What Is Target Market Identification?
Target market
identification is the process of selecting one or more market segments or
groups of customers to target in firm’s marketing mix. The idea is that tailoring that mix to address the unique
needs and desires of your target market can ultimately be more profitable for
the firm than mass marketing toward every would-be buyer in the overall market.
Marketing mix includes: product (what you're selling), price (how much you're charging), place (where you're selling), promotion (how you're communicating the
product's benefits), and people (how
you and team can give a competitive edge).
How
Target Market Identification Works
No matter
how broadly appealing your product or service is, not everyone will need or
want to buy it. And gearing your marketing efforts toward the overall market
can waste time and money. To maximize your reach and profits, you may want to
consider a targeted marketing approach where you identify a smaller target
market from the overall market and focus your marketing mix on that market.
Target market
identification broadly involves identifying why a customer would want to buy
from you, breaking down the overall market into different market segments based
on shared characteristics, and then choosing the most feasible, profitable
market segments as the target market for your marketing mix.
For
example, let's say a local luxury men's formal wear shop. Your customer isn't
the entire consumer market or even every man. Rather, you might divide the
overall market into segments based on geographic, demographic, and
psychographic characteristics, focusing on high-income men who are within a
10-mile radius, between the age of 25 and 50, and desire status. You can then
focus your marketing mix on that target market to better reach the men who
actually need or want your products.
Besides
targeted marketing, other strategies include mass marketing (aimed at a wide
range of buyers) and product-variety marketing, when a firm deliberately sets
out to offer a wide range of products to broaden the customer base. But
businesses are slowly transitioning from away from mass marketing to target
marketing as the latter often makes for a more effective marketing mix.
Benefits
of Target Market Identification
The
advantages of identifying a target market include:
1.
More effective marketing mix:
If you know who your customers are, you can tailor the product, price, and
distribution channels to better meet their needs and desires.
2.
Helps you choose the right marketing channels: With a target market in mind, you
can promote
your products or services to
customers where they are, be it by posting on a given social media platform or
placing ads in a part of town where people in your target market regularly
frequent.
3.
Uses limited time, money, and resources more efficiently: Promoting to a narrower target market
as opposed to the overall market allows you to allocate your hours and money
more efficiently on the people who are most likely to need or want to buy from
you.
4.
Maximizes sales and profits:
All of the above factors can boost the appeal and reach of your marketing mix,
which can boost the volume of sales and improve your bottom line.
How
to Carry Out Target Market Identification
Follow
these steps for the identification of the target market:
1.
Assess product or service characteristics: Make a list of the features as well as
the benefits that come with your product or service. For example, a laundry
detergent might feature a colour-safe, stain-removal formula, with the benefit
being cleaner clothes that retain their bright colour.
2.
Identify why customers would buy from you: From the features and benefits you listed,
identify the key
selling point that
gives customers a reason to buy your product or service.
3.
Identify the most relevant dimensions of segmentation: Figure out the dimensions along which
you want to break down or segment the larger overall market into a smaller
target market. To do so, make a list of the major segmentation bases and decide
which are relevant to the majority of your potential customers.
Major
segmentation bases include geographic (customers are targeted locally, state-wide,
regionally, or nationally), demographic (customers are targeted by their
age, gender, income, and education level, for example), psychographic
(identification based on attitudes, beliefs, emotions, lifestyle, and hobbies),
and behavioural (identification based on various patterns such as
purchasing occasion and loyalty status).
4.
Segment the market according to specific criteria: Identify one or more specific segments
that will define the target market.
For
example, a men's and women's shoe retailer that chooses to segment the market
by the demographic characteristics of gender and the psychographic
characteristic of hobbies may decide to target men who enjoy running in their
performance running shoe campaign and women who play tennis for their tennis
shoe campaign.
5.
Choose the most profitable segments to include in the target market: Evaluate how worthwhile it would be to
pursue each identified market segment by evaluating your firm's financial
resources and the profitability of each segment, which segments your
competitors serve, and how established you are in the market. If you can't
afford to promote to all the identified segments, there's too much competition
for a given segment, or you're trying to break into a new market, you may want
your target market to focus on one segment.
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