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Thursday, September 17, 2009

Identify a Target Market

Before beginning your advertising campaign, it is important that you first identify your target market. A target market is basically the type of person that will want or need your product or services. By targeting a specific market, you will be able to save money by spending less on marketing and increase marketing. The process of identifying a target market is called market segmentation. Using market segmentation, a business can use a top-down approach to identifying a target group or niche. Once you have identified a niche using target segmentation, you will be able to concentrate your efforts on marketing to attract a specific consumer group.

As a business owner or executive, you have probably heard of using market research. Market research is the process of using various techniques to collect, analyze, and report data about potential consumer groups. Formal market segmentation requires comprehensive market research. The market research will help you to identify quantitative and qualitative patterns in consumer groups. Quantitative data refers to numbers such as age, income, and family size while qualitative data relies on characteristics such as education, occupation, and personality. There are severals ways you can go about segmenting a population to target a market. Some are more relevant to your business than others. The following describes different aspects of market segmentation that will help you in identifying a niche and maximizing your marketing dollars.

1. Demographics:

* Age: Teenagers targeted by acne medication company.
* Income: A person earning $200,000 is more likely to purchase a Cadillac than a person earning $10,000.
* Family size: Wholesale distributors that keep prices low by selling in bulk would target larger families.
* Education: A calculator company may target high school math students.
* Occupation: A shoe company might sell a shoe targeted for construction workers.
* Gender: A handbag company will target women.
* Nationality/Race: A small business selling foodstuffs from Africa would target the immigrant African community.

2. Geography:

* Region of the world: The shoe company, Puma, most aggressively targets consumers in Latin America and Europe for their soccer shoes.
* Climate: A snow plow manufacturer will target areas where it snows.

3. Behaviors:

* Brand loyalty: Apple targets a niche of consumers loyal to its products.
* Value of quality: Higher-end watch companies like Seiko target consumers that value high-quality timepieces.

4. Psychographic:

* Personality: A person who likes to show off is more likely to buy a Hummer H2 than a reserved person.
* Lifestyle: A shoe company like Vans, that sells skateboarding shoes would target skateboarders with their advertising.
* Interests: Stores that sell arts and crafts materials target hobbyists and students alike.

5. Other Questions to Ask in Market Research:

* Readiness to buy: How soon will they purchase your product?
* Frequency of purchase: How often will they purchase your product?
* How likely are they to purchase your type of product?
* What kind of music do they like?
* What kind of ____(fill in the blank) do they like?

6. Types of Market Research:

* Surveys are the most commonly used and least expensive market research method available. They can be conducted online, in person, or by phone.
* Focus groups are a method by which companies gain feedback on products by asking questions in an interactive group setting. This method might also be used to gain feedback on services, concept, advertisement, ideas, or packaging.

7. An Introduction to Surveys:

* Establish goals of survey. What market segmentation criteria will you use? Ask specific questions so you won't lose sight of your target.
* Sample size. Who will be asked to complete the survey? The sample size should be as random as possible to ensure a variety of different type of people complete it. Also, the greater the sample size the greater the accuracy of the research.
* Method.
1. Personal interview: Ask past customers to answer some of your questions.
2. Telephone: Hire telemarketers to conduct the surveys for you.
3. Mail: Purchase the addresses from direct mailing companies and mail in bulk.
4. Web-based: Search for a website with a survey panel that has existed for a long time and has good results for past clients. You can also conduct your own research by putting surveys on your website or sending e-mail messages with links to your survey.
* Planning the research.
1. How much will the research method take?
2. How long will it take to write and edit a survey?
3. When will you implement the survey?
4. When will you complete the survey and analyze the data?
* Processing and analyzing data.
1. For large market research campaigns with a very large sample size, computer software is a must. You might want to hire a company that conducts surveys or someone familiar with statistics to help you with this aspect.
2. For smaller market research campaigns you can simply look through the surveys and get an idea of what your niche is.
3. Create a report detailing your findings and how it will fit into your marketing plan.
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