STARTUP LESSONS : Identifying Target Segment and Market Sizing

Understanding your Target Segment

UC When you start, you have the temptation to reach out to as many customer segments as you can - but is that the right strategy? Should you stay focused or spread yourself across segments?

Identifying the right customer segment for your venture idea is important. Equally important is the ability to dissect the customer segment. Doing this allows you to narrow your focus on the right segment and thus, market your products to a focused audience, with predictably better results. Let's first understand market segmentation in detail:

In order to identify the target segment, you should:

1. Segment your market correctly, based on Geographic, Demographic and Behavioural traits
2. Arrive at the value proposition of your product or service and customer's willingness to pay
3. Bring out an offering that is significantly better than the current options available in the market. Being incrementally better may not be very helpful.
4. Assess the size and growth of the relevant market segment
5. Once you have established yourself in a particular segment, you should consider the ability to enter adjacent segments

STARTUP LESSONS : Assessment of the Idea

Identifying the problem or the pain point you are trying to solve is the first critical step in validating your idea. You want to be able to clearly articulate a problem that you or others are experiencing regularly. You ought to be able to write down the problem that you are solving in a simple statement.

The next step is to determine whether this problem is a major one for your potential customers or not. If you build a startup that solves a “nice-to-be-fixed” problem, people might use your product, but never pay for it.
Let us understand how you should go about assessing your idea:

Identifying the problem or the pain point you are trying to solve is the first critical step in validating your idea. You want to be able to clearly articulate a problem that you or others are experiencing regularly. You ought to be able to write down the problem that you are solving in a simple statement.

The next step is to determine whether this problem is a major one for your potential customers or not. If you build a startup that solves a “nice-to-be-fixed” problem, people might use your product, but never pay for it.
Let us understand how you should go about assessing your idea:


So, to summarize, you should try and answer the following questions when you are assessing your idea:

• What pain point are you trying to solve?
• Who are you solving it for?
• How are you trying to solve it?
• Is anyone else doing it?
• Can you do it differently from them?
• Can you charge your customer? How much?

You also learned the factors you should look at while assessing your idea with the example of UrbanClap.
We want you to understand the importance of interacting with stakeholders involved in your business idea (For example in the case of Ola cabs, stakeholders involved are people using cabs, cab drivers, cab operators etc.). So now you should start interacting with stakeholders in your business, try and understand their perspective related to the problem you are solving. This will also serve as a good initial point of getting some clarity on the assumptions you are making about the business. It's quite possible that you may come to know some other major problems while interacting with these people.

It is highly recommended to do this activity as it will help you get more clarity on subsequent topics & assessment during the flow of this course and your startup journey. So get out of the building and break the ice.

STARTUP LESSONS : Identifying and Assessing the Idea

The first step for an entrepreneur before starting a new company is to find the right idea for his or her startup. The best way to arrive at a good startup idea is not to try to think up startup ideas – that would be the wrong way. The ideal way is to look for problems and needs, preferably problems and needs you have faced yourself. However, it does not necessarily have to be a problem you have faced personally. It could be something you have seen other people, your friends or family, face regularly.

Why is it better to work on such problems? First and foremost - it ensures the problem really exists. It sounds obvious to say that you should only work on problems that exist. And yet, by far the most common mistake startups make is try to solve problems no one has.

You should aim to solve a problem that you’re sure exists, and try to provide an offering that betters what an individual or a business would be going through today in the context of the problem or need to be identified. 

Trying to solve for pain points that individuals or businesses face can help you arrive at your venture idea. In this video, you saw how your idea should look to solve an existing problem. You also heard how some founders worked on the pain points that they observed to build their businesses:

1. Saavn: South Asian music digitally not available (B2C business)
2. redBus: Not being able to get a bus ticket at the right time (B2C business)
3. Freshdesk: Experiencing poor customer support services (B2B business)