Targeting Customers

Targeting Customers

In this lesson, you’re expected to:
– understand the importance of defining your target market
– learn how to identify and select a target market

What is a Target Market?

A target market is the market a company wants to sell its products and services to, and it includes a targeted set of customers for whom it directs its marketing efforts.

Identifying the target market is an essential step in the development of a marketing plan. A target market can be separated from the market as a whole by geography, buying power, demographics or psychographics.

There are many techniques for developing market segments and targeting. Once the firm has identified its market segment opportunities, it has to decide how many and which ones to target.

Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups.

A company invests a significant amount of time and capital to define and monitor its target market. Not all products and services are meant for all types of consumers, and consumers are often cautious with their spending power.

For this reason, target markets are typically segregated by age, location, income and lifestyle. A company defines its target market by the consumers that are likely to have a need for its product. Defining a specific target market allows a company to hone in on specific market factors to reach and connect with customers through sales and marketing efforts.

[Optional] Target Market
For more information, check out this link:
https://www.entrepreneur.com/encyclopedia/target-market
How to Select a Target Market

Testing of the target market often occurs in a phase before the product release. In this phase, a company may use limited product rollouts and focus groups, allowing the product managers to get a feel for which aspects of the product are the strongest.

Once a product is released, the company can continue to monitor the demographics of its target market through sales tracking, customer surveys and various other activities that allow the company to understand what its customers demand.

Importance of Identifying a Target Market

The target market is a central focus within a marketing plan that determines other essential factors for the product or service, such as distribution, price and promotion efforts. The target market also determines significant factors about the product itself.

In fact, a company may tweak certain aspects of a product, such as the amount of sugar in a soft drink, so that it is more likely to be purchased by consumers with varying tastes.

Criteria for Selecting a Target Market from Segments

To be useful, market segments must be capable of assessment on five key criteria:

1) Measurable: The size, purchasing power and characteristics of the segments can be measured.

2) Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing programme.

3) Accessible: The segments can be effectively reached.

4) Differentiable: The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programmes.

5) Actionable: Effective programmes can be formulated for attracting and serving the segments.

Why do you need a clearly defined target?

Having a well-defined target market is more important than ever. No one can afford to target everyone. Small businesses can effectively compete with large companies by targeting a niche market.

Many businesses say they target “anyone interested in my services.” Some say they target small-business owners, homeowners, or stay-at-home moms. All of these targets are too general.

Targeting a specific market does not mean that you are excluding people who do not fit your criteria. Rather, target marketing allows you to focus your marketing budget and brand message on a specific market that is more likely to buy from you than other markets. This is a much more affordable, efficient, and effective way to reach potential clients and generate business.

Defining your target market
Regardless of the product or service that you sell, you need to understand your customer if you want to maximize your sales.

Who are you selling to? Why should they buy your product? What do they stand to gain?

These are all questions that you need to address in determining your target market.

1) Understand the problem that you solve

The starting point in defining the target market for your proposition is to understand the problem(s) that you solve. Once you have a good idea what these are, you can start to work out who is most likely to suffer from these problems.

2) Identify types of customers

Start to list all the different types of customers that suffer from the problems you solve. Once done, you can start to build up a picture of these customers. Group them by location, market sector etc.

Ask yourself other types of relevant questions about these people. Are they married? Are they male or female? Define them in as many relevant ways as possible.

3) Who gains from the value in your offer?

If you can demonstrate that the cost of NOT sorting out the problems is GREATER than the cost of dealing with them, then your case becomes compelling.

Remember to take into account aspects like emotional upheaval and the risk to reputation when implementing your solution, as well as a bottom line cost. It is all these factors that make up the value in your offering.

4) Think about your market

Today we live in the world of niche. The web is fantastic at delivering personalized products and services, cutting out many of the distribution challenges that previously existed.

It is these factors that mean it is a more effective strategy to be a big fish in a small pond rather than the other way round. It will be easier to build your reputation and gain referrals. You will also find you get more from your marketing endeavors.

5) Look internally at your company

One way of deciding on the right markets to pursue is to think about your company and your business. Do you have particular areas of expertise?

For example, do you have a lot of experience in particular markets or unique knowledge of a specific geographical area? Are you better at getting on with certain types of people? All these factors could help you establish a particularly attractive offering.

6) What else is available?

Once you have decided the answers to some of these questions you must look at the market to see what else is available. The question you must have an answer to is: Why am I uniquely placed to solve the problem?

It may be that for some marketplaces there is no answer. However, in certain sectors or locations there may be a compelling response to that question. If you are unable to answer the question, you either have the wrong target market or the wrong offering. In this case, more work will need to be done before you start targeting your potential customers.

[Optional] Steps To Identify Your Target Market
Jim Rohn Sứ mệnh khởi nghiệp