Marketing plays such a vital role in not only creating a game plan of how you’ll distribute your product and services, but also how you’ll promote them to consumers.
This consumer who will be most likely to purchase your product is called your target market.
This is your target to hone in on when it comes to making any essential marketing decisions. Such as deciding the location to distribute your product or the colors you choose to use in marketing materials which aid in brand recognition.
However, after identifying your target market it’s easy to get lost along the way when it comes to developing a marketing mix based upon your identified market.
There will be instances where perhaps your target market is too big and you’re not effectively honing in on a specific group of consumers who are in greater need of your product.
Or, perhaps your target market is too small and you could reach greater heights when it comes to expanding your market. Perhaps even through location.
A great way to solve this dilemma is a concept called Market Segmentation.
Market Segmentation is a marketing term that allows one to control the size of their target market. One of the advantages of knowing how to correctly segment your market is that you can easily differentiate your brand away from your competitors.
There are two ways to do this:
Combine your Target Markets
Increasing the size of your target market involves combining various segments of your market. For instance, perhaps your Florida-based company is selling swimsuits and you have identified your market segments to be young females ages 18-25.
This approach to honing in on your target market is great, but you are also limiting the profit you could make for your business. Since your business location is Florida, you have a wide range of individuals who you could sell to.
Consider widening your target market to include segments such as:
- 1) Pre-teens (boys & girls) ages 10-13
- 2) College men
- 3) Older Women ages 40+
One of the risks involved with combining your market segments is that it is much harder to develop a marketing mix which satisfies each market segment. A way around this is to turn your company into a lifestyle brand.
According to Forbes, a lifestyle brand is a company that markets it’s products or services to embody the interests, attitudes, and opinions of a group or a culture.
While a target market may consist of different people in terms of age, race, or gender, there are certain interests and lifestyle commonalities which can unite a target market. For instance, on the surface Apple products in theory should only interest those in IT or those who are computer savvy. However, Apple products such as the iPhone have proven to be a useful addition to many lives.
Divide your Target Markets
A great way to differentiate your company’s brand from the competition in an oversaturated market is to divide your market into segments and become a niche brand. Therefore, focusing solely on one segment of a market.
For instance, perhaps you own a startup that is developing a social media-type dating site.
Well, there are many dating sites out there that focus on singles who are searching for love. Therefore, making it much harder for your startup’s dating site to stand out from the competition and become noticed.
A great way to distinguish your dating site is to focus on the target demographics (statistical data such as ethnicity, gender, age) you’ve outlined when preparing your marketing plan. Most dating sites have a habit of only focusing on younger demographics.
A way to differentiate your brand is to pick a demographic that differs. Such as individuals (40+) looking for love later in life or even after a divorce.
When dividing your target market, there is a risk to be had with only focusing on one segment of a market. While you can gain a competitive advantage by focusing on a demographic that your competition is neglecting, you are also leaving out key aspects of you company’s brand.
In going back to the dating site example, a potential problem that could crop up is perhaps the segment you’ve identified (individuals 40+) is not as interested in being in the dating scene as much as perhaps twenty-something singles. Conducting effective market research techniques such as surveys and questionnaires is a great way to eliminate this problem beforehand.
A questionnaire is a great initial step to take when it comes to seeing if those in your target segment (individuals 40+) are looking to reenter the dating scene.
Related: Importance of Market Research in Entrepreneurism
Cover Image: Thousand Wonders