Taking the time to identify and segment your target market is an essential first step to creating an effective marketing plan. While it is not the most glamourous or creative part of marketing, it is one of the most important steps to having a marketing strategy that works. I have decided to dedicate this entry to the topic of ‘target markets’ and ‘ market segmentation’ because it is an area that often comes up with my clients when devising appropriate and effective market strategies.
Taking the time to clearly identify and then segment your market using criteria that has meaning for your business is one of the best marketing investment decisions you can make. You will improve revenue when you take the time to do this part of a marketing plan properly.
Identifying your target market involves defining your customers – what group of businesses or individuals are most likely to purchase your services or products? Once you have your target market identified, you then need to segment your market.
Segmenting your market into groups with distinct needs, wants and behaviours allows businesses to generate targeted marketing campaigns that addresses specific customer needs. This helps to ensure the highest return for your marketing dollars. Segmenting your market allow your marketing/sales program to focus on prospects that are “most likely” to purchase your offering.
I am often asked, ‘what kind of criteria should I use to segment my market’? The criteria that you can use to segment your market needs to having meaning for your business and support your business stategy and objectives.
Generally speaking a businesses market is often grouped using general criteria including:
- industry sector (i.e. retail, manufacturing etc)
- company data (i.e. revenue, employee numbers, business function etc).
- geographic data (i.e. location of business)
- demographical data
Say for example, your target market is Corporate Australia. Without segmenting ‘Corporate Australia’, your sales messages will be far too general and not specific enough to address the unique needs of your audience. In this example, depending on the business positioning and strategy, you may segment the market by industry sector, by revenue size, by company type – i.e. public vs private and/or by employee numbers.
Once you have selected a specific segment (s) to focus on, then you can consider more subtle influences on the purchase decision such history of the purchaser with your business, future potential purchasing value etc.
So, next time you review your marketing strategy, spend time reviewing your customers/ your target market and how you segment your market. It will do wonders for your sales and marketing programs.