Business Model Canvas #2 Customer Segments

Every business model needs profitable customers to insist on the market. To get a better understanding of their customers, entrepreneurs can organize them in segments. A segment describes a group of people with the same characteristics e.g. in terms of their behavior, needs or sociographic characteristics. A company must consciously decide which customer groups it will ignore and which customer groups will be served. Following this decision, a business model can be aligned based on the deeper analysis of customer needs.

There are a large number of different customer segments. Some are to be described here:

  • Mass market: The mass market is a very general customer segment, which represents the largest possible group with largely similar needs and problems. Business models that focus on a mass market do not distinguish between different customer segments.
  • Niche market: Business models targeting niche markets address specific, specialized customer segments. Value offers, distribution channels and customer relationships are all tailored to the specific requirements of a niche market.
  • Diversify: In this case a business model serves two or more unrelated customer segments. The customer segments have completely different needs and characteristics
  • Segmented: A company with a diversified customer segment applies additional segmentation within the existing customer segment. The differences between the segments sometimes is very little but the effect on the other blocks of the canvas model, e.g. Channels, Customer Relations or value propositions is clearly noticeable.
  • Multi-sided Platforms / Multi-sided Markets: In contrast to diversified segments here a company serves two interdependent customer segments. Both segments are necessary to make the business model viable.

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