Episode 101: How to Use Market Segmentation: Developing a Target Market
How to Segment a Market
The best way to go out of business is to attempt to be all things to all people. Not everyone can or will be your customer, but on a planet of more than 6 billion people, there should still be enough market for you to survive in, if not thrive. Identify which consumers will best fit your business by following these steps to segment a market. (The Disney store, for example, caters to pleasing children, rather than trying to please every age and gender).
Evaluate which market or markets you want to pursue.Decide which methods you want to define your segments by and which definitions best fit your business model. You can characterize segments by any of the following categories:
- Geographypertains either to your location or the location of your target customers, where your product or service will be used.
- Demographicsare the statistical characteristics of your target market, such as age, gender, education level or household size.
- Psychographicscharacterizes consumers by psychological or emotional traits, based on belief systems or personality types such as risk-taker versus risk-averse, or early adopters versus late-stage buyers.
- Lifestyleis a behaviorally-based criterion, focusing on the activities your target participates in, from work to hobbies pursued or vacations favored.
- Life stagecombines some of the demographic and psychographic characteristics that groups have in common to delineate where or when your targets are in their life cycle: college and career, young families, empty nesters and the like.
Qualify your chosen market or markets.Once you’ve evaluated criteria to define your market and selected possible markets to pursue, assess the markets based on their potential for profitability to your business. Answer the following questions:
- How large is the segment now? Is it large enough to support my business?
- How easy or difficult will it be to reach the segment?
- Will the segment grow or expand in the future? How far into the future may it grow?
- Does this segment really fit with our business model? Can we immediately meet their needs or will it take a significant change in direction to meet demand?
- How difficult will it be to get the data we need to fully understand this segment, to answer these questions?
Gather and analyze data on your selected market.As time and budget allow, use primary and secondary research sources to build a clear picture of your target market.
- Review your own sales data. Who purchases how much of what products or services? When do they buy? Where are they located? Who does the actual purchasing and for whom are they purchasing?
- Cross-reference this sales data to industry-specific databases your trade association may publish or your Chamber of Commerce Book of Lists to get basic business demographic information, or US Census Bureau tables for general population data in your area or near where your area is that you are living
- Mine information from free or low-cost syndicated reports produced by market research firms to dive more deeply into market segments and glean insights on motivations driving buyer habits.
- Analyze the data you’ve gathered. Look for key similarities and differences among the general customer base, your overall population. Do certain groups bunch together or break apart from others based on geography, demographic breaks or behavior? This cluster analysis gives you more clearly delineated segments, helps you answer the qualification questions and sparks ideas on how to communicate with the target segments through your promotional efforts.
QuestionWhat are market segments?wikiHow ContributorCommunity AnswerMarket segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses, or countries that have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them.Thanks!
QuestionHow do I minimize the advertising costs for a new business?Sachin DubeerCommunity AnswerTry using the word of mouth. It's helpful and free. However, you have to give out an extraordinary service. Typically, a satisfied customer tells 10 people about his experience, but a unsatisfied customer tells 100 people about his experience.Thanks!
QuestionHow do I break into an already existing market?wikiHow ContributorCommunity AnswerCome out with unique products and services that are different from what is commonly done in the Market, and this can be better achieved when properly segmenting target markets (Clients or Customers) to understand their needs and find ways of satisfying them better than your competitors in the market.Thanks!
QuestionHow can a business grow when the production is far from where the products are needed?wikiHow ContributorCommunity AnswerWhen the manufacturing unit is far from the point of sale you should have a nearby warehouse, where you can store the products.Thanks!
QuestionHow should I segment my products in a highly competitive market?wikiHow ContributorCommunity AnswerApply a competitive profile matrix (CPM) tool to identify the strengths and weaknesses of your competitors on critical success factors. Then, design your winning mechanisms based on the results.Thanks!
QuestionWhat are the best methods for marketing our product?ADEOYE VICTORIACommunity AnswerHire a marketing research agency to conduct phone surveys among customers, create and use a slogan for your product with a logo or trademarks for greater recognition among customers and non-buying consumers (the ones you are trying to attract); create a website for your products so that consumers can read more about them.Thanks!
QuestionThe idea of knowing a customer, and the market is constrained much with capital. What can be done for most enterpreneurs to enable them with capital at no or very minimal loan interests?ADEOYE VICTORIACommunity AnswerFirst of all, advising the enterpreneurs to not start with loan, but they can start by saving some amount of money for three to four months. Then after, they can start with a small amount of money, and keep proper recording in order to increase the business.Thanks!
QuestionHow can I connect to African fashion designers in Europe?ADEOYE VICTORIACommunity AnswerBy creating a website for your fashion designers, so that Europe can read more about you. Offer coupons and special deals, so that people over there can download them.Thanks!
QuestionHow can I get a processing machine at a reasonable rate if I use local fabrication?Niyi AdelusolaCommunity AnswerYou can purchase a fairly used processing machine. This should come far cheaper, and afterwards you can go for a brand new one from the profit generated by the used machine.Thanks!
QuestionHow could a manufacturer segment a market?wikiHow ContributorCommunity AnswerThey could segment a market by age, social class, gender, etc. There are many different possibilities.Thanks!
Sources and Citations
In other languages:
Deutsch: , Español: , Italiano: , Português: , Русский:
May 24, 2019
3 days ago
Roger Paul Kamugasha
Jun 9, 2019
May 24, 2019
Joachim Chinaedu Nwachukwu
May 17, 2019
May 15, 2019
May 26, 2019
Jun 6, 2019
May 17, 2019
Jun 7, 2019
May 17, 2019
May 27, 2019
Jun 4, 2019
Jul 30, 2019
May 24, 2019
May 27, 2019
May 20, 2019
Samuel Sevi G.
Video: Market Segmentation Introduction
39 Bold and Beautiful Braided Bang Hairstyles
How to Make Strawberry Trifle
Anthropologie Breanna Garland With Tassels, Size One Size - Orange
Music Might Give Babies Language Skills a Boost
10 Times Cameron Diaz Was Spot-On About Love, Sex And Men
Why eat meat when these food combos are here to provide iron
This Airline Wants To Start Weighing Passengers Before They Board The Plane
3 Ways to Break a Lock
How to Temper Chocolate
How to Buy Floor Speakers
What happened at the North Korea summit
Karlie Kloss Is the New Topshop Face for the Spring 2019 Campaign