In short: An industry is a universe, and universes do not convert into pipeline. Start with what you already have: your own finance data, deal history and the reference list that lives in Excel. And a market definition that does not rule anything out is not a market definition.
Ask a small or medium technical business to define its market and the answer is often a geography, an industry, or both.
Denmark. Northern Europe. Energy. Manufacturing. Utilities.
These answers describe where the company might operate. They do not define a market clearly enough to make commercial decisions.
An industry is a universe. And universes do not convert into pipeline.
A usable market definition has to tell you more: which companies face a problem you solve particularly well, what makes them act, how they buy, why they choose you and which opportunities you will not pursue.
That distinction matters because a market definition is not wording for the website. It is a business choice that should guide sales, marketing, product priorities and investment.
What is a market?
Geography and industry are useful starting filters. They are rarely enough on their own.
Two manufacturing companies in the same country can buy in completely different ways. One may need urgent engineering support to keep an existing plant running. Another may be planning a large capital project three years from now. One values access to senior specialists. Another needs documentation, predictable delivery and procurement compliance.
They may sit in the same industry code. Commercially, they are not necessarily the same market.
This is not a new marketing idea. In the classic Harvard Business Review article How to Segment Industrial Markets, Thomas Bonoma and Benson Shapiro argued that industrial segmentation has to move beyond company characteristics into operating conditions, purchasing approaches and specific situations. More recently, McKinsey has made a similar point from the buying side: B2B companies need to understand how customers actually make decisions, including who is involved and what matters at different moments.
So the practical definition of a market is not simply "companies in this sector." It is a group of customers with a sufficiently similar problem, buying situation and reason to choose you that you can serve them with a focused commercial approach.
Start with the evidence you already have
Most technical businesses already hold the raw material for a better market definition. The problem is that it sits in different places.
The finance system shows invoices, customers, order values and perhaps product or project categories. That is important. It tells you what was actually paid for, not what people remember selling.
But finance data rarely tells the whole commercial story.
The reference list may be in Excel. The project descriptions may be in Word. Salespeople may keep their own files. The website may show only the impressive projects with the best photographs. None of these sources is necessarily wrong. They are simply incomplete and seldom updated in the same way.
This creates a familiar distortion. The large turnkey project is remembered. The smaller feasibility study, retrofit, service visit, spare-parts order or control-system adjustment disappears into "other revenue." Yet those smaller deals may reveal the most repeatable demand in the business.
That is why I would never define a market from a reference list alone, or from the finance report alone. Put them together.
Start with the last two or three years and ask:
- What did the customer actually buy?
- What situation created the need?
- Was it a first order, repeat order, extension or service task?
- Who initiated the purchase, and who approved it?
- Why did the customer choose us?
- What did the work lead to next?
- Which deals were profitable, repeatable and strategically useful?
McKinsey's research on industrial aftermarket services shows why this matters. Service and aftermarket work can carry higher margins than new equipment, but companies often fail to capture its full value because installed-base and customer information is fragmented. The small work is not necessarily small in aggregate. It may be the clearest evidence of where customers keep finding value.
Look for patterns, not trophies
Reference lists are often built to prove capability. They focus on the biggest name, the newest technology or the project that looks best in a presentation.
Market definition requires a different lens.
A one-off prestige project may prove that your engineers can solve something difficult. It does not automatically prove that a repeatable market exists around it.
I have seen lookalikes of "unicorn" projects accepted as markets in their own right. One exceptional project goes well, and the board assumes there must be many more just like it. The organisation is then asked to build a website, sales story and activity plan around that assumption before anyone has established how many comparable buyers exist, whether they have the same need, or whether the company can reach them profitably.
The better evidence is often less impressive at first glance:
- the same problem appearing across several customers
- repeat orders after the first delivery
- a small service that regularly opens a larger relationship
- a specific trigger that shortens the sales cycle
- a type of buyer who understands the value quickly
- work the company delivers well without reinventing the process each time
These patterns tell you where the company may have a right to win.
Twelve markets are not a market definition
I often see boards of directors in Denmark doing this work. That is appropriate: choosing where the company will compete is a board and leadership responsibility.
But responsibility is not the same as expertise.
Sometimes a trusted friend or general business adviser is brought in to help. The important question is not whether that person knows the company. It is whether anyone in the room has real expertise in defining markets: gathering customer evidence, distinguishing a segment from an industry, testing buying behaviour and turning the findings into choices.
Without that discipline, a board session can produce twelve focus areas. Nobody wants to close a door, so every possible geography, sector, application and customer type survives the discussion.
Then the consequences move through the organisation.
The website has to reflect all twelve. Sales needs messages for all twelve. Marketing receives a never-ending activity list. Technical experts are asked for material covering every possibility. Internally, people cannot agree which lead matters most. Externally, customers cannot see immediately why the company is relevant to them.
There is a large body of evidence behind the cost of this kind of overload. Harvard Business Review has described how too many parallel priorities weaken strategy, while research reported by Gallup found that only 22% of employees strongly agreed that leaders had a clear direction.
Activity grows. Meaning does not.
A market definition should lock some choices
This is the part many leadership teams resist.
A real market definition locks things. It says that some customers, problems and buying situations deserve more attention than others. It gives the organisation permission not to build a campaign, page or offer for every opportunity that appears.
That does not mean refusing all business outside the definition. Small and medium businesses often need flexibility. It means knowing what the company is deliberately building around, rather than letting every incoming request rewrite the strategy.
A useful definition might include:
- the type of company and operating context
- the problem or change that creates demand
- the part of the organisation that feels the problem
- the buying situation and decision process
- the value the customer expects
- the evidence that your company can win and deliver repeatedly
- the boundaries: what is adjacent, and what is not a priority
The wording does not need to be clever. It needs to be specific enough that two directors, a salesperson and the person updating the website would make broadly the same decision from it.
External and internal alignment
Market definition creates two kinds of alignment.
Externally, the company becomes easier to understand. The right customers recognise their situation in the website, sales conversation and cases. The value is connected to a real buying need rather than a general claim about quality, innovation or experience.
Internally, people can prioritise. Sales knows which opportunities deserve time. Marketing knows which audiences and problems to build around. Leadership can assess investments against the same logic. Technical teams understand which capabilities need to become repeatable offers.
This is why I wish more real marketers were sitting in boardrooms. Not to discuss campaigns or colours, but because market definition sits before both. It connects customer evidence with commercial choice and turns strategy into something the organisation can actually use.
Research published in the Journal of Marketing found that only 2.6% of board members in its large US sample had marketing experience, while that experience was associated with higher revenue growth. The exact board landscape differs from country to country, but the underlying point matters: decisions about markets benefit from people trained to understand markets.
Five questions for the next leadership meeting
Before approving another market list, website rewrite or campaign plan, ask:
- What does our finance data say customers repeatedly pay us for?
- What does the full deal history show that our showcase reference list leaves out?
- Which customers share a buying situation, not merely an industry code?
- Where do we have evidence of repeat business, profitable delivery and a credible right to win?
- What will we deliberately not prioritise for the next twelve months?
If the answers do not fit together, the business does not yet have a market definition. It has a collection of possibilities.
That is where the work starts: not with rewriting the website to accommodate every idea from the boardroom, but with the evidence required to make a choice.
If your market currently exists across finance reports, old reference lists and different opinions around the table, write to me.