Defining you Primary and Secondary Target Markets is the most important and most strategic marketing decision that you make for your business (That’s why we deal with it first!)
It is this decision that has the potential to point the ‘ship’ (i.e. your business or brand) in the right or wrong direction.
Some commitments to get right
I recommend that you commit to investing significant effort (time, research, strategic thinking and analysis) into defining the most attractive and profitable target markets for your brand.
I also recommend that you then commit to this defined target market and use these decisions to shape all other marketing decisions (i.e. the numerous marketing, promotions and sales decisions that follow).
Who, When and What?
An article on Target Market Selection just would not be complete without at least a couple of old chestnuts (and/or clichés) such as:
You can’t be all things to all people
To me this statement summarises the futility of striving to utilise limited marketing funds to present a brand or business in a way that caters to all customer groups.
I think a variation of a quote by Abraham Lincoln says it a little better:
“You can please some of the people all of the time and all of the people some of the time but you can’t please all of the people all of the time”
To me Abraham Lincoln’s saying draws our attention to the variations in consumer’s needs, wants and behaviours which makes it so difficult to please all customer groups with the same brand offering.
(P.S. I think Abraham Lincoln talked in terms of ‘Fooling the people’ and some politically correct marketer must have come along and tweaked it to ‘pleasing the people’)
Those of you who have participated in any of our Baker Marketing Strategic Marketing seminars or workshops would have heard me share the above as I strive to highlight the need for a clearly defined Target Market.
Another quote that comes to mind is:
“He who wants to protect everything, protects nothing”
(From ‘The First and Last’ written by World War two hero Adolf Galland1954 ….yes that’s right, from the side that did not win.)
Frederick Two of Prussia (also known as ‘Frederick the Great’) made a very similar quote about 200 years earlier but I prefer Adolf’s version. (It’s more marketing savvy!)
To me this last quote nails the overriding reason why you must do your best to define a clear and relevant target market that comprises of the most attractive and profitable customer groups for your business.
That overriding reason is that if you do not define a clear target market you risk spreading your marketing resources too thinly or stretching your brand too far – either can be disastrous for sales and profits.
So please invest wisely!
So please invest appropriate time, research, analysis and energy in selecting the most attractive (i.e. profitable) target markets and then using this target market decision as a major benchmark for all other marketing decisions.
Doing this will then help you shape the personality of your brand and make most other marketing decisions and investments that follow relatively straightforward.
How do you define the most attractive or profitable Target Markets?
Like most important and strategic decisions in your business there is a need to do some research, collate information, analyse and review this information and then set some priorities.
Sounds legit, but how do you go about achieving the right result?
This is where a structured approach to marketing planning can be helpful. So to give you a starting point I have outlined the key steps that I recommend to our private clients when assisting them to analyse and define their most attractive and profitable target markets.
A structured approach to Target Marketing
I have summarised what I consider to be the most important steps in defining the target markets that are the most attractive and profitable for your business.
- Market Research
- Segmentation and Analysis
- Defining Priorities
- Customer Profiling
Target Marketing 101
Naturally, to arrive at a concise summary of such an important topic I have had to rationalise the information that I share with you.
The topic of defining your target markets is worthy of semester long university subject.
However, most business owners and operators that I know do not have the time or the patience for such a war and peace which is why I recommend that you follow the steps that I have outlined below.
Five (5) Steps to Defining your Target Markets
Step 1 – Market Research
Research your marketplace and customer groups
This is where you investigate your marketplace and collect as much relevant and useful information as you can.
Your first step should include some desktop research (i.e. the internet) followed by some close examination of your competitors (i.e. Mystery shopping your competitors).
A bit of self-analysis is also very useful (I recommend Mystery shopping your own business).
Key information sources include:
- Competitor websites and mystery shopping
- Industry bodies, Government departments and other information portals
- Customer research if possible (consider asking your customers for their opinion)
- Pricing and product range review (review competitors and your range)
- Numerous other sources of information that may be specific to your product/service category
Step 2 – Segmentation and Analysis
Segment your customers into homogenous groups and analyse attractiveness
This next step involves two parts, namely:
- Market Segmentation
- Segment Analysis
Firstly, Market Segmentation, which requires breaking down your total market place into homogenous segments (i.e. market groups with similar characteristics).
In my last corporate role I was involved in marketing dairy products so whenever I hear the term ‘homogenous’ used in marketing I instantly think of white milk, iced coffee and Friesian dairy cows (as you can imagine this can be confusing for me).
However, when segmenting your marketplace it is useful to separate and categorise your different customers into groups of customers that have similar characteristics in terms of how they use your products/services, make decisions, education/social/geographic factors, and exposure to marketing messages etc.
Marketers call these groups of customers with similar characteristics ‘market segments’ (i.e. picture narrow segments of the total cake or in this case your total marketplace).
This grouping or segmenting then allows you to move on to the second part of Step 2, Segment Analysis which is where you then review and analyse relevant available information (i.e. your market research from Step 1 above).
Our review and analysis is intended to help you decide which market segments are more attractive and profitable for your business (i.e. prepare us for Step 3 below).
Step 3 – Defining Priorities
Identify the most attractive market segments
Step 3 is where you complete the all-important process of evaluating each market segment and ranking them in terms of attractiveness, profitability and overall importance and priority for your business.
I find the following criteria useful when evaluating market segment priorities for our clients:
- Total potential for profit (i.e. what is the total potential of a market segment versus how much profit are you currently generating from it)
- Total potential for conversion (i.e. how easy or difficult will it be for you convert prospects to customers when targeting a particular market segment)
- Total potential for long-term loyalty (i.e. what is the potential for a long-term income stream either directly from the market segment or from referrals associated with the market segment)
Your overall assessment of the above three criteria then forms your final ranking of your market segments.
There is a commercial trade-off associated with many business and marketing decisions and your selection of target markets is no different.
It is critical that you prioritise your market segments and define the most attractive and profitable segments as being your primary, secondary and tertiary target markets.
Step 4 – Customer Profiling
Develop a detailed description of your target markets
Customer profiling is simply creating a detailed picture (or profile) of your primary target market. I recommend that clients start to develop a detailed description of what a ‘typical’ target customer would look like and how they would behave.
Creating a profile of this target customer would include describing attributes such as:
- Social status
- Geographic location
- Likes and dislikes
- And much more
I even recommend that you go as far as to give your target market a name. Yes, that’s right name them.
I sometimes find that at first my clients find this suggestion a little odd. (In fact sometimes my clients find me a little odd.)
However, after they have selected a name that they feel is in keeping with the age, sex and status of their target customer, it assists them to build a much more vivid picture of their target market.
It also makes the process more efficient and effective when considering a change or decision in the context of your target market because you can ask yourself or your team:
“What would Margaret or John think of this?”
All involved will instantly know that you are referring your Primary Target Market and the use of the profile name will help to instantly conjure up a picture of who that person is.
Step 5 – Focus
Focus your marketing resources on your defined target markets
This last step means that I am asking you to commit to your target market decisions and to then focus your marketing resources, time, brain-space and energy on your defined primary and secondary target markets.
If you have completed steps 1 to 4 thoroughly then you will have identified certain market segments that are more attractive and profitable for your business.
Therefore, if you have limited marketing resources (money and time etc.) then it makes sense to focus all or the majority of these resources on targeting these most attractive segments (i.e. your primary target market).
Shaping all other Marketing Decisions
This means that when making all other marketing, promotions and sales decisions you reflect on your choice of target markets and ask yourself questions along the lines of:
- Would Margaret/John like this decision/change/addition etc.?
- Is this decision/change/addition etc. relevant to Margaret/John?
- What would Margaret/John think of this decision/change/addition etc.?
- How would Margaret/John respond to this decision/change/addition etc.?
(‘This decision/change/addition etc.’ could be anything from an advertising decision to a minor colour choice. Margaret/John are, of course, your Primary Target Market.)
NOTE TO SELF: If the answer to any of the above three questions is negative – think very carefully before proceeding!
Make no mistake!
Defining your target markets is the single most important marketing planning and decision-making area for your business and brand.
The quality of decisions made regarding target markets impact dramatically on your future sales profits and brand value.
Failure to make a commitment to specific target market segments means you risk spreading your resources too thin or targeting market segments that will not be profitable for your business.