IDENTIFYING A TARGET MARKET
Before deciding on a business and what produce to market, you need to:
- See if there is a demand for your business.
- Identify the target market.
- Analyse the market
This positioning guides all other marketing decisions, such as pricing, product assortment, advertising, services.
If you try to have 'something for everyone' you can end up satisfying no market well. You may need to do customer research to find out their satisfaction level. You also may need to change your image or change your target market. You also need to analyse and check out what is currently on the market and what is happening there.
A business without direction can be likened to a ship without a rudder: it can only proceed in ever increasing circles, burning up fuel (costs) and going nowhere fast.
So ask yourself:-
- What part of the market share are we asking for?
- Are we growing the right range of products to cater for that chosen market share? Is our timing on target to gain a competitive advantage?
- Are we just producing merchandise without a firm idea of where it may be sold?
- Are we researching a market before commencement of production?
- Have we got a high quality product? Can we command a premium price? Is the market saturated with stock of similar size and/or type?
- Are we turning stock over quickly enough to avoid peaks and troughs on both production and sales sides?
- Are we having to discount to obtain sufficient and regular cash flow? OR
- Are we allowing too much credit in order to encourage buyers?
- Do we keep sufficient records to enable future decisions to be made on fact?
The total market can be segmented into two very broad types: customer (household) markets and organisation/business markets. Each of these broad segments can be further segmented. (e.g. according to demographic, geographic, physiographic and behaviouristic variables.)
Common Variables for Segmenting Customer Markets
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Demographic
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Geographic
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Physiographic
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Behaviouristic
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Age
Gender
Education
Family size
Family lifecycle
Occupation
Social class
Religion
Ethnicity
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Region
Urban
Suburban
Rural
City Size
Climate
Landforms
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Lifestyle
Personality
Motives
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Purchase occasion
Benefits sought
Loyalty
Usage rate
Price sensitivity
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The ability to choose the correct target market is crucial, as it will influence the entire marketing mix.
Businesses can use a number of strategies to obtain information about its target market. One of the most common is the questionnaire, which asks people what they think of the product, and notes their personal details. This information is then used to refine the marketing mix.
Sometimes a business may be able to identify a primary and a secondary target market. A primary market is the market segment at which most of the marketing resources are directed. A secondary market is usually a smaller and less important market segment.
A business can choose one of three approaches to selecting a target market – through mass marketing, concentrated or niche marketing, or differentiated marketing.
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