The Importance of Determining and Reaching Your Target Market Pt. 1
About 95% of product launches fail due to ineffective market segmentation mechanisms.
Market segmentation is the process of partitioning all potential customers into groups based upon common needs and who might respond to similar marketing strategies. The segmentation may be based upon needs common within a group (ex. same occupation or hobby), what makes the group different (ex. language, demographic), or how they may react to the product or a marketing campaign (ex. geography, technology usage).
Dividing the market into different groups helps the business to understand the customer’s needs more efficiently and effectively. No business can target everyone, nor should they. Small businesses can effectively compete with larger companies by targeting a specific niche market. Start-ups and small businesses also need to carefully and selectively choose their initial target market in order to focus on a group small enough to gain traction yet large enough to be able to bring in enough revenues to keep the organization viable. Bottom line, target audiences are those groups of people who will be interested in the product and service and segmentations are groups within that audience that are differentiated by need or reach.
According to the marketing management gap report, 56% of the consumers believe that businesses need to understand the customer’s needs more deeply.
Define your target market
Defining your target market is one of the most important tasks to set an established and sustainable business. It can be a challenging task because businesses have to understand whom they are serving with their products and why. One helpful tool to accomplish this is to utilize a proto persona description such as this one from the Tools page. It includes questions such as:
·What pains do customers face or goals they want to achieve? How would the product or service meet that challenge?
What do the customers value or fear? How would the product or service meet or address these?
How large is the segment, what marketing strategies may work best, what are possible revenue models for his segment?
What are the factors through which a potential customer can be lost?
Further defining the target audience may include factors such as:
Demographics: What age group is your product for? What gender is your product for? What income level audience does your project target? Is it luxurious or a need?
Geography: Will your product be used in rural or urban areas? In the countryside or villages?
Psychographics: What lifestyle does your product offer (used by people of high living standards or it is affordable)? What is their interest and opinion related to your product? How important is your product in a particular culture?
Behavioral: Does your product offer a proactive or reactive nature of service?
Bottom Line: It is important to understand and focus on individual segments for clarity of strategy and effective allocation of resources The goal of market segmentation is to allow your product or service to actually reach the people who are most likely to make a purchase by expending the fewest resources and avoiding getting lost in the market space. Debt can build quickly when marketing is effuse and sales are slow.
Marketing aims to know and understand the customer so well, the product or service fits him and sells itself - Peter F. Drucker