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Market Segmentation in the Federal marketplace

In the commercial marketplace, marketing efforts often center around segmentation strategies. Selling to the “public” lacks focus. You have to divide the “public” into segments that you can reach. In the Federal marketplace, marketing efforts often center around RFP release schedules --- find out who is going to release an RFP that you can bid and then position yourself to win it. A lot of effort goes into finding out who is going to release a suitable RFP.

In the same way that marketing to the “public” lacks focus, market to the “Government” also lacks focus. There are tens of thousands of buyers. You need to segment the potential buyers in order to focus your efforts to identify suitable upcoming RFPs.

One high-level segmentation approach is to divide a marketplace into horizontal and vertical markets. An offering that has broad applicability is considered horizontal. An offering that is suitable only for specific applications is considered vertical. Horizontal offers may have more potential buyers, but locating individuals is harder. A vertical offering restricts the pool of buyers to specific areas that are easier to reach.

Off-the-shelf products tend to be horizontal in nature. For example, everybody buys PCs. Services can go either way, but contractors tend to look at them horizontally --- whatever you need we’ve got people who can do that.

One approach to gaining a vertical perspective is to think in terms of solutions. Get to know customers in a specific area and offer solutions to their needs. Beware --- some companies bastardize this approach by becoming too “solution oriented” and end up offering to solve any type of problem for anyone. The key is to get to know the needs of customers in a specific area.

In the Federal Government, this can be a specific department or agency. For example, you might tailor products/services to help the FBI solve law enforcement problems, and for growth expand the offering to other law enforcement agencies within the Department of Justice.

As you develop your understanding of the customer’s needs, you should also be developing your understanding of their buying habits and purchase cycles. Because you only have to monitor as many buyers are in your vertical segment, it is easier to gain advanced notice of suitable RFP releases. And when an RFP is released you have an understanding of the customer that runs deeper than what it says in the RFP and you are able to offer solutions to their problems instead of a simply response to the RFP. This is how you win. And as you develop a reputation for being able to solve the problems of those in your vertical market segment, you become positioned to consistently win.

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By Carl Dickson,
Founder of and PropLIBRARY

PropLIBRARY is our professional tool for people who want to win RFPs like their business depends on it.

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