Which customers?

Segmentation

Even the largest organisations have limited resources and so have to make decisions about where to focus their efforts. Firstly this means deciding on how to "view the world", by defining your marketplace in geographic, demographic, psychographic, behavioural and/or other terms, and then dividing all the possible customers into groupings or segments.

Profile the segments

• What groups of potential customers are out there with needs that you wish to serve?
• Who are they, where are they?
• What do they buy, why do they buy?
• How do they get to know about goods and services on offer?
• Where do they go to buy them?
• How are goods or services distributed or delivered?
• What after-sales service is there?
• What competitor activity is there?
• What factors drive growth in this segment?

Ideally, decide on a segmentation that rests primarily on customer needs, although this may have to be refined using other factors.

Targeting

Which customers or groups of customers, in individual markets or groups of markets, have needs that your business is best and most distinctively able to serve?

Do these potential targets have the characteristics necessary to be a source of profitable growth for your company?

• homogeneous - to meet their needs with the same marketing mix
• unique - they respond specifically to the mix that you offer
• actionable - defined in terms that let you market to them
• large enough to justify targeting

If operating internationally, at country level are there additional factors such as structure, cultural aspects, trade barriers or logistics that affect the relative attractiveness of the market as a whole or a customer segment within it?

Marketing Thinking from GCM Marketing Ltd. provides consultancy, advice and practical help with marketing analysis, marketing research, business and marketing strategy, marketing plans, marketing communications, brands & positioning, from a base in Scotland. Copyright © 2004, 2005,2006.