Every year, marketers spend billions of dollars to reach a consumer. But consumers do not all respond in the same way.We are all individuals and have our unique reasons for choosing one brand over another, whether it’s the slick packaging that gets our attention, the creative advertising, or simply the novelty of a product. Ideally, it will be the unique attributes of the product itself that the marketer will use to attract the customer in each target market.
Ditch the “one-size-fits-all” strategy
Once upon a time, it was okay to say, “Our customers are women, 18-34 years old.” Not anymore. Small businesses need to understand that the marketplace is highly differentiated now, and consumers have many choices. Need proof? Look no further than your local supermarket. How many varieties of spaghetti sauce do you see? Stroll down the hair products aisle of your favorite drugstore chain. How many varieties of shampoo do you find?The days of the “one-size-fits-all” strategy are over. Even for small businesses. Every product is adjusted for a specific target market.
Imagine going to a restaurant that offers up choices such as tacos, sushi, pad thai, pasta, and hamburgers. Your perception may very well be that while this restaurant offers a wide variety of choices, they likely do not prepare any single one of them very well. Now compare that with the famous Shake Shack franchise. They offer what many consider to be the best hamburger ever. They do not try to be all things to all people. Instead, they target customers. They serve a limited menu to customers looking for a very good burger and willing to pay a premium for it.
A target market is the group of customers towards which you will aim your marketing efforts. Target markets are the sub-segments of the larger market that allow for the best fit between consumer and product. Many small businesses make the mistake of thinking that all customers should be targeted. But your business will stand a greater chance of success if it focuses its efforts on that particular segment of the total market that is most likely to buy your product.
Understanding your customer is the best way to evaluate your target market. Why do they buy your brand and not the competitor’s? What needs of theirs are satisfied by your product?
How to segment the larger market
To focus on a smaller audience, you need to divide the larger target market into manageable segments. An effective way to do this is through “segmentation bases” – consumer characteristics that influence buying behavior. These bases will help you devise a customer profile that will illustrate the similarities and dissimilarities within the segments.
There are four broad bases of segmentation: demographic, geographic, psychographic, and behavioral.
1. Demographic segmentation. Here, you are dividing up the market by such characteristics as income, education, marital status, and family size. The most common way to segment is by age and gender, as they are the easiest to identify.
2. Geographic segmentation. Divide up the market by where your customer is located, and sell accordingly. A sporting goods retail chain will not sell surfboards in Dallas, but they will in Southern California. Similarly, if you own a restaurant, you will most likely target customers in your immediate and surrounding neighborhoods.
3. Psychographic segmentation. This type of segmentation uses psychology, in addition to demographics, to further segment its target market. The reason for this is that even if customers are grouped in the same demographic segment, they still may exhibit different psychological reasons for buying a product. For instance, a married man, 45 years old, with two children and a household income of $250,000 buys a Mercedes for its safety features. Another man with the same exact demographic makeup might buy it for the status it provides him. While the marketer may target these men using the same channels (e.g., email, TV, Internet, etc.), they will modify the actual copy and creative elements for each channel.
4. Behavioral segmentation. This type of segmentation categorizes consumers according to what they actually do with the goods and services they buy. Typical questions considered here are “How loyal is my customer?” “How often do they use my product?” Answers to such question may provide the business owner with valuable information. For example, if a customer has been using Colgate’s brand of toothpaste for 10 years, and in that time he has not had a single cavity, then a small price increase may not be a problem for them.
Positioning your product in your target market
To a certain degree, your success in the marketplace will depend on how you position your product. Positioning is the result of all the steps you undertake to create a perception of your brand. When McDonald’s entered into the gourmet coffee market, it needed to overcome the perception of being strictly a “hamburger place.” To accomplish that, it took into account the competition and the needs and wants of the consumer. It launched its ad campaign, Unsnobby Coffee, and put espresso machines in many of its locations. It also went to the extreme of launching its McCafé locations in some test markets, which included comfortable seating and wi-fi. The idea was to position it as a lower-cost alternative to Starbucks.
Positioning involves refining your marketing activities to create a desired image in the mind of the consumer. If you were to ask 100 people what their image of the Volvo car brand is, it’s a good bet that for many, if not most, the first response is “Safety.” Volvo achieves this by highlighting the concept of safety in the advertising, the price – and, naturally, the product itself.
But creating a desired image is only half the battle. Companies like Volvo need to ensure that they are creating that image in the minds of the right people. That is why businesses spend time and money carefully choosing the right target audience.
Once you’ve segmented the larger market, it is time to select the target market that is right for your business. In the second part of this article, I will explain how.