Imagine you have a big watermelon. Now imagine you’ll try and get the whole watermelon into your blender to make a nice watermelon juice. It seems like a good idea. Ermm, not so much, unless you have a very small watermelon and a very big blender.
Now imagine you also have a knife, with which you can slice the watermelon, so it’s divided into manageable chunks. With some of it, you’ll make some juice, with the rest, you’ll make a dessert and with the peel you will feed your backyard animals. That’s good usage of your product and enables you to serve different ‘markets’.
Market segmentation is just like that.
You may think you have a big market, but you can’t be everything to everyone. You have to slice it into chunks that you can handle, that you can understand and that you can work with to concentrate fully on squeezing the juice out of each individual piece. Segmenting your market is the key to your success as a business. ‘No one can please everyone all the time’, someone once said, and nothing could ring more true when it comes to targeting marketing.
By going after segments instead of the whole market, there is a much better chance to deliver value to the consumer and, consequently, increase your profit margins. By segmenting the market, you will be separating groups of buyers with distinct needs, characteristics and behaviours, who might require different products and a different marketing mix to match their requirements.
To segment your market you have a very sharp tool in the draw: market research.
You need to ask, you need to observe, you need to read between the lines, you need to interpret it. And once this research is done and you have a few segments that look appealing to your business, how do you know which one to target?
Here is a test you can perform, 5 simple but extremely important questions that you have to ask about that segment, so you can decide if you should invest in it. Here you go:
1. Is the segment substantial?
The market needs to be large enough to be profitable.
2. Is the segment measurable?
We should be able to measure the size and characteristics of the segment through different data sources.
3. Is the segment differentiated?
We should be able to distinguish between this segment and other segments in terms of the way they respond to the marketing mix elements.
4. Is the segment accessible?
We should be able to reach the segment in terms of communication, media and distribution.
5. Is the segment actionable?
We should be able to develop ways to attract and service the segment.
Ok, so now you have 5 ‘yesses’ and you have decided that you have a brand new target market for your product/service.
Well done, great stuff. But, how do you position your offering to this brand new market?
Here’s how to start: go back to your research. Remind yourself about how this market wants to be communicated to. Analyse their answers. Again, read between the lines.
Positioning involves placing your brand and everything that is unique about it in customer minds. A product or service’s position in the market is a complex set of perceptions, impressions and feelings that consumers have towards what you are offering them. It’s how they see it and how they see it fitting into their lives.
To position successfully you must have thorough knowledge of the key benefits sought by the market, so the more time and effort you invest on the market research, the more equipped you will be to come to the USP, which will be the pillar of your communication.
The unique selling proposition is about what makes the product special and different to the competition and it’s what makes people buy and buy again.
Invest in it, communicate it and promote it through your marketing mix. But overall, if you do one thing and one thing only, make sure you have taken the time to segment your market and got to truly know every pip.
Without that, all your efforts might just follow the watermelon juice down the drain or splashed across the kitchen walls. And that is one big cleaning up job.