"In
marketing I've seen only one strategy that can't miss - and that is to
market to your best customers first, your best prospects second and the
rest of the world last."
-John Romero (Video game designer; DOOM and founder of iD Software)
Let's pretend you are putting a product out on the market! You want EVERYONE to buy your product. So you work with a marketing team and decide to target your product to everyone. In an ideal world this is how marketing would work; target a product to everyone and in turn have everyone respond and buy your product. However, this is not the proper way to market or how the market and customers will respond. A key factor in fixing this marketing dilemma is to use market segmentation.
Market segmentation is the dividing up of potential consumers into groups that "have common needs and will respond in a similar way to marketing actions." (Kerin, 220) Doing this not only will help increase the potential success of your product, but it also helps get a better idea and narrow down a target market. The target market is necessary because it is just not realistic to market to every consumer and be successful.
There are specific steps in segmenting and targeting a market. These steps are...
1) Grouping potential consumers into segments
2) Grouping the products that are to be sold on the market into categories
3) Developing a market-product grid and estimating the size of the market
4) Selecting target markets
5) Taking marketing actions to reach out to the target markets
For step one there are four basis of segmentation that make this step more successful. Grouping potential consumers into segments based on geographic, demographic, psychographic, and behavioral variables can do wonders for market segmentation and finding a target market! (Kerin, 225)
Let's take a closer look at the 4 basis of segmentation...
There are many variables that can factor into these different parts of segmentation as well. Here are some questions that might aid one in segmenting based off of these different variables.
Geographic
Proper segmenting and targeting to a specific market is key. There is a concept in marketing called the 80/20 Rule.
This rule states that 80% of sales are obtained through only 20% of consumers. If this is true in most cases, it illustrated the importance of segmenting, targeting, and finding that 20% of consumers that are going to use your product a lot and at some point hopefully become brand loyal.
(Kerin, 227)
Below is an image that illustrates step three of the segmenting and targeting process. It segments both the consumers (vertical column) as well as the products (horizontal row) and then places them on a grid to compare and get an idea at who is using what product, which will help narrow and segment even further in the future. This specific example deals with the line of Apple products.
When it comes time to select a target market after some segmenting there are also factors that need to be taken into consideration. One can't necessarily just choose their favorite target market or even the one that looks the best because sometimes there are constraints and limitations. Factors that should be considered in making this decision are...
Once all is said and done and a target market is chosen then it is time to reach out to them using the marketing mix and 4 Ps (Blog post #1 "Marketing: It's more than just ads. It's a mix."). Evaluating the best place, product, price, and sources of promotion after segmenting and targeting will be so much more beneficial than just throwing your product out on the market and trying to get everyone and anyone to buy it. It is all about narrowing and tailoring as well as dividing and conquering!
If you want to know more I would highly recommend reading this blog post about market segmentation linked HERE! It was interesting, informative, and an enjoyable read so I would check it out!
Cited
Kerin, Roger A., Steven William. Hartley, and William Rudelius. Marketing. Boston, MA: McGraw-Hill/Irwin, 2004
Let's pretend you are putting a product out on the market! You want EVERYONE to buy your product. So you work with a marketing team and decide to target your product to everyone. In an ideal world this is how marketing would work; target a product to everyone and in turn have everyone respond and buy your product. However, this is not the proper way to market or how the market and customers will respond. A key factor in fixing this marketing dilemma is to use market segmentation.
Market segmentation is the dividing up of potential consumers into groups that "have common needs and will respond in a similar way to marketing actions." (Kerin, 220) Doing this not only will help increase the potential success of your product, but it also helps get a better idea and narrow down a target market. The target market is necessary because it is just not realistic to market to every consumer and be successful.
There are specific steps in segmenting and targeting a market. These steps are...
1) Grouping potential consumers into segments
2) Grouping the products that are to be sold on the market into categories
3) Developing a market-product grid and estimating the size of the market
4) Selecting target markets
5) Taking marketing actions to reach out to the target markets
For step one there are four basis of segmentation that make this step more successful. Grouping potential consumers into segments based on geographic, demographic, psychographic, and behavioral variables can do wonders for market segmentation and finding a target market! (Kerin, 225)
Let's take a closer look at the 4 basis of segmentation...
There are many variables that can factor into these different parts of segmentation as well. Here are some questions that might aid one in segmenting based off of these different variables.
Geographic
- Does the potential customer live in a city or rural area?
- What is the population/ size of their living location?
- What is the weather like where they live?
- How old is the person?
- What gender are they?
- What is their race and/or ethnicity?
- What year were they born or what generation are they?
- For example: Baby Boomers, Generation X, Generation Y, Millenials
- Are they married?
- What do they do for a living?
- How educated are they?
- What is their income?
- What type of personality does this person have?
- What do they value?
- What do they need?
- For example: quality, low price, ease of purchase
- What type of store do they generally shop at?
- How do they hear about a product/ main sources of advertising?
- What do they look for in a product?
- How often would they use/repurchase the product?
- How much do they know about the product
Proper segmenting and targeting to a specific market is key. There is a concept in marketing called the 80/20 Rule.
This rule states that 80% of sales are obtained through only 20% of consumers. If this is true in most cases, it illustrated the importance of segmenting, targeting, and finding that 20% of consumers that are going to use your product a lot and at some point hopefully become brand loyal.
(Kerin, 227)
Below is an image that illustrates step three of the segmenting and targeting process. It segments both the consumers (vertical column) as well as the products (horizontal row) and then places them on a grid to compare and get an idea at who is using what product, which will help narrow and segment even further in the future. This specific example deals with the line of Apple products.
When it comes time to select a target market after some segmenting there are also factors that need to be taken into consideration. One can't necessarily just choose their favorite target market or even the one that looks the best because sometimes there are constraints and limitations. Factors that should be considered in making this decision are...
- Market size
- Is the market too small to even be worth targeting?
- Is the market too large to focus on and reach?
- Expected Growth
- Is there expected growth in reaching out to this target market?
- Is there potential to expand?
- Does it look like your product will just fizzle?
- Competition
- Is there too much competition within the market you are looking to target?
- Is it worth it to try to beat out the competition?
- If you enter this market and/or segment is there expected to be competition in the future?
- Cost
- Is the cost too high to reach out to this target market?
- Resources
- Do you have the resources to serve this target market?
- You can have all the best ideas and advertisements in the world, but if you do not have the physical resources or manpower to serve and meet needs there will not be success.
Once all is said and done and a target market is chosen then it is time to reach out to them using the marketing mix and 4 Ps (Blog post #1 "Marketing: It's more than just ads. It's a mix."). Evaluating the best place, product, price, and sources of promotion after segmenting and targeting will be so much more beneficial than just throwing your product out on the market and trying to get everyone and anyone to buy it. It is all about narrowing and tailoring as well as dividing and conquering!
If you want to know more I would highly recommend reading this blog post about market segmentation linked HERE! It was interesting, informative, and an enjoyable read so I would check it out!
Cited
Kerin, Roger A., Steven William. Hartley, and William Rudelius. Marketing. Boston, MA: McGraw-Hill/Irwin, 2004
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