One of the first steps in a lean business is identifying your target market. In order to be successful, every business must determine who they are trying to target. Once a company has narrowed down their target market, they can perform target market segmentation in order to create the overall marketing strategy.
What is a target market?
A target market is anyone who can potentially buy a product or service. Keep in mind, your target market is not the same as your target audience.
Your target audience is not everyone that can potentially buy from you. This is a smaller, more specific group that you are targeting for an exact product or service (usually done through a target advertisement).
Understanding your target market
Understanding your target market starts with knowing your product or service, knowing your current customers, what their needs are, and how your product or service meets their needs. It is also important to know who your competitors are, what they are doing that is working, and what they are doing that is not working.
To get a complete picture of your target market, consider these questions:
1. Do our products or services solve any real problem?
Why do we sell what we sell? Is there a real need for it? Does it tackle a problem that no one else is looking at? You must have a clear understanding of why your product or service exists.
2. Who are your current customers?
You need to be clear on who is already buying from you. You can gain a lot of insight from them about what you are doing right. You should be able to get this information from your company records, which will tell you who bought what from you, when, and how often.
3. What are your customers’ needs?
You might need to do market research, including doing a market survey, running a focus group, or scanning industry reviews to find out what your customers’ needs are.
4. Who is your competition?
You will already be aware of your direct competition, but you might want to consult Google to discover any new and up and coming businesses to keep an eye on. Find companies in your industry or niche by inputting some relevant keywords in Google. Research the companies that come up. The knowledge you gain can help you differentiate your products and services. It will also put you abreast of new products and services being developed that might threaten your business. If you use any SEO tools, you can even data mine your competitors.
5. How do you stand out?
This is an important question to contemplate. Is our offering unique, or does every second business do the same? Ask yourself: would customers benefit from using us rather than the competition? Is there something that we are the best at?
Once you have a clear picture of your target market, you will probably want to consider target market segmentation.
What is target market segmentation?
Market segmentation helps you determine which groups you should target your marketing at. Simply put, market segmentation gives you a picture of the different groups in your target market.
With market segmentation, you create groups based on factors such as demographics, customer needs, priorities, interests, and lifestyle plus other psychographic or behavioral criteria.
Segmenting your target market makes sense as your business might have different types of customers who have an interest in your product or service. For instance, if you manufacture and sell medical supplies for women, men, and teenagers, you need different messages for each group.
How to segment a target market
There are four types of market segmentation: demographic segmentation, psychographic segmentation, behavioral segmentation, and geographic segmentation.
This is the most basic way to segment a target market. Demographic segmentation divides a market according to demographic elements including age, gender, family dynamics, education, income, race, occupation, and nationality.
Demographic segmentation is often used as demographic factors play a basic role in what products and services we typically buy. A group of elderly females will obviously not buy the same products as a group of teenage boys.
Psychographic segmentation takes the psychological aspects that influence buying behavior into account, including lifestyle, social status, opinions, values, interests, and personality traits.
Clever marketers use this information to market their products to a wider audience that has a lot in common. For instance, a brand can learn from its own millennials what they prefer and then use this information to market to a wider millennial market.
Behavioral segmentation divides markets according to similar behaviors. For instance, a group of people may hesitate to buy because they all need proof of product. There are different types of behavioral segmentation, i.e. segmentation based on buying behavior, benefits, level of engagement, or customer loyalty.
Geographic segmentation divides customers into groups based on geographical situation. It’s a fact that customers in different geographical places have different needs and preferences. People in Brazil have completely different interests from people in Poland, for instance. You might be selling clothes to both markets, but it won’t be the same clothes. Knowledge of the climate and lifestyle will inform your choice of product for each region.
Why market segmentation is important
Market segmentation can help you better understand your different target audiences. It helps you to target your marketing to specific target audiences rather than an undifferentiated mass market. It’s the difference between shooting an arrow at one yellow-clad fellow in a crowd and shooting at the same person standing on a pedestal.
When you have completed your market segmentation you will gain a better understanding of your customer’s needs and wants and will be geared to develop marketing campaigns that will hit the mark. Your marketing will be more efficient and cost-effective because you will offer the right products and services to the right audience at the right time.
Defining your target audience will help you with content development. You will be in a position to develop targeted content that will engage your audience. It’s also easier to establish yourself as an industry leader when you can develop targeted content.
Benefits of market segmentation
1. More efficient marketing campaigns
Market segmentation will lead to more efficient marketing campaigns because you will be able to target the right audience with the right message at the right time. Segmentation informs you about your audience so you can better tailor your messaging to them.
2. Focus business operations
Market segmentation can help you hone your products or services to your customers’ needs, making it possible for you to develop a brand identity focusing on particular types of products. If you try to reach too big a market with your products, you run the risk of disappearing in the crowd.
3. Reveals new opportunities
When you’ve done your market segmentation you might discover that you have been missing out on a huge opportunity for expansion. You might also discover an existing market segment that you are in an ideal position to create a product for. For instance, if you have a business that offers full-day medical spas for mature women. When you segment the group ‘women’ further, you discover that there’s a segment of young women aged 25 – 35 who also show an interest in medical spas.
Market segmentation can help businesses to identify audience segments that they are not currently reaching with their marketing efforts.
4. Lead to new products or services
Market segmentation can reveal to you exactly what your customers need and how your products fall short. Armed with this information, you can decide to develop a completely new product range to better meet the needs of your customers.
5. Inspire changes to business operations
Market segmentation can have a broad influence on business operations. For instance, information gleaned from segmentation can lead you to reconsider pricing and distribution. You might decide to change your prices because you are now aware of your customers’ price sensitivity.
Market segmentation might also enlighten you to the stores that your audience likes to shop at. This can be an opportunity for you to have your products in those stores.
How to find your target market
Successful marketing relies on knowing your target market. You need to know who comprises your target market and what their needs are.
Target marketing can be aimed at individuals, groups, and businesses who are most likely to need and procure your products or services. Here are eight steps that can help you to identify your target market.
1. Identify the problem that your product or service is solving
The starting point to identifying your target market is to understand the problem you are solving. From there you can start to think about who is most likely to experience the same problem. For example, you run a tree pruning and felling business. People who live in suburbs with large established gardens are target customers for your service. So is the local municipality if the streets are lined with trees.
2. Create a picture of your ideal customer
Here you create a fictitious picture of your typical customer, also called a buyer persona. Your marketing department can create a buyer persona by getting information through interviews, surveys, social media platforms, online forums, and other business data.
Depending on your business, you might need to develop more than one buyer persona.
Data points can include facts about income level, lifestyle, income earned, geographical location, education level, values and goals, interests, and of course, what their pain points are.
Armed with this information, you can target your services and messages to the right people at the right time.
3. Who are your existing customers?
Knowing who is already buying from you can point you to potential similar customers. When studying your existing customers, try to find out what identifiable points they share. This will help you to identify other people who share the same characteristics.
Find out what they like about your company and what it offers. Find out why they prefer you to other companies.
When you have a clear picture of your current customer base, you can find more people like them and target them with your offerings.
4. What are your competitors doing?
You can’t afford not to keep track of what your competitors are up to. The audience that they are targeting would also be the audience that you could be targeting.
Your competitors’ marketing campaigns are a prime source of information for you. Figure out who they are targeting, how and why, and you may discover new segments that you can target with your offerings.
5. Dig deeper: differentiate between user and buyer
Your ideal customer is not necessarily the person who needs and uses your product – the real customer is the person who makes the purchase.
For example, teenagers may love video games, but the real buyers are their parents, so your messaging must be aimed at them. And children love to play with Lego, but since parents are the buyers, the company has built its marketing strategy on wowing parents.
6. Do market research
The main purpose of industry publications and special reports is to keep members up to date with the latest developments in an industry. Their research material is available in print and online. These publications might give you an insight into the audience you should be targeting, the current state of the industry, how it might change in the future and who the main players are. You may even find information on demographics like customer age, gender, price sensitivity, and other revealing information.
7. Let Facebook Insights help you
You can use your company’s Facebook page to gain insights into your target audience on Facebook. You simply visit your Facebook page, click on the Insights tab and then on People. This action will provide you with information on the demographic of your followers and what they share about your company on the platform.
8. Visit your Twitter Activity Dashboard
You can find out a lot about your target audience and people like them by consulting your Twitter Activity Dashboard.
This dashboard gives you detailed insights into who your audience is and how they respond to your Tweets. You can gain a vast and interesting volume of information about your target audience here. Simply log in to analytics.twitter.com with your Twitter username and password.
On platforms like Facebook and Twitter, you will find out about your target market’s most pressing problems, concerns, and interests. This information will help you to hone your products and services so they remove all pain points, not only for your own customers but also the people that they are talking to and who might become your customers down the line.