Unless you have limitless resources targeting is critical. Selecting which market segments you will choose to focus on initially is an important step and one that enables you to maximise return on your investment. Targeting is a little like the application of topical treatments. No, it is, really. Stick with me on this one.
Targeting relies on good segmentation
You have completed a good segmentation of your market based on factors that are meaningful and you have a set of segments that you are able to reach. Good work. Targeting is the active decision about which segments to invest in marketing to and which to ignore. Yes, that’s right. You are going to ignore some of your market. Here is why…
Imagine you have one 50 gram tube of cream to be applied topically for the treatment of X,Y,Z skin condition. The 50 gram tube represents your total resources for the foreseeable future due to the cream being in short supply. Your goal is to treat the condition as effectively as possible. You would apply the cream to the affected area and ignore unaffected areas without a second thought. You wouldn’t start at the top of the body and move downwards towards the feet. You would quickly run out of cream before you covered the whole body and you may or may not treat the affected area. This approach would clearly not be the most effective.
It may seem like an outlandish example and to an extent it is, however imagine your total market was the body and your target segment was the area affected by the skin condition. You might waste a huge amount of resources by applying them too thinly, everywhere they could be applied, rather than where they will have their optimum effect. This, in a nutshell is targeted marketing and is one of the most important steps in developing your marketing strategy
We’ve looked at optimising use of resources as one of the main reasons to take a targeted approach to marketing. How do you know which segment to target? If your segmentation is good you can fairly rapidly develop and understanding of which segments may be most attractive to you. Do some maths. Quantity the value of each segment by multiplying the population by the average monetary value of each member. Adjust for available market share (customers you aren’t already serving), a sensible timeframe and any other relevant factors and you will have a single number that tells you what that segment might be worth to you.
There are of course other factors that may be relevant such as how challenging it may be to reach and convert members of a particular segment, so include these in your thinking and it should become clear which segments to focus on first. Which it is important to note. Focusing on one segment now does not prevent your from focusing on another in due course. Targeting is about optimising use of resources.
Another reason to target particular segments is that you can tailor your product and how you market it to appeal more intensely to a particular segment. If you try and appeal to every segment of the market you risk only being generally appealing. Nobody wants to be generally appealing.
Equally if you market to all segments then you have to compete with other providers in all of those segments. Which makes things more complicated and costly. Target specific segments and you will only have to compete with providers also focusing on those segments. You may find a segment without any competitors!
Describe your segments
When you have chosen which segments to target and which to ignore, work on a description of the people in the segment. They should all be very similar if you’ve done your segmentation right! Include who they are, what they think, what they do and how they behave. It’s worth putting in some real thought as this description or profile is very useful during the latter stages of the marketing process.