The Target Market
Target markets enable organizations to filter populations to identify the ideal characteristics of their customer group.
Recognize the targeting parameters that organizations commonly use to separate target markets from populations
- Target marketing enables the filtering of a broad population, using specific characteristics that denote likelihood to purchase a given good or service.
- Through effective targeting, organizations can acquire a higher volume of users at a lower cost per user. Simply put, marketing is cheaper and more effective if well targeted.
- Target marketing requires making assumptions and observations, and testing those observations against big data. Statistical assessments of significance is extremely useful when conducting target market research.
- While organizations can target on a variety of characteristics, the most common include geographic, demographic, pyschographic, behavioral, and product -related.
- Demographic: Of or related to the study of human populations, and how they change.
- Psychographic: Based on individual psychological characteristics, rather than demographic or other factors.
A target market is simply a specified group of potential consumers who are likely to have a need for (or interest in) a given product or service. As a business, targeting is the process of filtering a population for the characteristics that most closely align with their customer base. It's easy to see why this is a valuable tactic for businesses. Through identifying who the ideal consumers are, acquiring these consumers and gathering data about their current needs is that much easier and cheaper.
Target Markets: This is a simple image of three circles, each one smaller within the next. The idea is that a target market is a specific segment of a broader population, filtered through strategically collecting information.
Let's take a simple example. You work at a university, in their marketing department. They pose a simple question: who should we advertise our services to to get the most applications at the lowest cost? Your first instinct is to young men and women who have (or likely will) complete a high school diploma, and who live in relatively close proximity to the university.
However, your marketing manager informs you that this target market may not be the perfect match for the majority of your marketing spend. As you start researching the question, you realize a great deal of the paying customers of universities are actually the parents of students and not the students themselves. Interestingly, marketing to the parents may be more valuable (or maybe not!). You bring this conclusion back to your marketing manager, who goes a step further and asks about school guidance counselors.
As you can see from this example, choosing a target market isn't always quite as simple as it seems. Sure – it may be true that advertising to 16-18 year old students currently enrolled in high school performs best in some ways. But it may be true also that promoting to guidance counselors and high school teachers ultimately reaches more students, and for cheaper on a per student basis.
Common Targeting Approaches
Target markets can be specified using virtually any metric or approach. However, all marketers should be familiar with the basic market segmentation approaches that are most common across industries:
- Geographic – For many businesses, the location and region (and potentially the climate) are hugely relevant data points, creating the first large filter on targeting.
- Demographic/socioeconomic – This filter focuses mostly on gender, age, career, education level, marital status, wages and other biographical information.
- Psychographic – Compared to the previous two, this is a bit more complex. Psychographic targeting revolves around attitudes, religion, lifestyle, and values. Picture certain news channels, which seem to cater to certain types of opinions.
- Behavioral – This usually refers to their purchasing behaviors, relative either to your business, industry, or complementary industries. An example of this would be a headphones company targeting users who purchase DJ equipment.
- Product-related – Some user groups build up relationships with the products themselves. Smartphone users, for example, will find themselves bombarded with targeting specifically for the particular operating system.
The ultimate objective of most effective targeting approaches will be to filter the broader population into a small, idealized segment that is highly likely to convert into paying customers.
The Marketing Mix
The marketing mix is used to reach a target market and is often referred to as the "four Ps" of marketing: product, price, promotion, and place.
Break down the marketing mix into the "four Ps"
- Those selling a product must develop a product that meets the needs of the target market, set a price for the product, get it to a place where the consumers can buy it (distribute it), and inform the target market about it ( promotion ).
- A product is seen as an item that satisfies what a consumer in the target market needs or wants. It is a tangible good or an intangible service. The price is the amount a customer pays for the product. The price is very important as it determines the company's profit and hence, its survival.
- Promotion represents all of the methods of communication that a marketer may use to provide information to different parties about the product. Place refers to providing the product at a place which is convenient for consumers to access. Place is synonymous with distribution.
- Promotion: Promotion represents all of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, personal selling and sales promotion.
- marketing mix: The marketing mix is a business tool used in marketing products. The marketing mix is often crucial when determining a product or brand's unique selling point and is often synonymous with the four Ps: price, product, promotion, and place.
The marketing mix is a business tool used in marketing and by marketers. The marketing mix is often crucial when determining a product or brand 's offer, and is often associated with the four P's: price, product, promotion, and place.
A product is seen as an item that satisfies what a consumer in the target market needs or wants. It is a tangible good or an intangible service. Intangible products are service-based like products in the tourism industry, the hotel industry and the financial industry. Tangible products are those that have an independent, physical existence. Typical examples of mass-produced, tangible objects are the car and the disposable razor.
Every product is subject to a life-cycle including a growth phase, followed by a maturity phase, and finally an eventual period of decline as sales falls. Marketers must do careful research on how long the life-cycle of the product they are marketing is likely to be and focus their attention on different challenges that arise as the product moves through each stage.
The marketer must also consider the product mix. Marketers can expand the current product mix by increasing a certain product line 's depth or by increasing the number of product lines. Marketers should consider how to position the product, how to exploit the brand, how to exploit the company's resources, and how to configure the product mix so that each product complements others. The marketer must also consider product development strategies.
The price is the amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, as it will often affect the demand and sales as well. The marketer should set a price that complements the other elements of the marketing mix. When setting a price, the marketer must be aware of the customer's perceived value for the product.
There are various strategies that can be applied when pricing a product like skimming and penetration pricing. Skimming means to price the product highly to increase profits. For example if you invent a new software which no one else has, you can skim the market because the customers are forced to buy from you until there is more competition. Penetration pricing can be applied when you want to enter a market and price your product lower than the perceived market price so that more people will buy it and this will increase your market share.
Promotion represents all of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as advertising, public relations, personal selling and sales promotion.
Advertising covers any communication that is paid for. This can be in the form of television commercials, radio and Internet advertisements or through print media and billboards. Public relations is where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word-of-mouth momentum. Sales staff often play an important role in word-of-mouth and public relations.
Fedex Billboard: Billboards are a common method of promotion for advertisers.
Place refers to providing the product at a place or places which is convenient for consumers to access it. Place is synonymous with distribution. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix.
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