Marketing: Finding Your Target Market

Target Marketing

Marketing, of any kind, is virtually useless unless you are marketing to the right audience. There's no point in telling a group of motor mechanics all about the latest innovation in carpet cleaning techniques... they're simply not interested.

It's the same with marketing. If you want to gain someone's interest then you'd better talk to the 'interested' party.

There's a saying in the marketing world that goes like this...

"If you want John Smith to read your advertisement, then write a headline that says JOHN SMITH, READ THIS AD.

You see, it's talking directly to the interested person and that's what Target Marketing is all about.

Identifying a target market.

One of the biggest mistakes most business owners will make in their eagerness to get customers is to try to be everything to every potential customer. The drawback with this approach is that it weakens their marketing emphasis. Remember, if you want John Smith to read your ad, make sure you write it so that John Smith 'wants' to read it.

If it's unclear who you want to read the ad, then how can you write the headline???

Therefore it's essential for you to clearly identify exactly who your 'target market' is.

Your Target Market can be segmented into a number of different 'Market Segments'. And each of these Market Segments will generally fall under two broad types of markets:

a. Industrial
b. Consumer

The industrial market is the market which generally sells their wares from business to business. Whereas the Consumer market is, as the name suggests, is the actual consumer itself.

Within each market exists a number of segments:

According to Regina Gaujers, Julie Ann Harper and Jennifer Browne the consumer market can be divided into:

* Department stores,
* Convenience stores,
* Food outlets and
* Specialist retailers.

The consumer market, which is by far the larger, can be further divided by:

* Geographic,
* Demographic,
* Psychographic and
* Operational Variable Segmentations.

Geographic Segmentation is based on factors like:

* Climate
* City vs Country
* Coastal vs Country
* Suburb Etc.

Demographic Segmentation is based on factors such as:

* Sex
* Age
* Marital Status
* Occupation
* Education
* Income
* Etc.

Much of this type of information nowadays is readily available from the Bureau of Statistics via the Internet at www.abs.gov.au

Psychographic Segmentation is based on factors such as:

* Social class. Upper, middle, etc.
* Personality type. Eg, whether they are D, 1, S or C or so on.
* Lifestyle.

Operational Variable Segmentation is based on factors such as:

Buying patterns. In other words, does the customer buy on impulse? Do they buy through catalogues? Are they 'price' shoppers? Etc

There are many ways to 'segment' a market and as you are trying to identify just who buys your goods and services, they need to look also at combining segments. For example, if you were selling 'carpet cleaning' services, then its market segment might be something like. Couples in their 30s, who own their house within the suburbs with a disposable income of "x" thousand dollars.

This would then begin to tell you just who 'John Smith' really is. Once you've unveiled this identity, you can now begin to give thought to a headline that will get this market segment to read it. You are also able to begin to identify where the best place or places are to place your advertising pieces.

Somewhere within this market segment is your 'Target Market'...

Identify your "Target Market"

"Jack of all trades and master of none". Is too often the 'catch cry' (and downfall) of many a businesses. This mainly arises when a business owner has not done sufficient research to identify their target market nor applied appropriate analysis to that target market.

All too often business owners try to sell to too many different markets or groups and end up costing themselves money by having stock sitting around getting old.

YOU CAN'T SELL TO EVERYONE ALL THE TIME...

This is why we break down our market segments and from there identifying which of that segment is the intended or 'target' market.

Once you have identified the market segment its then simply a matter of choosing a 'niche' portion of the market segment that is most likely to be interested in what you have to offer. The aim is to identify a market where you can 'lead' the way and set the benchmarks.

Once you have identified your target market you must make sure that you

DO NOT WASTE TIME TRYING TO SELL TO OTHER MARKETS.

If a 'suspect' is:

* not in need of your client's product or service or does not want it,
* if they do not have sufficient 'disposable income' to spend on your client's product or services, and
* if they do not have the ability to make the decision to purchase,
* then your client is wasting their time in even trying to sell to them

Furthermore you must make it clear that a potential customer will base their decisions on what is called the "marketing mix".

The Marketing Mix

According to authors Gaujers, Harper and Brown, the Marketing Mix "refers to the range of activities used by businesses to market their products/services to buyers." .

It is critically important that you have the appropriate marketing mix for your target market. The marketing mix is made up of what is known as the 4 Ps...

* Product
* Place (Distribution)
* Price
* Promotion

Product: Product should be placed at the top of the list as it is by far the most important of the 4 Ps. Product does not simply relate to the actual, 'commodity' that is being purchased it relates also to sales, service, after sales service, packaging, friendliness and helpfulness of staff, convenience, buyer's comfort, choice, and so on; in other words the 'entire' product as a 'package'. This reinforces that the customer will often base their decision to purchase not just on the commodity but on the 'overall' experience and post purchase experience.

Therefore it is imperative that as part of the 'Product' mix you have to be reassured that you have made the right decision. This can be done in many different ways, however suffice to say that some 'after sales' contact is usually an effective way to handle PPD.Another aspect that fits into the 'whole' product is a phenomenon that occurs after the purchase has been concluded. It's called Post Purchase Dissonance (or 'Buyer's Remorse). This is a psychological phenomenon that occurs in many people after they have purchased a commodity.

It does not happen with every purchaser however it does often happen with the more ,expensive' type purchases. Another way of looking at it is to say that the customer now has the 'guilts' for purchasing the item. They may, if the regret is sufficiently strong, decide to return the goods or back down on the agreement.

Place: Place covers more than the location of your place of business. It also refers to stock layout, methods of distribution and so on. So when considering 'Place' as a facet of the marketing mix ensure you take all these factors into account

Price: this is the allotted price to a particular product or service. In order to be effective, price must take into account ALL costs involved in the production of the product/service plus any additional profit.

Factors to take into consideration when determining price are:

* What price can your target market handle?
* Your break even point
* The marketing mix
* Production costs

For your client to determine their 'base' price they can use the following formula:

* Direct costs
* Indirect costs
* Preferred margin
* Price Sensitivity Analysis
* Product/ Service demand
* Market trends
* Competitors pricing

DC + IC + PM = MP
Where:
DC equals Direct Costs involved in the production and/or provision of the said product or service, eg, CoGS, wages etc
IC equals Indirect Costs as for the above, for example electricity, rent, etc
PM equals the 'desired' Profit Margin, eg 10%
MP equals the 'base' price

Other methods of determining price are as follows:

Demand based pricing. This method takes into account what the market (your client's target market) will bear. This method works for determining the 'ceiling' price of the goods and services.

Competitive based pricing: This method will tell your client if they are 'within' a range of pricing that the target market is prepared to pay.

Note: There are many other pricing structure options available to you so further and extensive reading is encouraged in order to expand your knowledge.

Promotion: With the previous 3 Ps considered you can now analyse the promotion aspect of the 4th P.

Promotion is the effective communication of your products and or services to the target market. At this point it is important to consider the following:

* Budget
* Marketing strategy
* Promotional methods
* Legal aspects

It is important to set a budget and stick to it. Generally speaking, 4% seems to be about right for SME. Once a budget is set, then determine a 12 month strategy, determine what to do month by month and stick to it.

Look at what promotional methods might be suitable. Yellow Pages? Direct Mail? Newspaper advertising? TV advertising?

And last but certainly not least; be aware of the legal ramification if your promotion does not follow the guidelines of the ACCC. For instance misleading advertising.