So, the first rule of targeting is to accept that that means that everyone who is not your target customer is not your customer. The second rule of targeting is to always pick a target segment that values what you have to offer.
A common mistake
One of the common mistakes firms make is to go after segment just because that segment is attractive to the company. Maybe this segment has a lot of disposable income or maybe they are opinion leaders and so can improve the brand image if they start using the product.
But the value that the customer would provide to the company is only half of the equation. And, you also have to consider whether you are capable of creating an offering that the customer actually wants.
For example did you know that in the early 1980s Levi’s produced a line of high-end men’s suits? Of course you did know that. The suits flopped miserably because they picked the segment that they valued.
It’s easy to see in retrospect why it might be a bad idea for a brand known primarily as a casual western cowboy type of the brand might have a hard time jumping into the market where customers tend to devalue refinement and quality and status.
How to pick a market segment target
So it’s not enough for a segment to be attractive to you. That’s necessary but not sufficient. Your target must find your offering attractive too. In other words you must be in a position to sell an offering that will create value for the segment you target.
Both parties must come away from the transaction better off or the whole thing is going to fail. This is demanded by the two basic principles of good targeting: first you should have a single target for each offering and second you should select targets because you can create value for them.
With those two principles in mind let’s shift gears now and talk about how to pick a target. There is a tool for that called the attribute by segment matrix. In order to create an attribute by segment matrix you must have three types of information:
- you must have information about the possible segments that one could target in other words you must’ve had done your segmentation analysis,
- you will need the attributes that are important in that product category,
- finally you will need an evaluation of how your offering and the offerings of all your competitors perform on those attributes.
If you can help your company think that way about marketing you will vastly improve your chances of success.