Get your message to the people who need and want what you have to offer!
Typically business owners start out with grandiose ideas of selling their product or service to “everyone” until a little thing like money throws a wrench into it.
Since success depends upon your being able to meet customers’ needs and desires, you must know who your customers are, what they want, where they live and what they can afford. Without assessing who your audience is, how will you determine whether you are meeting their needs?
Here are three steps to follow when identifying your market:
- Identify why a customer would want to buy your product/service
- Segment your overall market
- Research your market
Step 1: Identify Why A Customer Would Want To Buy Your Product/service
What problem(s) does your product or service solve and who would be willing to pay for a solution? What are the features and benefits of your product / service? A feature is a characteristic of a product/service that automatically comes with it and a benefit is what the customer expects to receive.
Not only do your potential customers need to have the problem, they also need to be aware they have the problem and understand you have a solution they will benefit from.
Take a look at who has already purchased from you to refine both your target marketing and your pricing strategy. Gain valuable insights by releasing a beta version of your product / service. Let potential customers speak with their wallets and guide the launch of a new product or service.
Step 2: Segment Your Overall Market
Break down a larger target marketing into smaller, more manageable segments with specific characteristics. Each group requires different marketing strategies because they have different wants and needs.
An example of market segmentation is the real estate industry. As a realtor, you probably want to focus on both home buyers and sellers. Again, that is the “everyone” bucket. This audience may be segmented into generational, geographical (subdivisions, neighborhoods, towns, cities), first-time home buyers, empty-nesters, baby boomers, retirees, senior/active living, distress (foreclosures, short sales, investors), renters, relocation. The marketing and promotional campaigns for each market segment will be very different.
Establish a game plan to find your customers
As you start defining your target markets by segments, think of who the customers will be. You’ll need to do some market research and study your target audience’s demographic, geographic and purchasing patterns. If you’re selling from a storefront, you need to know how many people in your target market live nearby. If you’re selling from a website, you need to learn about your prospective customers’ online behavior. By understanding how to locate your customers, you can help to start building a marketing strategy.
Potential customers are in a local, state, regional or national marketplace segment. If you have a retail store, geographic location of the store is one of the most important considerations.
Climate is a commonly used geographic segmentation variable that affects industries such as heating and air conditioning, sporting equipment, lawn equipment and building materials.
Decide if your business is going to do business on a local, regional, national or international level. Identify the geographic region where your market is located. Identify specific boundaries within which you will do business.
Potential customers are identified by criteria such as age, race, religion, gender, income level, family size, occupation, education level and marital status. Choose those characteristics of your demographic target market that relates to the interest, need and ability of the customer to purchase your product or service.
For example, a target market for a real estate developer selling luxury vacation homes include professional married couples approximately 40 to 60 years old with incomes of more than $150,000.
Many businesses offer products based on the attitudes, beliefs and emotions of their target market. What are the factors that influence customer’s purchasing decisions? Is it the desire for status, enhanced appearance or more money? Other psychographic variables include lifestyle, family, hobbies, status seeking, sports, conservative, and socially responsible.
Businesses, not just consumers, can also be described in psychographic terms. Some companies view themselves as cutting edge or high tech, while others consider themselves socially responsible. Still others see themselves as innovative and creative. These distinctions help in determining how your company is positioned and how you can use the company’s position as a marketing tactic.
Products and services are purchased to solve a problem or satisfy a need, however, there are a variety of reasons. It is your job to determine what those reasons are, such as: brand, loyalty, cost, how frequently and at what time of year customers in a segment use and consume products. It’s important to understand the buying habits and patterns of your customers. Consumers do not rush and buy the first car they see, or the first sofa they sit on, but will buy food products more often, more spontaneously and more frequently.
- What is the reason or occasion for purchasing your product?
- What’s the number of times they’ll purchase?
- What’s the timetable of purchase; every week, month, quarter, etc.?
- How long does it take the customer to make a decision to purchase?
Most businesses use a combination of the above to segment their markets. Demographic and geographic criteria will usually qualify your target markets so you can establish if segment members have enough money to purchase your offering or if they’re in a location that’s accessible to the product. The psychographic and behavioristic factors help to construct a marketing strategies designed to attract these buyers to your business.
For example, a staffing firm is limited to the geographic area where their office is located because their target customers want to work in that area. In their marketing and advertising they will appeal to psychographic factors such as the desire for stability and income.
Think about which segmentation criteria will be most helpful to you in segmenting your target market:
geographic _____Yes _____No
demographic _____Yes _____No
psychographic _____Yes _____No
behavioristic _____Yes _____No
Next, identify what is important to your customers and rank these on a scale of high, medium, low or not at all. Are they price sensitive? Are they looking for the highest quality? Is great customer service important? Or, is location a deciding factor?
Step 3: Research Your Market
After identifying and defining the possible segments within your target market, you must face the critical question of whether it would be profitable and feasible for you to pursue each identified segment, or to limit to just one or two segments. Be prepared to redefine your target market or to expand it over time.
What is the financial condition of your business? If you have limited resources at this time, you may want to direct your marketing efforts to only one segment. A concentrated marketing strategy designed to focus on one market segment is likely to be more effective than a diffuse campaign attempting to reach two or more.
Where is your competition? Are they ignoring smaller segments that you can possibly exploit?
Is the market new to your company? If so, it may be better for you to concentrate on one segment for now, and expand to others when your initial segment has been successfully penetrated. Developing new markets takes a greater commitment of time, money and energy.
Are you making assumptions based on your personal knowledge and experience? Your own personal experience and knowledge can make you believe that you understand your target market even before you conduct any research. For example, if you’re a fitness buff and want to start a business related to personal health, you may assume you know your customer. Never assume. You need to ask and talk to them to really understand them.
Identifying Your Market
___ Determine why a customer would want to buy your product or service.
___ Identify your products’/services’ benefits and features.
___ Decide which segmentation criteria will best segment your target market: geographic, demographic, psychographic or behavioral.
___ Segment your market.
___ Divide larger target market segments into smaller segments.
___ Decide if it would be profitable and feasible for you to pursue each segment.
Next we will talk about establishing Buyer Personas to custom your marketing strategy even further.