Trying to appeal to everyone can result in you appealing to no one. Not all customers are the same – they have different wants and needs.
A wiser strategy is to focus on the distinct needs of one or two specific groups of people within a market. In marketing terms, these are known as segments. Broadly speaking, they share characteristics, taste, judgment and/or buying habits.
Through tailoring your approach to meet specific customer needs, you stand a better chance of becoming the leading supplier within that ‘market niche’. This can place you in a strong position, providing there’s sufficient revenue to be earned. You could still pick up business from other customers, too.
There are many ways to segment the mass market. Gender, age, social class, location, ethnicity, marital status, occupation, income and spending are all common methods.
Indeed, understanding customers’ spending habits can shape the type of business you start. There’s no point starting a small business that offers relatively expensive products if the market you serve is budget-conscious. Alternatively, there’s no point selling no-frills items if your market prefers luxury, thank you very much.
If you identify a segment that isn’t being served by competitors, proceed with caution. Others might have found it impossible to run a viable business in that niche. There might not be enough money in it. Alternatively, you might be onto a winner, having spotted a lucrative gap in the market.
Segmentation can help you identify customers to target. This enables you to allocate your marketing resources to attract those most likely to buy from you.
Effective marketing is impossible if you lack knowledge about your customers’ needs. A scattergun approach isn’t advisable. Your efforts need to be more focused. Some businesses target different segments at different times. Breaking down segments into more defined sub-groups can also bring greater success.
If you know which niche you want to target, carrying out market research enables you to build up a customer profile, which can be used to guide future marketing activity.
If you plan to sell to individuals, if possible, find out their gender, age, marital status, occupation, income, location and reasons that affected their buying decision. If you plan to sell to businesses, try to find out how much they spend; what, when, how and why they buy; where they’re based; what they sell and to whom.
You can ask customers for such information, but there are data-protection rules you must observe.
Gaining a greater understanding of your customers enables you to more closely align your business with their needs, which is the most likely road to success.
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