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Marketing Plan 101: Who’s Your Customer? - Part 2

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Marketing Plan 101: Who’s Your Customer? - Part 2

By TonyaWilson
Published: March 9, 2012

In my last post I said I would discuss consumer behavior and the levels of market segmentation in this one. I have since changed my mind (I can do that, really, I can). That is simply too much for one post so the consumer behavior will have to wait for Part 3. Now onto the market segmentation!

Entrepreneurs are passionate people. They have put their blood sweat and tears into their business, be it service or product. They love it and can’t image how anyone could not see the value that their product provides.  This passion and dedication leads them to believe that mass marketing is the way to go. They have a food product and everyone has to eat right?

It is absolutely true that everyone has to eat, however, there are many factors including geographical location, ethnicity, culture, and even tradition that could play into the appeal of a particular food product to different customer segments.  Mass Marketing* is the production, distribution and promotion of one product for all buyers. Using this method could result in the largest possible market, lower cost, lower prices and higher profit margin but, and this is a big BUT, its difficult and almost always too costly for a small business owner to reach a mass audience. For these reasons segment and niche marketing is the more realistic, attainable and economical plan for small businesses.

In Segment Marketing,* the business owner focuses on a group of customers with similar needs and wants that his product may have a higher likelihood of fulfilling.  Take clothing for example.  A clothing line designed for evening wear that includes dresses and ties may be targeted to middle income, 18 to 24-year-olds.  This is a good start to identifying a target market, but the customer segment is actually even more narrowly defined. The segment would either be: 18 – 24-year-olds who shop at discount stores, 18-24 year olds who shop at department stores, or 18-24-year-olds who shop at high-end designer retailers depending on which of these retail categories your clothing product matches.  The benefit segment marketing has over mass marketing is its ability to better design, price and deliver a product to satisfy their target audience and to compete with competitors.

As small business advisors, we typically encourage small business owners to find a niche in the market that isn’t currently being met. Niche Marketing* narrows the target audience even further by focusing on a segment of customers that seek a distinctive mix of product benefits. These customers will have a specific set of needs and will pay a premium to the business best able to meet their needs. A niche is not likely to attract other competitors and typically will have size, profit and growth potential.

In my last post, I asked you to do the research to define your target audience- to put a face on your customer. Here, I want you to take your identified customer and determine the segment in which they belong. Next month, we’ll look at consumer behavior in terms of what motivates your customer to buy.

* This hyperlink goes to a non-government website.    

About the Author:

Tonya Wilson
As a member of the Ohio SBDC at Columbus State, we provide entrepreneurial development assistance and business consulting to start-up, emerging, and existing business owners. In addition to one-on-on advising, we create, coordinate and promote programs and events to inspire, educate and engage individuals who wish to start or grow a small business.

Comments:

I think most small business owners just starting out should niche market. It is much easy to meet the needs of a small, fairly similar group of people, then it is a diverse group. Great advice, thanks for the post.

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