How to Identify Target Markets
In the globalized markets, it is very tough to find out the target customers to develop marketing strategies and to invest their marketing efforts. Companies always try to know about their customer groups and their changing needs; it enables the marketers to reach them successfully. Target marketing is the process of identifying and studying potential customer’s needs. A group of people having similar demographic characteristics and they like to buy similar products and services are termed as target markets.
While producing new products or to increase the market for the existed products, companies try hard to know the target markets. Target markets are separated into two types primary target markets and secondary target market. Here the people of the primary markets involve consumers, whereas customers are the secondary target groups. For example, a person who buys baby walker becomes the secondary target market, whereas the baby is considered the primary target market. So the marketers should frame strategies for the need fulfillment of both primary and secondary target markets. Knowing target markets is very important to reduce the cost, to produce better and suitable products, which creates value to the customer’s money.
In the business point of view, no business can satisfy all the needs of the entire customers, so every business should identify the specific customers of their product, to satisfy their needs. So entrepreneurs should analyze the markets to put their efforts, otherwise, it will become a waste of time and money if the companies put their efforts blindly. For example, a manufacturer of jewelry tools is looking to produce and sell an innovative and new product, and then they have to check how much sales are possible because it is a very narrow market segment.
In order to take decisions of producing such products companies should do market research to know about their potential customers. Conducting research on where do they live? Where do they buy? How much can they spend? How frequently they buy the product?
So raising all those questions can make them to think and invest on producing new products or to bring changes in the existed products. Once the valid information is gathered by using various research tools such as demographic records, quantitative techniques, market surveys, and financial position of the markets then it enables companies to invest more efficiently.
Markets are segmented on the basis of age, gender, income, education, marital status and religious background.
In geographic segmentation, the entire markets are segmented by the customer’s addresses, various locations, climates, and regions etc.
Behavioral segmentation is done on the basis of special occasions and the customer’s reaction towards these occasions. During festival season buyers like to buy more and some specific products.
Psychographic segmentation is based on various psychological aspects such as values, beliefs, attitudes and personality and these reflect the buying behavior of the customers.
Levels of segmentation
Organizations should know their potential customers and market segments because it is highly expensive and cost effective if the marketers blindly give advertisements. So the marketers should know their market segment to play strategies or produce products. Various levels of market segmentation are
In mass marketing, companies produce products suitable for the entire consumers or mass markets. They follow mass production and mass distribution system to occupy the entire markets. Mass marketing is very profitable to the marketers and its cost of production reduces with the increase in production on the basis of economies of scale principle but advertisement and promotional costs become high in mass marketing because advertisements should be given to attract the mass audience.
Example: Detergents, Soaps, Cooking oils, etc.
Depending on the nature of the product, markets can be segmented for some extent, on the basis of customer’s requirements, location, income levels, and other demographic characteristics. It enables the marketers to frame and delivers promotional strategies for those particular segments.
Examples: Cars designed for different income levels like economy segment, luxury segment, and super luxury segment.
Niche marketing concentrates on producing products and services to specific target customers. Niche strategy is a difficult market strategy because an in-depth market research is necessary to reach the specific customer needs. This is also a very successful strategy for small companies because it can get the competitive advantage by playing strategies on a particular niche.