Identifying the target market starts with segmentation. Once you understand your customers and are able to segment the market, you can identify the target market with the most potential. There is a process of segmenting the market and then selecting and reaching the target segments. The process has five steps as shown in the figure below. Show
©University of Waterloo Step 1: Group Potential Buyers into SegmentsThere are five main criteria to use when forming the segments:
When segmenting, we can pick from many segmentation variables. There are four main dimensions of segmentation: Geographic, demographic, psychographic, and behavioural segmentation. The table below shows these dimensions and the variables corresponding to each dimension.
Concept Check Question: Which of the following statements is false regarding segmentation? Education is a demographic variable. User status is a psychographic variable. Personality is a psychographic variable. Usage rate is a behavioural variable. Step 2: Group Products to be Sold into CategoriesBusinesses pay close attention to the differences in the needs of consumers in each segment. In order to address the needs in the best way possible, businesses create differentiated products. These products could be different based on the features of the product, pricing, distribution, etc. As you have learned, companies have full control over the marketing mix elements (4Ps) which allows them to create different mixes of the 4Ps to create differentiated products. Segmentation and green consumerismIt is very common to apply demographic segmentation, or segmenting a market based on population characteristics. However, there are many other variables that could be used, as you have seen in the chart above. In addition to the variables listed so far, there is also segmentation based on environmental friendliness. Companies with a green focus pay attention to segmentation aligned with consumers’ environmental orientation. One important point is that segmentation can be done using a combination of different variables rather than just a single variable. Using a single variable is also fine but in many cases a single demographic variable may not be sufficient in understanding and segmenting a given market. As a result, marketers combine a number of variables that might be relevant to their target market. Retrieved from https://www.clinique.ca/product/ Example: Cosmetics companies, such as Clinique, combine many variables in their segmentation, specifically gender, income, and occupation. These variables help to distinguish segments for different lines of cosmetic products. Step 3: Develop a Market-Product Grid and Estimate Size of MarketsYou have seen an example of a market-product grid from Sleep Country. Below is an additional example from a fast food restaurant that is located next to an urban university. We label the market segments in the horizontal rows and products in the vertical columns as shown in the table below. The market sizes are estimates from zero to three. Zero means no potential. One represents small potential. Two represents medium size potential. Three shows the most potential.
The blue-shaded area in the table shows the target markets. The reason behind the selected target market is coming from the potential market size estimates. There is almost no potential for breakfast. For that reason, the restaurant decided not to serve breakfast at all. The non-student segment is also eliminated from the target market due to lower potential compared to the student segment. The restaurant still serves non-students but all marketing activities are directed towards students since they are promising the highest market size estimates. Step 4: Select Target MarketsOnce you develop a market-product grid, it is fairly easy to identify the target market from the grid based on the highest market size estimates. The grid is the tool to use when selecting a target market. Critical Thinking Activity: Develop a market-product grid for your group project. Remember that you are not identifying their current target market. Rather, you are developing the grid based on your market-product strategy and segmentation. Concept Check Questions: 1. The first step in segmenting and targeting markets that link customer needs to marketing actions is to group potential buyers into segments. group products to be sold into categories. develop a market-product grid and estimate size of the overall market. select target markets. 2. In a market-product grid, what factor is estimated or measured for each of the cells? the size of the market in each cell the competitive products in each cell the governmental regulations applied to each cell the purchase method applied to each cell Step 5: Take Marketing Actions to Reach Target MarketsIdentifying target markets makes it possible to take actions towards the segments we include in the target market. Based on the characteristics of each segment, marketers decide on the best tools to reach out to these segments. We will cover promotional strategies in future lessons. What are the 3 steps in target marketing?3 simple steps to targeted marketing. Step 1: Identify your target market. The first step you need to take is to define your target market. ... . Step 2: Reach your target market. ... . Step 3: Identify your type of customer. ... . Know your target market and your business will grow. ... . Start identifying your own target market.. What are the 3 types of market segmentation?Demographic, psychographic, behavioral and geographic segmentation are considered the four main types of market segmentation, but there are also many other strategies you can use, including numerous variations on the four main types.
What are the steps in target marketing?On this page. Step 1: Identify Existing Ideal Customers and List Their Characteristics.. Step 2: Identify the Problems You Solve and the People Who Benefit the Most From Your Solution.. Step 3: Evaluate Your Data and Create Your Target Market Draft.. Step 4: Compare Your Target Market Draft Against Real People.. |