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Research Report

Segmentation Strategies for Optimal XaaS Offer-Market Fit

This report is for Offering Management members only

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B2B technology providers must actively and effectively counter the three trends of technology commoditization, consumption economics, and unprofitable subscription business models.

Designing successful products and services, creating solutions, and pricing those solutions requires a function of deep understanding of customer use cases, their operating environment, what they value, their behavioral characteristics, and their role in achieving a desired outcome, i.e., "the problem space." Designing with this deep problem space understanding is more likely to result in the optimal offer-market fit.

To achieve optimal offer-market fit, technology providers must conduct effective market segmentation. TSIA  has identified a strong correlation between solutions targeted at specific vertical market segments and profitability.

This paper provides a framework for effective market segmentation by covering the following topics:

  • The rationale for segmentation as part of effective XaaS offer development.
  • A framework for segment identification.
  • Segmentation traps.
  • Six segmentation best practices.

Authored By:

Laura Fay

Vice President, XaaS Product Management, TSIA

Publish Date: May 17, 2023

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Peg Rodarmel, SVP, Subscription Services, Infor

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