Many of you may have heard that markets across the globe are fracturing into ever finer segments. You may have also heard that this is been driven by the rise of social media.

But if people are getting together to discuss specific interests and this is leading to an emergence of ‘new markets’ to emerge then surely these interest groups must must have existed already. It just we didn’t know about them. So in this sense social media doesn’t ‘create’ new markets and market segments. It just identifies them.

The mountain of data that social media produces can now shine a light on who these people are, and what they like. And voila – we have new identifiable and serviceable markets.

Want to grow in this brave new world? Then learn to collect and read the data and then use the tools to communicate with them as they progress down the path towards making a purchasing decision.

All the tools are there and the people are waiting.

“Social media hit a tipping point in 2009 as sites like Facebook and YouTube increased their presence in mainstream media while sites like Twitter and Digg emerged. On top of the obvious, thousands of new and legitimate social media websites hit the scene with hopes of being the “next big thing”.

While most credit and attention are being given to Facebook for unofficially winning the social networking battle with MySpace, Bebo, and others, Twitter and Digg were the real winners in 2009 for very different reasons.”

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This new environment has enabled a quite different approach to growing markets and winning market share. Technology has both facilitated the “fracture” of markets into specialised interest groups and provided the wherewithal to identify and communicate with these groups – in real time. It’s time to get granular!

Stop guessing and start knowing

Not many companies have been able to turn the massive amounts of data that social networks create into profit. This is because they lack the ability or simply do not have the courage to make the steps necessary. In fact, the vast majority of companies have not managed to develop a management structure and marketing strategy that is in line with the fracturing of the market place they play in. Many are still guessing their way through mass media insights and market research based on small sample sizes extrapolated out to the entire population.

This will change very quickly in the coming months. As Hal Varian, the chief economist of Google, recently stated in the McKinsey Quarterly; “I keep saying the sexy job in the next ten years will be statisticians. People think I‚Äôm joking, but who would‚Äôve guessed that computer engineers would‚Äôve been the sexy job of the 1990s?”.*

Companies develop far better growth strategies if they choose to focus on granular information – in both identifying and attacking new market segments and in cutting costs.

The concept in practice

The Harvard Business Review recently explored the ramifications of exploring granular data. In that article they discussed how Amazon leverages it’s virtual and low cost supply chain to “efficiently indulge the tastes of narrow customer segments, literally down to the individual buyer, at very low marginal cost”.

The article went on to discuss how the strongest contribution to performance comes, not necessarily from focusing on acquiring overall market share, but identifying and investing in markets with the most vitality. The example they illustrated was that of a construction and services business face near zero growth. The company used granular data to divide its world into geographic, customer and product segments. They quickly discovered that they had very weak market share in the fastest growing market spaces revealing over $10 billion in potential that could be tapped into.

Steps to take

So here is what you need to do:

• Accept that a fundamental change in communication is in place and be prepared to adapt.
• Allocate budget towards methods and technologies that can gather relevant data.
• Use this data to identify new market opportunities, the strongest growth areas will be apparent quickly.
• Invest in these new segments ¬†and be prepared to ditch low growth market segments.
• Develop a method for managing the multiple market segments you may now be playing in.

Life’s a beach

In the good times it’s easy to be complacent as customers come to you easily – like all of those people flocking to the beach this summer. But in the wintery phase the world economy is currently going through understanding the needs and wants of the micro-markets you can have most influence over is a winning strategy – that is easy to scale up when things begin to warm back up.

Now’s the time to get out your microscope and look carefully at the grains of data you have available to you.

* to see videos of Hal Varian talking about how the market place has changes click here.

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