Selecting a Target

For many, working to discover target markets seems to be the most boring part of marketing. I would argue, however, that some of the greatest innovations in business involve the discovery of new ways to reach a unique set of target markets. This is because targeting cannot be an emotionless exercise of statistics. The purpose of statistics is to help understand the emotions of the majorities and underserved niche markets. So anything done with this information has to be emotional. Targeting is about looking for people to build a relationship with. It’s about appealing to people, about creating a positive reaction among those who are most likely to purchase your products.

We target specific sets of people because emotions are a very personal thing. It is, therefore, almost impossible to spur strong emotions in every person in the world with the same message and product. This is where targeting comes it. Targeting is the process of reaching out to those your message and product are most likely to appeal to emotionally.

Far too many small businesses become overly concerned about leaving out a few customers and try to take a broad approach to their marketing. What they need to understand is that targeting isn’t about excluding potential customers. It’s about finding the best way to include those customers most likely to make your business money. There is a common saying in business that 80 per cent of your revenue comes from just 20 per cent of the population. While this exact figure isn’t set in stone, it is true that almost all of your money and, hence, the vast majority of your profits will come from just a few customers.

Indeed, there are many cases where a business has a number of customers who contribute so little revenue that the business actually loses money serving them. Some only do so in order to avoid looking bad. Further, it’s impossible for you to reach every potential customer through your marketing efforts. As an example, Target, the second-largest retailer in the U.S., spends billions on marketing in the form of product selection, promotions, pricing, location selection, etc. Yet they only sell a little more than $200 worth of products per person in this country. Given that TV’s, computers and groceries for a month cost more than that, we have to presume that this means that most people are not shopping at Target despite the billions of dollars they spend on attracting customers. It’s important then to focus ad dollars on the customers most likely to buy your products rather than trying to reach as many customers as possible.
Indeed, the vast majority of your promotional and strategic decisions should be made on the basis of your target market rather than on the opinions of anyone else. Mckee in an article for “Business Week” gives the following example:

Years ago, one of the home pregnancy test brands created an award-winning advertising campaign that was particularly successful at reaching its childbearing-age female prospects. Due to the nature of the ads, the company received a handful of complaints from older women who thought they were in bad taste. Its response? Press on. It wasn't that the company didn't care about the complaints; it simply recognized that older women were not the target audience for a pregnancy test, and it should therefore not be overly concerned about what they thought about the ads.
http://www.businessweek.com/smallbiz/content/jun2009/sb20090612_217280.htm
In other words, the company continued to embrace an ad model that made some people upset because, in truth, what should matter to a company are their core customers, and people have such variable tastes that anything a company does that one group finds funny or important another will grow angry at. Consider, for example, the case of Wal-Mart as they began to center their strategy around pleasing high-end consumers, they began to lose their existing customer base, and their same store sales started to slump. Their decisions had nothing to do with advertising, which remained generally the same. Rather, they had to do with like factors and pricing. Any businesses must center on selling to their customers; thus any strategy which detracts from this goal will fail.

Who you choose to target depends as much on your brand as your brand depends on your target. You shouldn’t develop one without developing the other. (The exception is artists and those using wiki targeting who create a certain product and brand around their art and so must discover their target.)

In order to select a target market, you must understand three things; first, who is using a product or service like yours and why are they using it? Which of these people is happy and unhappy with the service they are receiving from your competitors? Finally, which of these people are you best able to serve?

A good target market, then, are those not being served by your competition as well as you could serve them and are preferably dissatisfied with the service being given to them by the competition. Remember that this quality of service comes from the fulfillment of emotional needs rather than the fulfillment of physical needs. This is why there can be so many restaurants in an area because people often seek some variety in the food market and so will go to multiple restaurants within the course of a year.