Many businesses fall short when starting up their business from not undertaking enough market research. According to a survey conducted by CBInsights, the top reason cited for SME’s failing was due to “no market need.”
Other reasons for the collapse of SME’s included a failure to fulfil a purpose in the market or insolvency. Such issues were as a result of not having a definable target audience in place.
It is integral that businesses are familiar with marketing segments so that they can define their target audiences. As without specified target audiences, businesses will fail to get their brand seen by the right consumers.
Market segmentation – wouldn’t life be boring if we were all the same?
It is impossible for a single marketing advertisement or product to resonate with a mass audience. This is because there is an abundance of consumer variables to appeal to, such as behaviours, socio-economic backgrounds and ethnicities.
Therefore businesses must use marketing segmentation to divide the population. This will then enable them to pinpoint target audiences, which they can market their brand to.
After a business has outlined their target segmentation, they can then test how relative their product is to specific audiences, by running promotional advertisements.
The amount of engagement and conversions received will confirm how effective a product or service is to a specific market sector. This is an example of how businesses use a marketing mix to test tactics, tailoring their marketing strategies to trial their product to various market sectors.
Similarly, businesses can also develop a product mix – a batch of products distributed under one brand identity, to examine how well different variations of their product resonate with conflicting market segmentation.
See below for the four key types of marketing segmentation most commonly used by businesses.
Demographic marketing is the process of targeting audiences based on variables that include: age, life cycle stage, gender, income, religion race and nationality. Businesses believe that such variables have a distinct effect on consumers’ buying habits.
A consumer’s needs, wants and demands vary significantly according to age, making age a key variable to consider when distributing a product to the masses.
For instance, a child may require a low budget laptop to simply browse the net and play online games, whereas an adult, may require a high-budget Apple Mac, which is responsive, contains multiple apps for business purposes and is less likely to get a virus than a windows computer.
The example depicts how they want for the same product is evident across all market segmentations, displaying how businesses tailor their product accordingly to appeal to consumer variables.
Life cycle stage
There is always a need for a product or service throughout a consumer’s life cycle – a driving force of capitalism.
For example, there are 4.3 births every second, inflicting an infinite need for baby products, all year round – this is great for baby retailers.
Consumers will always depend on a product or service, throughout their ongoing personal developments. This differs from the consumer age variable, where products are tailored specifically to appeal to certain age groups.
This means that time is a key factor for businesses – particularly if the demand for a product is seasonal only. For some brands, products have to be delivered to consumers at the right time, during key phases to generate sales.
With 21st-century occupants embracing gender fluid identities and breaking the barriers of gender-specific work roles, it is becoming less apparent for brands to blatantly stereotype and generalise gender when marketing their products.
Undoubtedly the majority of businesses still deliver binary products, in an arguably more subtle fashion, meaning that it is still okay for your business to do the same.
Tailoring your product to create ‘feminine’ and ‘masculine’ appeal, is an effective way of appealing to a wider audience.
Businesses vary the cost of their products to attract all consumer classes – a product’s price is often determined via its functionality and quality.
Tailoring products in relation to income is great for businesses to: provide a service that is accessible to all, deliver competitive prices against akin offerings, and heighten product appeal.
Low prices are alluring for consumers, and ironically, high prices can too increase appeal. As generally speaking, the more out of budget a product is, the more a consumer will demand it.
Religion race and nationality
The most successful brands such as Coca Cola – who’ve worldwide acclaim – consistently adapt their product mix and marketing strategy to appeal to international audiences.
Resonating with consumers who are of different nationality and religion is essential for businesses who’re looking to expand globally. To convert international consumers, businesses must manipulate their messaging so that it is relatable and adheres to local customs.
Differing to targeting a consumer based on their demographic variables, businesses can market their products to consumers through their behaviour. This is particularly successful for if a business wants to build brand loyalty through a niche product that is not geared towards the masses.
Businesses can target consumers during seasonal periods, where consumers are shopping for an occasion. As well as building consumer loyalty, by targeting regular shoppers with reward schemes. Additionally, businesses can tailor their product – adapting its size – to consumers who are more avid users of their product.
Businesses can then analyse their marketing strategy by determining their loyal customers based on their behaviour. This will help a business identify their product strengths, define their competition through split loyal consumers, and determine their weaknesses through shifting loyal shoppers.
Using psychological elements to target consumers is similar to targeting an audience via their behaviour, however, it’s more personal to the consumer. Psychographic segmentation consists of targeting consumers based on their social standing, day-to-day activities, interests and opinions.
Businesses can effectively target consumers based on their lifestyles through online pages they follow, GPRS ‘check in’ points and previous purchase history – collected through shared data – and shape their products to them.
Consumers possess different demands dependent on their location. For instance, in colder countries, a consumer’s need will differ to someone who resides in a hotter location. This is similar to what type of area a consumer lives in too, for if the consumer dwells in an urban area as opposed to a town area, the want for a product will vary.
Different geographic locations can also favour products more than other countries due to cultural influences, for example, football is most popular in Europe and basketball is favoured most in America – thus sports brand will adapt their range accordingly.
Contextual knowledge of what geographic location prefers your product most is essential for larger businesses who are looking to expand globally – as is, finding a gap in the international market for your product.
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