Segment your market and sell

Many companies make the mistake of trying to sell to a very wide market when their product or service is really only relevant to certain customers. For really good marketing, it is more effective to break down your market and then target each niche with the right product...

Segmentation is not about products: it's about people. It's about breaking down an existing and potential customer base into smaller groups - known as segments - and prioritising them for marketing contact.

By targeting specific individuals within the various segments you will focus your efforts on those customers who are most likely to buy your products or services.

In this way, not only do you only talk to those customers who are likely to be interested in what you are offering, but you gain in profitability too.

Good marketing is no longer simply mass marketing. More and more products are being developed for specific, definable audiences to whom you can then talk directly and relevantly. In many cases, marketing has become more sophisticated, focusing on three main elements:

1. segmentation of customers into groups
2. relevant communication to those within each group
3. positioning the product in a way that appeals to the group.
   
   

What's in it for you?

Most markets are now so competitive it has become harder to get noticed. Differentiation is critical if you are to see a good return on your product or service. You must offer additional benefits where possible as well as competitive prices. Your distribution has to be outstanding both in terms of access and convenience. Lastly, your advertising and communication needs to stand out among all the media clutter.

Investing in a database is essential. So too is the proper and accurate interpretation of the information held in the database. Segmentation is all about offering appropriate solutions to your customers. It's not about offering them what you think they need. Not all customers are looking for product innovation. Not everyone is prepared to pay top dollar for a brand name.

Some people want to buy direct from home or office while others prefer a retail outlet. There are many who find wacky advertising appealing but there are still plenty who just like a factual presentation. For every person who surfs the net daily to keep up to speed, there are millions who still read a daily newspaper and watch the ads during Coronation Street.

Segmentation, targeting and positioning at its most sophisticated is a matter of linking a customer's functional demand to their emotional desires. Different people will prefer different images. Some may seek status with a high quality beauty product for example, while others are looking for something cheap and cheerful. If you reflect this image across the various media areas that each segment uses to access information then your returns are likely to be much greater.

Do it yourself

Recognise that customers cannot be treated as a homogenous mass. People want to be treated as far as possible on an individual basis. Segmentation helps you achieve that.

Invest in a sound marketing database. As well as name/address/contact information, your database also needs to include transactional data - what people buy, when and why. This enables you to get an insight into your potential customers' purchasing behaviour on the basis of what they do rather than what they say they do. Include a full contact history, including media preferences and special offers. From that database, over time, you'll develop a complete picture of your customer base.

When you have segmented your customer base into actual and potential customers, high and low potential customers and any other variations as you think appropriate then you are ready to start the targeting process.

Ensure you prioritise the groups, starting with those with the best current and long-term potential. But don't ignore companies further down the list.

Now decide which groups to include for your particular marketing approach and devise particular products and communication messages to suit each. Ideally, you should know so much about individual customers that you can tailor communication even more tightly. For example, if you know that a customer bought spring plants from you earlier in the year, it's a pretty fair bet they might be in the market for autumn ones as well.

You can refer to specific purchases when you contact customers. It's a much more personal approach and it does pay dividends. Don't make too many assumptions from people's lives especially if you are basing these on information gleaned from limited data.

For example, just because people might fall into a high wage bracket doesn't mean they are all going to be interested in a fast car - they might be over 80 years old. It is people's disposable income you should be interested in not their actual income.

Positioning is critical. You may well find that customers who apparently have little in common are actually seeking out similar products and services which appeal to their sense of image and identity.

© 2000 Active Information (Better Business)