Zeroing in On Your Target Market
Zeroing in On Your Target Market
Many businesses today struggle with defining their target market. Fearing that they will lose potential customers, they don’t exclude anyone. While in a sense, this may true, these are not their core customers; they are random individuals who weren’t really expected to purchase from them but, nevertheless, have a need for their product or service. Chances are, these ‘outliers’ are not the best customers bringing in the bulk of revenue, and spending money on them is a gamble.
Conversely, focusing exclusively on your target market is an inherently more effective marketing strategy. You can tailor your marketing efforts to that group, rather than imposing a one-size-fits-all strategy. Although you might be missing out on the random outliers, you will be gaining more customers within your target market, who purchase more from you on a more consistent basis. Losing a few less-valuable customers in order to gain more preferred customers is a price well worth paying.
Using targeted marketing to cater to niche markets can actually be far more effective than targeting broader groups. Usually, extremely broad markets are dominated by big brand names, and trying to compete doesn’t make sense, especially for small businesses. However, by targeting niche markets, you will often find smaller segments that larger brands have overlooked or neglected, with less competition for their attention.
Once you identify your target market, you can ensure that your brand appeals to people with similar characteristics to your core demographic(s). With a clearly defined target audience, it is much easier to determine where and how to market your business.
Following is a checklist of important factors to consider when identifying your target market and evaluating your potential customer base.
Evaluate Your Current Customer Base
Who are your current customers? Why do they buy from you? Look for common characteristics and interests, and which ones bring in the most business. It is highly likely that similar people could also benefit from your product/service.
Check Out Your Competition
Who are your competitors targeting? Who are their current customers? Rather than pursuing the same market, you may look for a niche market that they are overlooking.
Segment Your Target Audience
Commonly used ways to segment your audience include:
Geographic Segmentation. Geographic segmentation identifies target markets based on where businesses are located. In some cases, businesses will be attempting to appeal to a very local market segment (i.e. human resources outsourcing or workplace safety consultant). In other cases, the market reach might be far broader, even expanding into global market segments. Geographic segmentation can be useful to identify the best media and marketing channels to reach specific geographic areas most effectively, through marketing messaging.
Segmentation by Size. B2B companies may choose to target potential customers based on business size—in terms of number of employees or in terms of annual sales. Larger companies may indicate the potential for more significant sales, while smaller companies hold value in as much as there are so many more of them to target as potential customers. Size becomes an issue in determining which individuals within the organizations to target for communications and how to best connect with them. In small companies this task is much more discernable; in larger companies, it can be challenging to identify the key decision-makers.
Segmentation by industry. Industry segmentation can be used by businesses selling products with appeal in specific industry segments. For example, companies that manufacture specialized computer components will want to identify companies that use the components, segmenting them into a targeted group for communications. Different industry segments may also have specific needs and challenges that can be addressed through key messaging. There are numerous industry-specific trade associations that can be utilized to connect with these audiences.
Business need segmentation. Segmentation based on business need allows businesses to identify and connect with companies that may span geographies, size and/or industry, but share a common need addressed by a business’s products or services. For example, nearly every business needs telephone systems and computers. Businesses may choose to combine segmentation to more narrowly identify their audience, such as businesses that need finance software that are located within a certain radius and are part of the transportation industry.
Evaluate Your Decision
Once you’ve decided on a target market, consider these questions:
- Are there enough potential customers who fit my criteria?
- Will they really benefit from my product/service? Will they see a need for it?
- Do I understand what drives them to make decisions?
- Can they afford my product/service?
- Can I reach them with my message? Are they easily accessible?
Target Your Market
The following list refers to what you need to evaluate the potential and value of each segment.
- Criteria size—the market must be large enough to justify segmentation; if it is small, it may make it even smaller
- Difference—measurable differences must exist between segments
- Profitability—anticipated profits must exceed the costs of additional marketing plans and other changes
- Accessibility—each segment must be accessible to your team and the segment must be able to receive your marketing messages
- Benefits—different segments must need different benefits
You can have more than one niche, but make sure you don’t break down your market too far. Assess your marketing message; if the same message resonates effectively with both niches, then maybe you have broken down your market too far. The trick is to find that perfect balance.
What’s the best way to gather all of this information?
- Search online for research others have published on your target
- Search articles and blogs that talk about or to your target audience
- Search for blogs and forums where people in your target market communicate
- Look for survey results, or consider conducting a survey of your own
- Ask current customers for feedback
Once you know who you are targeting, it is much easier to determine which media to use to reach them, and what marketing messages will resonate with them.
We are an Alpharetta marketing firm with expertise helping local and global businesses, alike, enhance ROI by defining their target audience. We focus on buyer-centric programs that elevate brands, sharpen messaging, launch products, pinpoint campaigns, boost awareness and unlock opportunities within your target audience. For more information about target marketing, don’t hesitate to contact us.