Everyone has heard of the "elevator pitch" and all entrepreneurs know they need one. Right? I'm talking about the ability to tell your business story in the time it takes the elevator to get the floor where your audience will egress. While everyone knows they need one, the confidence imbued in entrepreneurs -- necessary to be an entrepreneur -- often results in the overconfident belief that the pitch will magically flow when the time comes.
As with most marketing terms, the phrase "market segment" is often tossed about carelessly by entrepreneurs, technologists, and yes, even by some marketers. To my mind, however, segments are a cornerstone of market-driven business plans. Market segments are fundamental to a process-oriented view of taking technology to market and building business plans from the "bottom up."
In 1991, Geoffrey Moore in Crossing the Chasm defined a market segment as:
a set of actual or potential customers
for a given set of products or services
who have a common set of needs or wants, and
who reference each other when making a buying decision.
Most of this is pretty intuitive. In a nutshell, a market segment is comprised of like buyers who share the same pain. But there's more to it. The reference part trips some people up. The key point to understand is that the customers and potential buyers must be willing AND able to reference each other.