PM Imperative 2: Identify and Target Market Segments (Or: Why “knowing your customer” is not enough)

 

Most companies fail at growth not because they don’t understand customers — but because they try to serve too many different customers with one answer.

Marketing Imperative 2 forces a hard, uncomfortable question:

Which customers are we actually building for?

And just as importantly:

Which customers are we explicitly not building for?

This is not a tactical exercise. It’s a strategic one.

The Illusion of “The Market”

In any B2B or B2C market, customers do not have uniform needs.

Yet many teams talk about “the market” as if it were a single entity:

  • What does the market want?

  • What will the market pay for?

  • How do we win the market?

This framing is dangerously misleading.

A single offer aimed at the overall market may delight some customers — but it will usually underserve many others.

Marketing Imperative 2 starts by rejecting the idea of a monolithic market and replacing it with something more precise:

Market segments = groups of customers with similar needs, who value similar benefits, with similar priority levels.

Similarity matters. Priority matters even more.

Segmentation Is Not Targeting (And This Is Where Teams Get It Wrong)

There are two distinct parts to this imperative:

  1. Identifying market segments

  2. Choosing which segments to target

The first part is creative and analytical:

  • Who exists in the market?

  • How do their needs differ?

  • What trade-offs do they care about?

The second part is decisional and strategic:

  • Which segments can we actually serve well?

  • Where do our strengths matter?

  • Where do competitors have structural advantages?

Most teams stop at step one.
Strong teams have the courage to do step two.

A Modern Tech Lesson: Stripe and Online Payments

Stripe entered an already crowded market:

online payments

At the time, the dominant players were banks and legacy payment processors. They served the market — but only certain segments of it.

Stripe made a deliberate choice.

The segment Stripe chose

  • Developers and startups

  • Product-led companies

  • Teams that wanted to move fast without negotiating contracts

What they valued:

  • APIs over sales calls

  • Self-serve onboarding over account managers

  • Speed and flexibility over bespoke enterprise workflows

The segment banks and legacy processors served

  • Large merchants

  • Long-running businesses

  • Compliance-heavy, relationship-driven procurement

What they valued:

  • Stability over iteration

  • Contracts over APIs

  • Custom pricing over transparent usage

Stripe did not win by out-executing banks at their own game.

It won by choosing a different market segment — one that legacy players were structurally ill-equipped to serve.

Same payments market.
Very different segments.
Very different ability to deliver value.

A market segment can be attractive — and still be the wrong one for you.

A Simpler Framing (Why This Keeps Repeating)

This pattern shows up everywhere in tech:

  • Developer tools built for experimentation vs production at scale

  • Platforms optimized for speed vs platforms optimized for control

  • Products built for builders vs products built for procurement

Each pair lives in the same category.
Each requires different capabilities.

Trying to serve both usually results in serving neither well.

Choosing Markets Is Choosing a Business

This is the part that doesn’t get said loudly enough:

Choosing a market segment is choosing what business you are in.

And by implication:

  • What capabilities you invest in

  • What trade-offs you accept

  • What opportunities you walk away from

That’s why market selection is inherently:

  • Creative (imagining alternative futures)

  • Strategic (allocating finite resources)

  • Non-reversible (at least in the short term)

It is not a marketing slide.
It is a leadership decision.

The Hard Truth

Segmentation alone does not create advantage.

Targeting does.

And targeting requires the discipline to say:

  • This segment fits our strengths

  • That one doesn’t — even if it’s large

Great companies don’t win by serving more customers.
They win by serving the right customers exceptionally well.

Final Takeaway

Marketing Imperative 2 is not about analysis for its own sake.

It is about focus.

And focus is uncomfortable — because it forces trade-offs, exposes weaknesses, and limits optionality.

But without it, strategy collapses into wishful thinking.

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