User Experience Design Blog

Commentary on strategy and design of interactive products.

Designing Web Sites for Market Segments

September 21st, 2006 by Sergio Paluch

One of the most pervasive design shortcomings of web sites is neglecting entire market segments–a mistake that can have very costly consequences. This article provides the basis for an effective method to correct this and improve overall conversions.

Principal Market Segmentation for Web Sites

There are many different ways to divide a company’s market into segments; the most effective partitioning for web site design hinges on the conversion likelihood of the prospective customers. It is a matrix of a user’s commitment to buy a product or service and that user’s perception of the company selling that product or service. The matrix looks like the following diagram:

Positive perception of company X

Negative or neutral perception of company X

Immediate need for particular product or service offered by company X

1. User has immediate need for a product or service offered by X and trusts company X to deliver it 2. User has immediate need for a product or service offered by X but does not necessarily want to buy it from company X

Possible future need for product or service offered by company X

3. User does not have an immediate need for a product or service offered by X but is likely to buy something from company X 4. User does not have an immediate need for a product or service offered by X and does not necessarily plan to buy something from company X

In list form, these become:

Market Segment 1 User has immediate need for a product or service offered by X and trusts company X to deliver it.
Example: I may need a new tennis racquet, and I’m likely to buy one from HEAD since I know they make great racquets.

Market Segment 2 User has immediate need for a product or service offered by X but does not necessarily want to buy it from company X.
Example: I may need a new tennis racquet, but I am not set on buying it from a particular manufacturer. I will likely look at buying a new racquet from a variety of makers.

Market Segment 3 User does not have an immediate need for a product or service offered by X but is likely to buy something from company X.
Example: Perhaps I’m a big fan of a certain company (brand) such as Puma. I’m not in the market to buy new sneakers or other athletic wear, but I like Puma enough that if I see something cool that they are selling, I might just buy it.

Market Segment 4 User does not have an immediate need for a product or service offered by X and does not necessarily plan to buy something from company X.
Example: Maybe I’m not a big fan of Puma products, and I’m not in the market for new sneakers or anything else that Puma happens to make. I would have to see some particularly special Puma product or have an acute need for a product that only Puma offers for me to buy something from them. Nonetheless, I might have to get new soccer cleats soon and might find that Puma makes one that fits me best.

Addressing Market Segments to Improve Conversions

The likelihood of converting prospective customers from each of these segments parallels their numbering above (with few exceptions). Conversely the frequency of prospective customers in each market segment is inversely proportional to their conversion likelihood.

Visitors that fall within Market Segment 1 are most easily converted to active customers and are also most rare. Therefore, a web site should make it easy for these users to find their product or service and allow them to quickly and easily buy it.

With rare exceptions, the second easiest segment to convert to active customers is Market Segment 2. Not only that, but the total number of prospective customers that fall in this category is usually much greater than in the first, and that translates to a sizeable potential market.

Addressing the second market segment means including content that will convince these users that they should buy the product or service from this particular company. And as we would do for the first segment, we also need to ensure that, once convinced, these prospective customers can easily find and buy whatever they need.

The third most likely group to convert to paying customers is the collection of users that fall into the third market segment. This group is particularly important for those companies that have a very strong brand such as Nike, Google, Ebay, Sony, etc. Since these users are likely to buy something from the company that they trust, addressing this market segment means exposing the users to attractive products and services and convincing those users to buy them.

Finally, the market segment that is least likely to result in conversions comprises Market Segment 4. However, this is by far the biggest market segment and even tiny conversion rates for these users can result in significant revenue.

By addressing the former three market segments you will usually have also addressed the last one, so little additional attention needs to be paid to this group. However, some cases call for special attention being paid to these prospective customers. For example, if you have a revolutionary new product or an outstanding and unique service and the likelihood to convince people to buy your product or service is great, you may want to include a specific web page, section, or module on your homepage to address this group. You should address why they should buy it despite not being previously interested in it, why they should buy it from you, and offer them a fast and easy way to do so.

Implementation Outline

A coherent implementation of this principle starts with comprehensive research of the company’s customer base that then factors into the strategic analysis and synthesis of a user experience architecture. The strategy should manifest itself on the homepage and transcend to all pages within a web site. Some visitors enter a web site from pages other than the homepage, and each unique page in a web site must have the right mix of addressing each of the four market segments.

The market segmentation outlined above is just the beginning - albeit one that is often missed; a fully optimized user experience incorporates strategies based on further market segmentations. In future articles we will address utilizing other kinds of market segments to optimize conversion of prospective customers.



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