Every company or small / home business exists for the purpose of providing their product or service to the market place. With this point in mind it is sometimes baffling not to mention amazing that a great deal of businesses do not spend time on market segmentation (or niche marketing and we will use the terms interchangeably) as a regular part of their business strategy planning sessions.
Company's often ask about how to do market segmentation and some of the many answers to that question will be addressed here. Failure to focus on implementations of market segmentation essentially means that the given business may well end up selling their product or service into a section of the market place which is not as good as a fit as it could or should be.
The company's which command significant market shares are the ones which make sure their products or services are carefully targeted to a specific niche in the market. Let's consider car manufacturers who wish to sell a sports car with two seats and costs in excess of $60K.
This should get you thinking, so consider this if you were tasked with selling this type of car who would you target ? would you spend thousands of dollars sending out leaflets and information to young mothers whose children are all at school ? Would you go to college campuses to speak to post graduate students about buying their first car ? or how about going to visit local working men's clubs ?
As we continue to consider finding an appropriate fit within the market for our product or service consider the latest video game which has entered the market.
If you were tasked with making maximum sales of this product in a given period of time what groups of individuals would you get together into a room to talk about the product in order to effect the most of amount of sales. Would you call up the local church and ask the pastor for permission to address the congregation after the next prayer meeting ? Of course you would not but you may well take a similar approach if you were representing a music production company who were promoting one of the hottest christian artists on the scene.
When considering market segmentation we have to stand from the company's point of view and we look out from the company and view the landscape which is called the market. In essence we are looking out at the sea of the population all of which may be clients of ours. Here follows a process on how to effectively segment your market.
Niche marketing looks at splitting up the target market into group for which you can use to target your product and service to. The market can be segmented by race, age, earning capacity, living area, marital status, disposable income, height, skin color, parents, single parent families, music lovers etc, etc which when devised correctly will give you a firm base for which category of product you can sell to a particular Market Segment.
In the examples above let's consider music lovers; straight away we know that within this market segment or niche there can be jazz, classical, opera, rap, r&b, latin and the list can go on.
What is the point here ? the point is that section or niches in the market can be further segmented to determine very vertical or narrowly defined sections of the market place. When we carefully segment the market to various degrees we end up with the situation where our product dovetails into a section of the market perfectly and all of our marketing and advertising activities and budgets are seen to work in a most efficient manner.
In summary, there are various components which make up a marketing strategy, segmentation strategies play a major part in the overall marketing strategy of any organization or small business. Using the examples above and using it as a template for your niche marketing exercise will serve your company well.
Marketing experts have noted increasing media fragmentation. Recently, the role of advertising and promotion in the overall marketing process has changed considerably. The audiences that marketers seek, along with the media and methods for reaching them, have become increasingly segmented. Advertising and promotional tactics have become more regionalised and targeted to specific market segments.
The extraordinary expansion of media options to reach specific markets has been fully documented. Along with the growth of products and services and the segmentation of types of prospects has come an extraordinary proliferation of media. There are new kinds of media, new developments in the traditional media, and new uses for media. Increasingly, the new media are tools for targeting rather than for blanketing the mass market.
Information and the role of the customer database In the information age marketers are not only focusing on analysis, but also understand the value of information collection.
In the past, direct marketing has been distinguishable from other marketing disciplines because of its emphasis on initiating a direct relationship between a consumer and a supplier, a relationship that until recently centered primarily on the exchange of goods and services. However, in today's market, exchanging information is becoming almost as important as exchanging goods and services. With rising costs, crowded supermarket shelves, and overstuffed mailboxes, smart marketers are not just efficiently consummating a sale, they are also providing a chance for customers to communicate with them.
Of all these changes surely the most revolutionary is the ability to store in the computer information about your prime prospects and customers and, in effect, create a database that becomes your private market. As the cost of accumulating and accessing the data drops, the ability to talk directly to your prospects and clients -- and to build one-to-one relationships with them ? will continue to grow.
The new marketing landscape The effects on consumers of overwhelming change and the acceleration of change in our time have been brilliantly documented by Hugh Mackay in Reinventing Australia: So apparent is our national malaise that it has become fashionable to talk about the Age of Anxiety.
For people given to applying labels to decades, the 1980s was popularly described as "The Anxious Eighties" and there is no doubt that the decade lived up to the promise of that rather depressing label. Australia has not been alone in all this. All around the Western world, social commentators have been impressed by the rising level of angst over the past 20 years.
The mind and mood of customers in the 2000s provide interesting challenges.
The growing number of consumer segments and the simultaneous increase in available products and services have made marketing much harder. Manufacturers are in a quandary about what to produce; retail merchandise buyers are overwhelmed by the task of product selection; and advertisers feel swamped trying to convey appropriate messages to so many market segments about so many products ...companies are grappling with the fact that mass advertising campaigns have become less and less effective in reaching diverse groups of consumers.
Advertisers must now fight to establish the relevance of their products in an extremely fractured marketplace. The marketing future will undoubtedly look different in another respect as well: customer information technologies will change the relative roles of retailers, manufacturers, and media companies.
Retailers have a built-in advantage because they can directly measure customer response and get first option at the broadest range of information. Indeed, point-of-sale scanning systems have already played a significant role in shifting power from manufacturers to retailers.
Most important, the balance of power between large and small companies will change. As customer information technology becomes more prevalent, only those companies that can invest the resources and show technological leadership will succeed.
Both Stephen Campbell & Robert Thomson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.