Wednesday, January 16th, 2019

Creating Customer Experience (Part 2)

By Barbara Smith on Nov 25 2009 • Filed under The Serial Entrepreneur

Have you found the gold in your target market?

In Part 1 we talked about brand setting and delivering the brand promise at every customer interaction. So the next question is: have you found the gold in your target market?

Market segmentation – the ability to divide your potential customers into groups that share the same qualities – is an important step in the process of identifying target markets. Once various segments are identified, their respective needs are examined in order to choose the most effective communication and advertising messages to reach a specific group. What you say, how you say it, and through what manner it will be said (TV, Internet, print ads, radio, etc.) will be different depending on which market segment you are trying to reach; for example, how you would market to a ten-year-old computer gamer is different than how you would market to a 40-year-old business woman, or a 25-year-old sports fan.

Typically most businesses segment their customer market by geographical and demographic methods. This is the easiest method with which to segment a market as the data to undertake this approach is relatively straight-forward. For example, a business might identify two market segments, “domestic” and “international.” These two market segments are then further divided into smaller groups by income levels or age, ie. Baby Boomers, the Y Generation, etc.

In today’s evolving societies and changing consumer behaviors, smart business owners are finding ways to refine their markets even further. This helps them identify the niche groups which are so important to small businesses that want or need to specialize. For example, segmentation approaches now include such areas as “benefits sought” and “activities demanded.”

These methods allow you to “drill down” deeper into your potential customer base to identify the target market that is best for you. Imagine a funnel where the broadest, most generic market is at the top, and the most specialized market is down at the point. The funnel is filled with various layers, or groups, and each layer becomes a more precise grouping the further down it goes. This “drilling down” approach helps you to recognize specialized target market needs at a niche level, giving you the information you need to maximize advertising effectiveness.

In keeping with our example above, the larger ”domestic” market (the broad part of the funnel) has now been segmented into “single women, aged 30+, living in Western Canada, who seek an activity holiday experience that includes skiing, spa, wine and culinary features” (the narrowest part of the funnel). Now you have the right market with which to send the right messages.

Many academics, including Hanlan, Fuller and Wilde*, have argued that the “benefit sought” approach, when coupled with geographic and demographic profiles, may yield higher returns due to the effectiveness of the approach.

So don’t just stop after segmenting just once or twice; drill down until you find your “gold.”

* Source: Hanlan, J., Fuller, D., & Wilde, S. (2006) An Evaluation of how market segmentation approaches aid destination marketing. Journal of Hospitality & Leisure Marketing 15(1) pp.2-24


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