Why do entrepreneurs work so hard to find a customer segment to sell their products when they can sell them to everyone?
Well, it’s because businesses don’t operate in an ideal world. Hence, they don’t have the means and budget to market their products to everyone. Even before companies sell their products, a marketing cost is attached.
This initial marketing cost is the price-per-person companies pay to advertise and effectively communicate their products to the customers.
Does this cost guarantee conversion to customer reach? No. It will only have an impact on a group of people with a need(s) and means to buy your product, also known as Target Market.
For good reasons, marketing strategists recommend shifting your marketing strategy from a broader customer base to a highly targeted customer segment. The text below will cover it all.
You will learn the ins and outs of target marketing with an extensive example of a popular food franchise and how it can benefit your business in the long run.
What is Target Marketing?
Target marketing is the process of reaching out to one or more customer segments of a broader audience in a market. This customer segment is tied with common traits and is interested in your product and services.
A company’s target marketing strategy is tailored according to its target market’s likes, dislikes, and commonalities.
Before planning a target marketing strategy, the company will perform extensive research for a customer persona (ideal customer avatar) to answer questions like
- What are their needs and wants?
- What is their expectation towards a product?
- What are their habits, hobbies, and interests?
- On which social media or other channels do they spend their time?
It’s important to understand that a data-led target marking strategy will help you improve the effectiveness of your digital and offline marketing campaigns. You need before and after insights to compare and improve your marketing mix.
Understanding the Target Marketing
As mentioned above, target marketing starts with understanding your customers. Your customers can be masses, but the more segmented your target market is, the more effective and fruitful your marketing efforts will be.
For instance, eating a piece of pie would be easier than gulping the whole pie. Similarly, you can’t be everything to every customer, but you can be something to every customer segment.
It gets easier to plan a product, pricing, promotion, and distribution strategy for a smaller segment rather than the whole market, which might turn into a recipe for disaster.
Furthermore, social media channels such as Facebook, LinkedIn, Twitter, and Instagram have made target marketing easy to understand. Every social media focuses on different target audiences making customer reach easy through advertising. Other digital platforms for tech-savvy individuals are apps and emails.
For example, Starbucks, a coffee company, knows its target market – tech-savvy white-collar individuals from urban and sub-urban regions purchasing coffee on their way to work.
How can Starbucks make its brand more accessible to customers? Targeting its customers through social media and mobile application advertisements with a personalized crafted message emphasizing the grab-and-go ease of freshly brewed coffee. The company can also provide nearest location maps and email new coffee combs and flavors.
Now that you understand your target market, it gets easier to plan a target marketing strategy to reach them before your competition and influence their purchasing decision. Although it’s done in a multitude of ways, five of the most common types are target marketing.
- Geographic market segmentation
- Demographic market segmentation, and
- Psychographic market segmentation
Geographic Target Marketing
Geographic marketing is based on location. This type of target marketing can narrow down location from country and city to area and postal codes. Businesses sell their products to individuals needing products based on their residence site.
- Climate Zone
Example. For instance, the company that makes expensive lawn mowing machines will target customers from a geographical region that has high-income levels.
Demographic Target Marketing
Demographic target marketing is based on the following statistics
- Relationship status
Demographic target marketing is the most critical indicator of understanding your target audience. It gives a precise idea of customers who prefer your products.
Example. A sports bra company does target marketing based on gender. But within the gender segment, they have various products for different income levels that cater to women of varying age groups.
Psychographic Target Marketing
Psychographic targeting marketing divides customers based on status, class, or lifestyle preferences. This type of marketing helps you connect with your customer segment on a deeper level. The parameters this targeting strategy uses are as follows.
- Upper/middle/lower class
- Lifestyle choices
Example. For instance, a company that deals in diamonds sells diamond jewelry to the upper class. A company that makes a mobile app to manage runners’ routines targets people with the same interest or lifestyle preferences.
Behavioral Target Marketing
Behavioral target marketing caters to a customer group with the same behavioral patterns. These behaviors are driven by a need, pain, or buying pattern. Following are the behavioral characteristics.
- Buying reason/pain/need
- Buying process
- Buying time
- Decision makers
Example. Online clothing brand targets customer based on their purchasing patterns. They target customers who often browse the new arrival section on the website or abandon their carts.
Firmographic Target Marketing
Firmographic target marketing is a B2B (Business to Business) practice that caters to industries. This type of marketing strategy characterizes businesses on the following characteristics.
- Industry size
- No. of employees
- Years in business
- Legal status
Example. For example, a creative design agency builds websites for startups only. The company’s target market is new businesses that need additional support and become loyal, long-term partners in mutual growth.
Target marketing has endless benefits. The research and hard work a company’s sales team puts in gives them insights into the market they’re trying to reach, separating the prospects who’ll buy the product from the ones who won’t. Target market segmentation can;
- Make a company confident in its efforts and products. Helping them realize their potential and build a reputation in the market.
- Most businesses are targeting one – sometimes multiple segments of the market. Easy to reach out and customize advertisements to the message, engagement, pricing, promotions, and other marketing efforts. For example, Nike targets sportswear but caters to different customer segments such as runners, fashion, footballers, etc.
- You can have a strong positioning power. You’ll know whom to serve, a company or a customer. Your positioning can help your customers from other markets reach out to you depending on their needs and preferences.
Target Marketing Example (KFC)
KFC is an American food brand that has grown with leaps and bounds to 20,000+ stores in almost 150 countries, giving its competitors a tough time.
How did they do it? By positioning themselves as a go-to restaurant for those who like eating fried chicken. The best part is that they cater to audiences from 4-year- old to 45+ adults.
Let’s understand how target marketing has contributed to KFC’s success.
Business model; Franchising
Franchising is a highly profitable business model. Each franchise is an independent business but must maintain standards (cleanliness, hygiene, and food quality) set by the franchisor and pay a fee depending on the total turnover.
KFC’s Target Market
KFC serves in different geographical areas going from the vast continent and country locations, narrowing down to states, cities, and living sites.
KFC is available in America, Europe, Africa, the Middle East, Asia, and other parts of the world.
Target Market Segmentation
The Target market is divided into customer segments and products (Food Menu). The products are designed for different age groups and food preferences based on culture or personal choice. They also have a few no-fried options for health-conscious customers. Their customer segment at a glance looks like
- Healthy eaters (few options)
KFC is a family restaurant, but it has also maintained a vibe that has attracted the young over the years. It positions itself as a convenient alternative to time-consuming cooking. In short, it’s a reflection of the masses for their reasons.
KFC represents the following classes based on its target marketing strategy. They want to make sure that their brand is affordable yet tasty. Their prices resonate with the upper-middle and middle-class, offering serving options like ”extras” and ”bundles.”
KFC has three competitive advantages
- It’s the menu, especially 11 herbs marinated fried chicken.
- Ability to serve different audiences to increase sales without compromising quality
- Ability to adapt to change and customer needs
The ”finger-lickin’ good” slogan is KFC’s 20th-century famous message since 1956. The food chain also has a strong social media presence. KFC uses all media channels as it caters to different customer segments. For promotion, you can see KFC advertisements on various media, such as online, TV, hoardings, print, etc.