“Who is my target market?” That is a million dollar question! (literally, if you discover and continue to rediscover your companies target market you can make millions).
Sometimes as an entrepreneur or small business you are tempted to pursue any market or customer to bring in some income. At the end of the year, and the bottom of your profit and loss statement, you could be doing more harm than good. Keep in mind that not all market segments are a good investment of time and money for your company.
There are 4 main criteria for segmenting the market. A “good” market would meet all 4 of the criteria.
Before pursuing a segmented market, check if it meets the criteria:
Homogeneous – Within a segment, the consumers should be as similar as possible, meaning that they are likely to respond the same to the marketing mix (the 4 P’s: product, price, promotion, place) deployed.
Ask yourself “Are the customers in this group likely to react the same way? Or are they currently reacting the same way?”
Heterogeneous – The consumers in different segments should be as different as possible, meaning that one segment group will likely respond differently from other segment groups based on the marketing mix.
Ask yourself “Are the customers in this group acting differently than the customers in that group? How so?”
Substantial – Mostly obviously, the segment you pursue needs to be large enough to make a profit. When pursuing a segmented market, you absolutely should not move forward with it if it is not likely to make a profit from the business activities.
You may ask “Can I make a profit from this segment? Is there a need for what I’m offering in this segment?”
Operational – Through the segmenting dimensions (behavioral, geographic and demographic) you should be able to identify the right marketing mix to deploy.
To determine if the market is operational, you’ll want to ask questions like “What product am I going to offer? At what price? Where am I going to sell it?” etc. With those answers, you’ll want to consider what segment they match best.
Identifying potential target markets and segmenting them by the segmenting dimension is not easy. Without a large amount of money, it can take years to discover the answer to the million dollar questions “who is my target market?” For now, focusing on pursuing s segmented market that checks off all 4 points of the criteria for segmenting.
Rebekah A. Dull, BA
Consulting | Marketing | Websites