Your Target Market and the Need to Focus

If you read my blog last week, it talked about the six components to your marketing strategy.  Now I want to go through each component over the next six weeks one by one.

Market is a generic word used to describe any group of people or organization who are or might become customers of your product or services.  However, not everyone is a customer of your products or services.  How do you go about target marketing and find out who is your most probable customer? If you had the ability to target only those who are most likely to buy – your most probable customers – your business would most likely be very successful!!  Knowing this information, you could direct all your marketing efforts specifically to people who are likely to buy, rather than to a wide spectrum of people, many of whom are not likely to buy from you.

Your first step is the need to focus because Good is the enemy of Great and if you want a Great Marketing Strategy, you must first identify your target market.  You should be looking at your overall market and identify its various subgroups or “market segments.”  Once you identify these segments, you should evaluate them and select the market segment which will produce the best results for your business and this will become your “primary market segment” and the other identified market segments that produce desirable results are called secondary market segments or as Michael E. Gerber of the E-Myth refers to as “flanker market segments.”

Now you are probably asking – how do you describe a market segment and what enables you to differentiate one market segment from another while trying to differentiate the segments and identify prospective customers to attract to your business.

We use demographics all the time in business in finding probable customers.  Every time you speak of someone’s statistics that include address, age, income, college degree, the size of a family, married or divorced, income, you are speaking the language of demographics.  Demographics are the objective, directly observable characteristics that best describe people and organizations.  You see it all the time when you fill out a form to receive something in return.   The form will ask specific targeted questions to best identify if you fit the target market for that company or to put you in a market segment for that company.  Standard demographics include the following elements:

Age                                Education            Ethnicity
Employment Status        Race                    Income
Location                         Occupation         Family Status
Gender                           Marital Status      Physical Characteristics

When finding demographics for commercial customers, keep in mind that a person (not a business) makes the buying decision.  The decision process is different for organizations and is influenced by additional factors that depend on the nature of the organization or the persona of the organization.  The demographics of an organization include:

Industry
Product Line
Size of Business (sales, # of employees, etc.)
Type of Business (Manufacturer, Distributor, Retailer, etc.)
Location (Headquarters, # of Branches, Operation Locations)
Geographic Scope of Business (Local, Regional, National, International)
Financial Status of the Business (Revenues, Profits, Leverage, etc.)

How can you get the demographic information you need, now that you have identified the individual and business questions?  The best source is objective, professional market research.  I am in no way a certified market research company, but I realize the importance of finding out this information.  Here are some good sources of demographic information:

Formal Approaches:

•    Use a Professional Market Research firm if you can afford it.
•    Get free information from sources such as:
1.    Dept. of Commerce
2.    Chamber of Commerce
3.    Small Business Bureau
4.    State and Local Governments
5.    Bureau of Labor Statistics
6.    Local Newspapers and Magazines
7.    Census Bureau
8.    Library Reference Sections
9.    The Internet (Google, Social Media)
•    Have customers complete a demographic questionnaire on your Web Site or via Survey
•    Conduct a telephone survey (preferably with an outside source so you can get reliable information)

Informal Approaches:
•    Collect data in-house through observation of your customers by asking well-placed questions to get the information that cannot be observed.  Be sure to document your findings.
•    Create a Customer Demographics Questionnaire to document your findings.
•    Gather information on a monthly basis during seasonally different months of the year to compile accurate data.

Now that you have compiled your lists and completed all of the above, it is time to identify and break down the data to identify your primary target market and your secondary target markets also known as “flanker market segments.”

Be sure to set up a product-market grid for your business that takes into account your customer and your product or services you sell.  On another section of the grid, list your products or services you sell and the various types of customers you serve.  Be sure to describe your products and/or services in terms that differentiate them in the eyes of your customers.  Now go in and fill in the various information.  On another section of your grid, identify your market segments.  Fill in the information for each segment in the grid with the demographic information received.  Now select your most important segment and designate it as you primary target market.  If you have other important segments, describe them as secondary target markets.

Be sure to review this information and update it periodically to keep the information current.

Next week we will talk about Developing your Position Strategy.