Back to Marketing Basics: Market Segmentation and Target Market

Online marketing success depends on segmenting to find your target market (or markets) and targeting your marketing strategy (message, products, service options) to appeal to this target audience, just like it does in an offline environment. That’s why vanity metrics, like Facebook Fans, don’t really matter — they’re likely not part of your target market.

According to Entrepreneur, target marketing is:

Your target customers are those who are most likely to buy from you. Resist the temptation to be too general in the hopes of getting a larger slice of the market. That’s like firing 10 bullets in random directions instead of aiming just one dead center of the mark–expensive and dangerous.

So, let’s explore how a firm SHOULD do segmentation and targeting.

Why you need a target market?

Think about it. Not everyone is the same, right?

Not everyone wants the same things. And, not everyone looks for the same things when they buy. Right?

So why would you think you can create a single product, with a single message and EVERYONE will want it?

Target marketing both reduces costs, because you’re not wasting resources trying to please everyone, and increases revenue, because people buy products they see as “for them”. Thus, instead of creating generic products (and messages) that don’t “speak” to anyone, you’re creating targeted products (and messages) designed to tickle the fancy of a smaller group of people.

Steps in target marketing

Marketing Donut developed a list of 6 steps in defining your target market:

1. Understand the problem (s) you solve


2. Paint a picture of your ideal customer


3. Who is most likely to seek a solution for the problem you solve


4. What does the market look like


5. Think about your internal customers — employees and their capabilities


6. Investigate competitors in this market

Nolo, discusses using demographic variables (age, income, gender, education …), geographic variables (country, urban vs suburban, region …) and psychographic variables (attitudes, loyalty, values …) to define members of your target market. Traditional marketing also adds variables related to usage including the 80/20 principles that some markets contain really important consumers who buy large amounts of product relative to other consumers. For example, big dog owners consumer a lot more dog food than small dog owners simply because big dogs eat so much.

Technori adds tips for creating a target market based on using secondary research (from other sources) and primary research (research to solve that particular need).

A better way to create target markets

Of course, there’s a better way to create target markets — one that integrates across critical elements of market segmentation — dividing the total market up into groups — targeting — determining which group or groups will be most profitable — and positioning — develop a clear message (and product features) that satisfy the needs of your chosen target market better than competitors.

Market segmentation

Market segmentation means getting to know your market — learning demographic, geographic, and psychographic variables about the people who have the problem your product solves.

• Are there groups who have different needs?


• Are there groups who think or feel differently?


• Are there groups who have different lifestyles? View different media?

Not all market show a distinct set of groups, but most do. If you don’t find viable groups, you can use a concentrated strategy, where you develop a single product/ message for the entire market.

Most firms use a differentiated strategy, where they target 1 group within the market or several groups. Sometimes a firm will develop different products/ messages for different groups; sometimes they’ll use the same product with different messaging strategies aimed at the individual groups of consumers.

For example, a brokerage firm might have an IRA account and market it to different groups by changing the message. A group composed of younger workers might highlight the growth over time by putting in a small amount of money, which the message to a group composed of older workers might highlight the increased contributions allowed older workers under US tax law.

Same product/ different message

Target market selection

Once you’ve identified the various segments within the overall market, you’ll need to look at both competitors and your internal capabilities in deciding which groups you’ll target.

• Are group differences wide enough to justify targeting them?


• Can you meet the unique needs of 1 or more segments?


• Do competitors already do a good job of meeting the needs of a particular segment

You also want to look at the potential of each segment:

• Is the segment large enough, although small segments, called niches, are potentially valuable with low-cost digital marketing strategies?


• Is the segment stable enough — will their needs likely exist into the future?


• Is the segment wealthy enough — although even low-income segments can be valuable if the problem is serious enough?


• Can you reach them without wasting money on media that reaches everyone?

The last elements of target market selection is to define your target market. In traditional marketing, we commonly talked about target markets as being: 18-24 college students, from middle class backgrounds, studying at public institutions … etc. While better than nothing, these somewhat generic target markets didn’t really help in the next step — positioning –.

Today, we’re more likely to use personas to define target markets. Personas are more detailed, specific descriptions of your target market, focusing heavily on psychographic differences and usage behaviors that differ between market groups.

Positioning – Putting it all together

It’s not enough to segment the market and define your target market — or persona –, you need to clearly position your product in the minds of your target audience as something designed “for them”.

First, differentiate your product from those created by competitors. Give it unique features that especially appeal to your target audience; features as simple as color choice (ie. Apple 5c) or as complex is a totally different system.

Then, create messages that clearly articulate this difference, why your target audience cares about it, and how you deliver it better than competitors. FOCUS on a single reason why your target market cares about your product; don’t cloud the message by listing EVERYTHING you do.

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