Segmenting Your Market & Choosing Your Target
There are many different ways to segment the market and it is important to segment the market and then be open minded about which target to choose.
In the old days, we used to always pick a demographic to target, however I want you to think about segmenting on factors other than demographics. To refresh our memories demographics can include age, sex, income level, job, industry, or geographic location.
Today, marketers refer to what is called Response Based Segmentation and that is more of a behavioral segmentation. A couple of ways to segment based on behavior include
Purchase Behavior - How often do they purchase, how do they purchase (online or in-person), do they buy in large quantities or small?
Benefits Sought - What benefits are they hoping for by purchasing your product or service? A relaxing home, lose 25 pounds, more time with family, a better job, etc.?
Customer Journey Stage - You can segment customers based on whether they are in the initial stages of learning about their problem, engaging with your company or have already purchased?
Occasion - Is there a special ocassion that made them decide to buy? A wedding or anniversary, health scare, a burst pipe, or divorce?
Interest - Do you have people who purchase from you with different interests? Are they interested in travel, sports, gardening, business, etc?
Status - This could be their job title, or something like bride, mom, or even company size.
You may even segment the market several different ways in order to have a niche small enough where you can dominate and large enough for a viable business. Some things to consider when choosing your target:
Profitability - For instance expensive houses, travel, consulting packages and so forth mean you should make more so are often a desirable target market.
Size of the market - If you are looking at the market for brides, divorcees, business owner, etc it is advisable to see how many of these there are. Do a quick Google search and see what you find out.
Pain Point - This is really what benefits they are looking for and how bad is the pain point. For example cleaning our house is a pain, but not as much as dying from cancer so we pay doctors more than cleaning ladies. Who is willing to pay the most for your services?
Who do you enjoy working with - We usually like working with like minded people so if they are a viable market keep this in mind because it is easier to understand them.
Competition - What is the competition doing? Don’t go after an extremely competitive niche. Instead see if you can differentiate yourself by going after a subset or totally different segment.
Once you have evaluated all this check out Google Trends to see if people are looking for your service. For instance you could look for Weight Loss Training for Busy Professionals, Eco Friendly Homes, or Wedding Planning for 2nd Marriages. When you are starting out it is better to have a small niche that you can dominate than huge competitive niche. You can have 2 target markets, but probably make sure they are defined clearly and separately.
