Published: 11 September 2014
In a world of ‘big data’, where data mining is done by laptops rather than giant boreing machines and data warehousing is stored in smaller spaces than an Argos catalogue content, the importance of extracting information for understanding target markets has never been more prevalent. Yet some organisations still don’t collate or use the gold dust that is right in front of them in terms of customer details.
Why is this so important? Well if you’ve ever been in a supermarket without a shopping list and spent twice as much as you thought you would you may understand my meaning. If not, read on…
Not defining your target market (i.e. creating a shopping list of all the criteria that makes up the perfect customer) means that you are effectively targeting everyone you possibly can, meaning you are spending a lot of money trying to reach consumers who, for all the best will in the world, will never be interested in what you are selling. Basically, you enter a supermarket just for milk and come out with cheese, bread, sun tan lotion and a bbq set (which you don't really need).
Segmenting a Target Market
There are a number of ways to segment a target market and it is very much dependent on what you are selling and what you need to know about your customer base. For example in a butchers shop the likelihood is that you would be interested to find out who is a vegetarian and who eats meat, but if you are selling books then this probably isn’t very relevant at all.
So how do you segment your market? This can be done in three different ways:
Demographics cover a wide range of distinguishing factors that facilitate categorising a population by the similarities between each individual (a little like a census). Gender, age, employee status, marital status and even geographical location can be quantified in order to segment a market that express similar characteristics.
Example: If you were running a school or nursery you would benefit from knowing which household has children and their age.
Why consumers behave in a specific way helps to understand what is important to them and why they show such behaviour.
Example: Consider a leisure facility. Knowing and understanding the different customer habits will allow them to target marketing activity more effectively (i.e. someone only using the swimming pool would be interested in knowing when the pool timetable changes whereas this would not be of interest to someone who only uses the gymnasium).
Probably the hardest to quantify of the three, psychographics provides a deeper understanding into consumer values, attitudes and lifestyles (VALs). The potential questioning here is almost endless and requires a level of knowing exactly what you want to understand or need to know. Understanding why consumers buy a particular product or service over another is a powerful asset that cannot be underestimated.
Example: If you sell musical instruments it would be beneficial to understand the VALs of consumers, are they interested in learning and what type of music do they listen to and why? If everyone that comes into the store has distaste for classical tones, then playing Bach’s Toccata And Fugue In D Minor in store would not create the right ambiance.
A Businesses Business
In the same way market segmentation is used in the business to consumer world, it can also be utilised in the business to business domain, it is just a slightly different list of variables being used to compile a database of businesses. Instead of focusing on age and gender, these statitics are replaced with business size, usage rates, industry type and product useage.
Ready, Aim, Fire!
Once you are in a position to start to communicate effectively with your segmented market, then the efficiencies in both time and monetary savings will be apparent.
Remember, it is all about understanding the who, what, why, where and when. Positioning yourself as the organisation that provides what your target market is looking for in a way they are happy to consume it. In defining your target market you will be more efficient and effective in your marketing communications, gaining a greater ROI.
So next time you end up holding a host of unwanted toiletries waiting to pay, just think, if you had written a shopping list then you would have segmented the supermarket into the items you are specifically targeting saving you a fortune on unrequired toilet roll!
Remember, every little helps!
This blog was created by Pete Sumpton the very knowledgable Marketing Director for moocreations and a Digital Marketing Communications Tutor for Professional Academy. For more of his insights in to the world of Digital Marketing Communications follow moocreations on Twitter or download a prospectus for a Digital Marketing or Marketing Communications Qualification accredited by the CIM's CAM Foundation!
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