Why You Should Segment Your Target Market
In this article you will learn:
- What market segmentation is.
- Defining criteria for proper segmentation.
- Benefits of segmenting your target market.
It's that time of year again: time for cooking the Christmas feast. But first, you need to decide what you want to cook: turkey or ham? cornbread stuffing or broccoli casserole? pumpkin pie or apple crisp? Then you must make a plan and organize your tasks. Everything can not be cooked at once, or in the same manner. Those that cook at the same temperature can be in the oven together. But don't forget to set your timer, you don't need anything burning.
Defining your target market and market segmentation is just like cooking your feast. You must first determine who your target market is. Who do you want your marketing team focused on? Once you have this firmly defined, you then need to segment your target market to determine the best marketing plans to implement.
Market segmentation is a way of narrowing a broad target market into groups of consumers with like needs and goals that you can more efficiently market to. Successful segmentation should abide by certain criteria. Each group should be:
- Identifiable and measurable - could be by sex, age, employment, income, education, locality, or any other distinction.
- Large enough to be profitable - if your market segments are too narrow, you may risk ignoring potential customers and losing their business altogether.
- Reached effectively - they should have similar interests: where they shop, television shows they watch, products they consume.
- Responsive to marketing - your product must fill the group’s needs in some way that sets them apart from the other segments.
- Stable and not expected to change quickly - if their needs and/or goals change, or a strong competitor becomes available and you are unable to maintain your customer base, you will have to start all over.
Let's say, for example, your product is a waffle iron. Your target market would be those who cook and those who (want to) consume waffles. But your marketing strategy for a stay-at-home-parent would be different than if directed towards a child.
Without market segmentation, you would use a mass marketing strategy. This assumes all consumers not only have the same needs but also respond to the same marketing technique. With this strategy, you may reach the maximum number of consumers, but there is a higher likelihood of the majority of them not buying into what you are selling.
Benefits of market segmentation:
- Encourages developing new market strategies
- Efficiently create marketing campaigns that effectively reach your target market
- Communication with loyal customers leads to product improvement
- Improved customer satisfaction
- Discover more applications for your product
- Can be energy efficient
- Locate niche markets your competitors are overlooking
- Reduce wasted time and resources directed towards those outside your target market
One other thing to consider, especially for small businesses, is the expense. You may spend a bit more on time and funds researching to properly divide the groups and to develop the best marketing strategy for each segment. But ideally, the end result will be more profitable.
Just like needing to know what foods you are going to prepare before you create your cooking plan, segmenting your target market is key to developing the proper marketing strategies. Segment properly, and you will see an increase in profits in no time.