When a specific product (or products) is aimed at a particular market segment (portion of the market) that segment becomes the ‘target market’.
This target market may be defined by age, gender, geographic, socio-economic grouping a mix of these or by other demographics
A targeting strategy is used in order to target these markets. Targeting may be selective, niche, mass, full coverage or specialise in certain products.
The targeting strategy decisions that you make will be influenced by:
The size of your business
Existing competition
Whether there is an established market
The customers’ needs and preferences
The amount you need to sell to make a profit
This strategy will define the customers that you want to service (your target choice).
In order to develop a targeting strategy it is necessary to make decisions that would include:
How many products are being offered
How many segments have been determined to exist in the target market
Which segments are to be targeted
Which products are to be offered in each of the segments
Targeting strategy is the selection of the customers you wish to service. The decisions involved in a targeting strategy include:
How many segments to target
Which segments to target
How many products to offer
Which products to offer in which segments (product positioning).
Defining your Target Market
To be successful in promoting a product or service, you must first get to know your market; know who you are aiming to sell to. It is also important not to confuse existing customers with your ‘target market’.
In order to develop a targeting strategy it is important to research your potential client base. Not understanding your potential market i.e. who will buy your products; can lead to bad decisions, incorrect pricing, marketing strategies that don’t work and even failure of the business. Demographic segmentation is the most popular base for determining customer groups mainly because customers’ needs or wants are closely related to the demographic variables. It consists of dividing the market into segments based on these variables such as age, gender family size, income, occupation, education, religion, race and nationality.
Some questions regarding your target market that you need to answer are:
How old are they?
What gender are they?
Where do they live?
What is their family structure (number of children, extended family, etc.)?
What is their income?
What do they do for a living?
What is their lifestyle like?
How do they like to spend their spare time?
What motivates them?
When you know the answers to the above questions you can use differentiated (target) marketing techniques i.e. the needs of your customers are better understood. This has the flow on effect of creating stronger customer loyalty; creating more total sales with a concentrated marketing effort in selected areas thereby gaining market position with specialized market segments. Target marketing of products or services reduces the cost of production, distribution, and promotion. However this method of marketing has the associated risk of competitors entering the market or your target market becoming saturated.