The target market segment is an element that was selected based on the results of an analytical study of the sales market in relation to a specific product, service. A distinctive feature of the segment is the minimum cost of the enterprise for marketing in this area. At the same time, it is the target part that allows you to get most of the financial results and other criteria by which you can evaluate the company's profit.
What for?
The determination of the target market segments makes it possible to understand which areas are not yet occupied by competitors or whether there is rivalry, but it is expressed in a weak form. At the same time, analysts determine in which market plane buyers are active, where they react more positively to marketing strategies and how it is expressed. In this case, it is necessary to find a zone in which the company's profit will be above the average standard value. Successful work in such an area is the key not only to financial well-being in the present, but also to the possibility of development in the future.
Who needs?
Mainly research on the target market segment is the field of activity of analysts of large enterprises and medium-sized. For small companies, the tasks of market segmentation and identifying the characteristics of each selected sector are not justified, they require too substantial temporary and material investments, therefore they will not be really reasonable activity.
In most cases, for a small company, the area of interest is a segment in a segment, a narrow sphere, its own niche, where the main component of success is the presence of an original and recognizable brand, good reputation and a popular name. With these aspects, there is no doubt in excellent competitiveness. Avoiding the analysis of target market segments, it is still possible, having at your disposal a small business, to find your optimal site, in which there are prospects for further development. But for large companies, such areas are quite insignificant, therefore, they are not of interest and cannot be used to obtain benefits.
About terminology
A niche happens:
The first involves the expansion of the range, in the analysis, attention is paid to various services and products. The second option is the situation when the company offers goods that are suitable for different categories of consumers.
Revealing the current sector: where to start?
First, it is necessary to determine the criteria on the basis of which it is planned to implement market segmentation. The selection of target market segments takes into account the specific features of the correct category of goods. It must be borne in mind that consumer goods have their own characteristics that are not characteristic of production, services differ in other specific features and require special analysis.
The division of the market into groups begins, taking into account statistical information, taking into account the criteria:
- geography;
- demography;
- psychography;
- potential buyer’s behavior.
And if in more detail?
Psychography in the framework of determining the target market segment is the identification of the types of personalities of clients, the definition of the target social group. The task of analysts is to compile a correct portrait of the buyer, taking into account his lifestyle and moral level. They talk about behavior when, as part of an analytical activity, they collect information about how a client responds to advertising campaigns, changing sales conditions. It is necessary to calculate how long it takes for the product to be recognized, and based on this, formulate further product promotion strategies.
What to do next?
After the initial analysis, it is necessary to work on the choice of the target market segment and product positioning. First, they assess the level of attractiveness of the various sectors found, studying the system of factors, conducting marketing research, which will allow us to assess the necessary scale of strategies that will allow us to achieve success within the market. To do this, you need to analyze the following aspects:
- How many segments do you need to engage to succeed?
- Which zones are the most promising, profitable?
Analysis Features
Identifying the target market segment is not an easy task, requiring a thorough approach. To assess the attractiveness of different options, it is necessary to do analytics over the entire volume of sectors and determine what annual growth rates they show. In the context of several years, it is necessary to find out how high the share of profitability is, and also to evaluate competition in the selected sector.
To understand how attractive different sectors are, they are analyzed taking into account political, social, natural, environmental factors, evaluating the energy intensity of the region and the technological requirements for enterprises. It is necessary to pay attention to how strongly inflation affects business as applied to each target segment of the market that is interested. This is an important factor that largely determines the successful future of the company. It is also necessary to pay attention to the legal aspect.
Comprehensive assessment
A full-fledged approach to determining the target market segment and positioning a product requires an analysis of the possibility of adjusting preferences by customers. The company should serve all customers. If there is a certain group of the population interested in the product, but their needs are currently not fully met or not at all satisfied, it is much easier to draw the attention of this audience to your product than to earn recognition from those who have steadily acquired a different brand for quite some time.
Strategies for selecting target market segments oblige to analyze the financial capabilities of the clientele. The company must first of all rely on those who are willing to spend impressive enough money to get at their disposal goods of a particular brand. Loyalty to the client’s brand is in many ways the key to a successful future enterprise.
Do I need it?
An analysis of the strategy of the target market segments requires an adequate assessment of the appropriateness and prospects of occupying a specific zone. You need to understand that development is a difficult process, a large variety of factors play a role, you will have to spend the enterprise’s potential. The costs will be not only material, but also scientific, you will have to invest in technology and spend money. All this needs to be calculated and evaluated, compared with the opportunities that open up when entering a selected area, and only on the basis of an adequate analysis and assessment of possible ways in a difficult economic situation make a managerial decision.
Positive Terms
For segmentation to be successful, it is necessary to pay attention only to such an area for which it is possible to clearly define boundaries and identify its characteristics in quantitative terms. If a segment shows an impressive capacity in the long term, you can work with it, otherwise the investments will not justify themselves. In addition, the selected sector must be accessible, that is, the channels of movement of goods that are already there should be applied to it. It is equally important to analyze the possible methods of product promotion - they should be suitable for a particular enterprise.
The moral basis of the decision is important. When choosing a market segment, you need to pay attention to its quality components and the acceptability of the impact of the product on the consumer. Such an example of a target market segment: a children's group. If a product can negatively affect the psyche, the moral basis of the work is a big question.
Another illustrative example of the target market segment is middle-aged consumers interested in purchasing natural and organic products. Such are relevant, in particular, for enterprises promoting farm goods, food products "directly from the village."
What to do next?
Having determined which market sector is really promising and attractive, you can begin to choose between coverage strategies. There are currently three popular options:
- concentrated;
- differentiated;
- undifferentiated.
Select and share
Dividing the market into segments and analyzing the attractiveness of each of them, you need to choose for yourself whether the company should focus only on one sector or choose several more promising. Based on the decision made, they select the optimal strategy for further product promotion. In this case, the target segment will be several at once, if a decision is made in favor of this option. The main condition is compliance with the requirements of a marketing company. When choosing a strategy, you need to identify your strengths, which can be emphasized in the fight against competitors, as well as determine the size of the market and profit, think about building a company-friendly image of the company.
Market coverage is provided by predicting differences between sectors. At the same time, the company produces some goods that are delivered through marketing strategies to the client as attractive. It is represented in the entire market. This is mass marketing. If this approach is impossible or unwilling to resort to it, you can concentrate on a single segment. Tactics are called concentrated marketing.
How else?
One way to choose the right market sector is to process multiple blocks. Each is assigned a unique product, varieties of one category. The best tactic is differentiated marketing. A unique product promotion plan is formed for each of the sectors.
It's curious
As practice shows, often the workflow allows you to detect such market elements that for various reasons have remained outside the scope of manufacturers' attention. Having found a similar phenomenon, they talk about the market window. But under the market niche it is customary to understand such an area in which the enterprise has a stable position, the company dominates the others.
Choosing a specific segment, it is very important to evaluate what competitors produce and how exactly they work. Knowing their mode of action, product properties, you can adequately identify the position of your proposal. Based on the information about the products promoted by the rivals, you can correctly position your own, providing it with exactly those qualities that will help to isolate the product for the buyer from the total mass.
Attention to all aspects
Succeeding in the conditions of modern business is frankly difficult. When it comes to enterprises seeking to capture a new market, everything here is especially complicated. So, you can find the most suitable segment, which is characterized by growth rates that meet the requirements of the company. This area can be attractive structurally, large and promising. Nevertheless, the choice in her favor has a chance to end with the collapse of the enterprise. To avoid this, you need to very responsibly evaluate the capabilities of the company, the future development of the company and its activities at the moment. It is important to realize how great will be the resources spent on promoting the product and fighting rivals. With an incorrect calculation, there is a chance that there simply will not be enough reserves, and the most promising, attractive of the found areas will still not become a source of profit.
Undifferentiated marketing
This term is used to denote such an enterprise development strategy when the company does not pay attention to the difference between different market shares. There is one product with which the company enters the market, and it is he who is promoting, attention in the process focuses on the common needs of the entire group of customers. But the differences between buyers remain virtually “behind the scenes”. The most promising in such marketing will be the approach based on mass. This applies to both advertising campaigns and product movement.
The correct organization of the workflow allows you to significantly save on the investment stage. This tactic is very well illustrated by the approach of Coca-Cola, especially in the initial steps of establishing a business. At that moment, the company produced a standard drink, which was bottled in exactly the same bottles. As you can see from the current state of affairs, the mass tactics of undifferentiated marketing with the correct organization of work gives really impressive results.
Differentiated marketing
This term is understood to mean such a strategy when a company creates a unique product for each segment selected for itself. Moreover, its development is based on the characteristics of the clientele. To succeed, you will have to produce a fairly extensive range of products and simultaneously promote several marketing campaigns. It is believed that with the proper organization of work, it is possible to significantly expand the possibilities of product sales, strengthen the position in each of the selected sectors, on the basis of which to rise above competitors.
A good example of such a strategy from history is General Motors, which promoted its cars as cars for all income levels, for different purposes. A product that meets the needs of every individual has found a response among the masses. On the one hand, this tactic gives greater profitability than the one described above, but the costs of translating it into reality are also more substantial.