Target Marketing

Target Marketing Can Be the Key to Increasing Sales

Target Marketing. Image (c) Alex Slobodkin / Getty Images

Definition:

Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments consisting of the customers whose needs and desires most closely match your product or service offerings. It can be the key to attracting new business, increasing your sales, and making your business a success.

The beauty of target marketing is that by aiming your marketing efforts at specific groups of consumers it makes the promotion, pricing, and distribution of your products and/or services easier and more cost-effective.

It provides a focus to all of your marketing activities.

So if, for instance, a catering business offers catering services in the client’s home, instead of advertising with a newspaper insert that goes out to everyone, the business could target the market with a direct mail campaign, a flyer delivery that went only to residents in a particular area, or a Facebook ad aimed at customers within a specific geographic area.

Social media platforms such as Facebook, LinkedIn, Twitter, and Instagram have sophisticated options to allow businesses to target users based on market segments. For example, if a Bed and Breakfast business could target married Facebook followers with an ad for a romantic weekend getaway package. LinkedIn is more B2B oriented - you can target businesses by a variety of criteria such as number of employees, industry, geographic location, etc.

While market segmentation can be done in many different ways, depending on how you want to slice up the pie, three of the most common types are:

Demographic Segmentation

Demographic grouping is based on measurable statistics, such as:

  • gender
  • age
  • income level
  • marital status
  • education
  • race
  • religion  

Demographic segmentation is usually the most important criteria for identifying target markets making knowledge of demographic information crucial for many businesses.

For example, a liquor vendor might want to target their marketing efforts based on the results of Gallup polls, which indicate that beer is the beverage of choice for people below the age of 54 (particularly in the 18-34-year-old age range) while those aged 55 and older prefer wine.

Geographic Segmentation

Geographic segmentation involves segmenting the market based on location. Home addresses are one example. However, depending on the scope of your business this could be by:

  • neighborhood
  • postal/zip code
  • area code
  • city
  • province/state
  • region
  • country (if your business is international)

Geographic segmentation relies on the notion that groups of consumers in a particular geographic area may have specific product or service needs; for instance, a lawn care service may want to focus their marketing efforts in a particular village or subdivision that has a high percentage of seniors.

Psychographic Segmentation

Psychographic segmentation divides the target market based on socio-economic class, personality, or lifestyle preferences. The socio-economic scale ranges from the affluent and highly educated at the top to the uneducated and unskilled at the bottom. The UK-based National Readership Survey defines social class according to the following categories:

Social GradeSocial StatusOccupation
A upper middle classhigher managerial, administrative or professional
B middle classintermediate managerial, administrative or professional
C1 lower middle classsupervisory or clerical, junior managerial, administrative or professional
C2 skilled working classskilled manual workers
D working classsemi and unskilled manual workers
Ethose at lowest level of subsistencestate pensioners or widows (no other earner), casual or lowest grade workers

The lifestyle classification involves values, beliefs, interests, etc.  Examples include those who prefer an urban as opposed to rural or suburban lifestyle, or are pet lovers or have a keen interest in environmental issues.

Psychographic segmentation is based on the theory that the choices that people make when purchasing goods or services are reflections of their lifestyle preferences or socio-economic class.

Target Marketing Case Study - McDonald's Restaurants

McDonald's Restaurants is the largest fast food chain in the world and one of the most successful examples of demographic target marketing, aiming their products at children, teenagers, and young urban-dwelling families by offering "Play Places", free wifi, "Happy Meals" that include toys such as Walt Disney characters, and ad campaigns with slogans such as "Feed Your Inner Child". Targeted advertising combined with aggressive pricing has enabled McDonald's to capture 25% of the fast food market share in the U.S.

However, in recent years as millennials have surpassed baby boomers to become the largest generation in the U.S., McDonald's sales have been in decline as fast food style menu items such as the ubiquitous Big Mac and fries have lesser appeal to millennials. In response, McDonald's has altered their marketing strategy to target the millennial generation by advertising fresher, healthier menu options and upscale coffee products such as espressos.

More information on Target Marketing

If you’re interested in target marketing, the first step is to do the research that will help you define and zero in on your market. The following articles will help you get started:

How Do Businesses Use Marketing Research?

Do-It-Yourself Market Research

Define Your Target Market and Increase Your Sales

How to Find and Sell to Your Target Market

4 Steps to Developing a Marketing Plan

Also Known As: Niche marketing.