In a recent engagement we focused on identifying the minimum viable segment (MVS) for a NewCo the client was contemplating launching. We were assessing the viability and sustainability for new services and set out to identify the group of customers who would have a strong and immediate need for the offering. The benefit of this exercise is that it clarified the NewCo’s thinking about core features and it simplified its product development efforts.
Minimal Viable Segment is essentially the smallest subset of a target market that can sustain a product. It involves an in-depth analysis of customer demographics, behaviors and needs to find the most receptive group for a product.
The strategic benefits of defining a Minimum Viable Segment are compelling:
- Focused targeting: Zeroing on specific customer groups, for example, professional photographers for photo editing software ensures relevance and engagement.
- Efficient Resource Use: A targeted approach leads to better use of capital and resources.
- Fit and Relevance: Tailor product features, tweak marketing messages and dial-in the user experience to fit the needs of the segment.
- Feedback and Iteration: Gather the voice of the customer and enhance the product features. Who better than, for example, the professional photographer, to provide feedback on the usability of product features and to define what else is missing.
- Brand Advocacy: Identify early adopters who can champion the value of your product, boosting its visibility.
- Reduction in Market Risk: Minimize the risks of new products or new markets by running market tests before a full-launch.
- Scaling Framework: Be guided by the MVS when contemplating how to scale to larger markets.
- Tailored Message: Speak directly to the target market and have a resonating message to validate customer acquisition assumptions.
- Specialization Advantage and Know-How: Not quite competitive advantage, but develop specialized market knowledge not readily available without significant investment.
- Inform Long-Term Strategic Planning: Key learnings should be applied to expanded segments and more importantly to future expansion efforts.
By more thoroughly understanding market dynamics and customer behavior through rigorous analysis, risks can be mitigated and know-how can be developed to add to incremental growth. A thoughtful and rigorous MVS analysis accelerated the client’s ability to segment, target and position its new offering. It saved time and resources. More importantly, they received timely and accurate feedback on the product offering that allowed them to enhance and to expand the final product offering. Long term, this approach provided them with the tools to assess new market entry with minimal investment on future projects.