It is important to define target markets in order to achieve your marketing strategy objectives because different audiences have different needs. To reach the right audience marketers need an effective, targeted marketing strategy. This can be achieved by segmenting your audience.
Market segmentation is the segmentation of markets into similar groups of customers, each of them reacting differently to promotion, communication, pricing and other variables of the marketing mix.
There are two basic markets you can sell to, consumer and business (B2B). Once you’ve established which market you are selling to you can then divide it into further sub-groups. You can group them by geographic, demographic, and behavioural and psychographic. Which is basically location, age, gender, income, education, ethnicity, marital status, household size.
The more narrowly you can define your target market, the easier it is to understand your customers’ needs and develop products or services that meet their needs. With segmentation, you reduce the risk of getting things wrong. The common characteristics of each segment allow for the development of a standardised marketing mix for all customers in this segment.
A segment-orientated marketing approach generally is a much more affordable, effective and efficient way to reach potential customers and generate revenues. It is possible to satisfy a variety of customer needs with a limited product range by using different channels, incentives and promotional activities.
Creating target markets
Target markets are created for marketing activities using the STP process. STP is an acronym for Segmentation, Targeting, and Positioning – a three-step model that examines your products or services as well as the way you communicate their benefits to specific customer segments.
Using this process, you will basically be segmenting your market, targeting your best customers and positioning your product.
Marketing segmentation is the division of a broad market into small segments comprising of individuals who think on the same lines and show an inclination towards similar products and brands.
Unique selling point
Once you have selected your target market using segmentation it’s time to identify your unique selling point to target your chosen group. Targeting plays a critical role in your marketing mix. If you are targeting the young people segment, then your products need to be more creative, more colourful and cheaper. But if you are targeting the middle-aged working classes, your product needs to be elegant, it is ok to be high priced as they have buying power, and your promotions need to be different.
Finally, your goal is to identify how you want to position your product to target the most valuable customer segments. Positioning allows you to engage with each group better, personalise your messages, and sell much more of your product. Then, you can select the marketing mix that will be most effective for each of them.
Apple has long been considered a premium brand as many of its products come with a high price tag and yet teenagers are one of Apple’s primary target market demographics. Whilst some teenagers would probably prefer an iPhone, the iPod is still the next best thing when it comes to socialising with friends, listening to music and using social media.
Apple markets the iPod with the slogan “Your films, TV programmes and music take centre stage”. As teenagers watch traditional TV less, the iPod looks appealing and teenagers, once hooked, may eventually go on to be iPhone and iPad consumers.
To achieve success in your business, you need to make sure your audience is segmented correctly and that you are pitching the right products to the right audience.