Seriously, the question may sound simple, but the answer is complex. The fancy marketing term for this is called market segmentation. It’s the reason why the Golf Channel and Lifetime Television networks exist. It’s why the same company that owns the Intercontinental luxury hotels also owns Holiday Inn and Candlewood.
Market segmentation means separating the buying public into groups based on common characteristics, then sorting them by their propensity to buy your stuff. Segmentation allows you to concentrate your sales resources on the people who are most likely to buy your products.
You’re going to need to start out with some idea of a market segment when you offer a product. Some companies discover that they should have more than one product, to target multiple segments at once. That’s why Intercontinental Hotels Group owns a luxury hotel chain (The Intercontinental), a budget hotel chain (Holiday Inn) and one in between (Candlewood).
On the surface, these hotels look like they might be competing with one another, but they really don’t. The typical customer for The Intercontinental wouldn’t want to stay at a Holiday Inn, and the typical customer at a Holiday Inn couldn’t afford the Intercontinental. This way, each hotel can chase a different market segment.
Here are five ways you can tell if a market segment might be useful to you:
The people in it can be easily identified – say, suburban women over 30, or businessmen between 25 and 40 who play recreational sports.
It has enough people and buying power to make it worthwhile to target. If you have a product that only appeals to Icelandic-American men between the age of 18 and 25 who dropped out of high school and play semi-pro water polo, you should expect to have a marketing problem.
The people in the segment behave similarly toward marketing. A marketing message tailored to suburban soccer moms probably won’t resonate with rave-culture college students, and vice versa.
They more or less need the same stuff, and they need your stuff more than other groups do. You shouldn’t expect to sell a lot of trance-music glowsticks to the aforementioned soccer moms – and you shouldn’t try.
You have some way to reach out just to them. This last point is why the Golf Channel works. You might ask yourself why someone thought there’s enough interest in golf to merit its own channel, but advertisers know exactly who is watching – middle aged male weekend duffers. Media buyers New York Interconnect reports that about seven in ten Golf Channel viewers are male, almost half are managers or professionals and about 40 percent have a college degree.
The hard part is figuring out which groups want your stuff more. Score.org, a nonprofit offering business advice for startups and small companies, has five suggestions for figuring out who your customers are:
Determine what you need to know. For example, what do they like or dislike about your product or service? How do they feel about the way your company handles complaints? Are they repeat customers? Why or why not?
Use one or more survey methods to measure customer satisfaction, such as direct mail, telephone calls, or focus groups (groups of 6-10 people who share their ideas about your product or service).
Hire an outside market research firm to develop questions and interpret findings, unless you have an experienced person in-house.
Have employees keep ongoing written records of customer compliments and complaints. Review these at staff meetings.
Once you know what your customers want, make the adjustments and improvements necessary to keep them coming back.
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