Trying to satisfy a wide range of different needs is rarely effective. Splitting your customers into different groups of similar people will enable you to market your products or services specifically to the ones that will be most profitable to you.
Identifying market segments
Start to identify the different segments among your existing customers by looking for groups with similar characteristics. Consumers are often segmented by age, gender or income. Business customers can be broken down into different industries or by size. In practice, location is often a key factor, whether you are targeting local customers or looking for export opportunities.
Segmenting your market should enable you to identify the similarities between your different customer groups - and the differences. You will be able to more clearly understand what aspects of your offer appeal to each of the groups and adapt your product or service to more closely match their requirements.
This might mean modifying your product - or working on delivery, service, reliability or some other need that is important to that market segment. It might also mean adjusting the way you market your offer - so you might change your pricing policy or use distribution channels that reach your target customers more effectively. You should also adapt your promotional messages to the different customer segments.
Choosing and evaluating different market segments
Knowledge is everything when it comes to identifying which groups of customers you should be targeting. Market research will help you understand more about the needs, tastes and spending habits of different groups of potential customers. This should tell you about the customer segments most likely to buy into your offer and the kind of marketing and sales activities they will respond to.
A SWOT analysis will help you assess your strengths and weaknesses as a business and spot the opportunities and threats that are looming in your market. It will help you evaluate if you're in a position to carry out a strong marketing and sales campaign with your target groups of customers. Significantly, it will also enable you to see how you measure up against the competition.
Understanding what your rivals are up to is critical. How are they working with your target group/s? Would you do better or worse? Where are the gaps - in their offer and in their marketing? Are groups of customers being ignored by rivals? Could you target these profitably?
This combination of market research, SWOT analysis and benchmarking should give you a detailed picture of your marketplace and your own potential. This in turn will tell you where you should be directing your marketing activities and how. Only when you are armed with this knowledge can you confidently tailor your message to different segments of your market and have persuasive conversations with your potential customers.
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