Profitability and Stability of Market Segments
Evaluating the potential profitability and stability of market segments can be a very challenging exercise. The following is a check list of items that you can use to help you help you form an accurate determination:
- Decision-Making Power
- Sales
- Growth
- Lifetime Value
- Retention
- Responsiveness
- Media Exposure And Costs
Let’s dive a little deeper with each of these.
Decision-Making Power
Having customers within a given segment who have a responsibility for making buying decisions will increase sales opportunities and therefore contribute to profitability. By increasing this type of customer within segments you have a much better chance of improving overall stability while ensuring continued profitability.
Sales
Profitability and stability are intrinsically linked with healthy sales. If you can ensure that you have customers within your market segments who are likely to buy a marketed product then you are in a good position to establish and maintain profitability and stability.
Growth
Healthy sales and market share will always be at risk if continuous growth is not encouraged. To avoid this you will need to strive to have your segments within a growing market.
Lifetime Value
Having a significant volume of repeat business is clearly an outstanding opportunity to maintain profitability and stability in any segment. You should actively seek and maintain customers who are likely to buy repeatedly over their lifetime.
Retention
Customer retention is a core objective of any marketing plan. Having customers who are more likely to be retained over time brings multiple benefits to the business.
Responsiveness
Having customers who respond quickly to marketing efforts.
Media Exposure And Costs
Having easy and inexpensive access to media.
Working through this checklist will help you to form accurate determinations when evaluating the potential profitability and stability of market segments.
What’s Next
Up next we will talk about how a range of products can appeal to different market segments.