Customer insight is the foundation to business success
How well do you really know your customer? Many businesses fail to take a step back and really get an understanding of their customer base before undertaking marketing. If you don’t know your customer, how can you sell to them?
Many businesses are just too quick to throw money at marketing without really taking the time to think about who they are actually targeting with their communication. History has demonstrated that the likelihood of a business surviving tough times is slim if they rely on targeting a mass market. Marketing costs tend to spiral and both sales conversions and ROI remain low.
Taking the time to really get an understanding of a client, and their buying behaviour, allows a business to precisely reach and engage with a consumer with specific needs and wants. You will find that many of your clients have similar needs and wants and you can cluster them into groups, or segments, based on these desires. This is called market segmentation. In the long run, this benefits a business because they are able spend their marketing $ wisely and make better strategic marketing decisions.
For example; Pete, the farmer, realised early on that not everyone would purchase his expensive organic produce. He did not want to spend his entire marketing budget on advertising to the masses. Instead, he identified his target market and created a specific marketing plan to communicate effectively with his prime customers.
His target market consisted of females age 18-65, with an income of $75,000+, who have healthy eating habits and who are concerned about pesticides. His marketing plan consisted of ad placement in local women’s magazines, newspapers and also email blasts to a customer list that he formulated with age and income specifics. Lastly, he advertised with a local gym about his healthy produce. Marketers have numerous choices in how they can segment a market and if done well, can really improve the ROI on marketing spend.
Dividing markets into identifiable groups allows the business to develop specific messages that will resonate with a specific group (market segment) through media channels that will target that group directly. This approach ensures maximum engagement is achieved with an audience who feels the business really knows their needs and wants which, ultimately, results in a higher conversion rate to client for the business.
Market segmentation doesn’t have to be an onerous or expensive process, it can be undertaken at any time to ensure every marketing dollar is spent wisely. We often work with small to medium-sized business improving their market segmentation and targeted marketing. Our ‘Essential Marketing Package’ helps businesses to segment their marketing, identify buying behaviours, formulate target messages for each segment and will also recommend communication strategies for a business. Click here for more info.