Quickly, without thinking, who is your target customer? Was that easy?
As an investor you look at potential investments where you believe you can implement strategic and operational improvements to continue to drive growth and create value.
Market segmentation and targeting is one of the first principles of marketing and using best practice here often delivers improvements relatively quickly.
One of the key questions I ask those responsible for marketing (or selling) is;
“Who is your target customer?”.
I follow this up with;
“…and what do they want?”
The worst answer to the first part of course is “everyone” or “millennials*” (*replace with any broad demographic generalization!).
Unless you are one of the worlds biggest brands, “everyone” is not an option; and even the worlds biggest brands operate a targeted marketing approach based upon distinctive, quantifiable consumer or customer segments, so maybe there’s a clue for us all here.
So how does it work?
Step 1: Understand your markets segments, geographically and demographically of course, but also psychographically, (personality and lifestyle), and behaviourally, (product usage, quantity, location and what do they think of it.) This process usually involves gathering market intelligence, and perhaps going out and conducting your own market research. (At the very least talk to some consumers and customers.)
Step 2: Understand what your offer is and ensure it responds to those needs of the segments in the market. Honestly, usually this is the easy bit, most companies know what they do well and how best to “sell” or “position” their product. The trick is to position against your target market with a relevant “insight” that makes you and your product a more compelling offer than alternatives.
Step 3: Make some choices! This is usually the hardest part. Someone will say “we’re leaving money on the table!”, “we must include X and Y and Z, oh and W as our targets!” Having too many targets or too broad a target is rarely the right approach. Of course, you can segment your market in line with your product portfolio so you may have several targets, but not dozens!
Step 4: Pressure test those target segments. Are they big enough to generate income? Are they differentiable, measurable and accessible?
Step 5: When choosing your target and matching it with your offer serving the needs of the target, you will need to articulate your offer as a differentiated value proposition*. Once defined you are ready to start implementing a marketing plan against your target with your compelling value proposition. (* we will discuss how to construct a compelling value proposition in a future blog.)
Understanding to whom you are addressing your offer or product is a key step in any organisation.
Who is your consumer and what do they want?
Who are you targeting and where?
Can you honestly answer these questions without thinking too hard?
This is an area in many companies that can deliver a relatively quick win to enhance value and render the marketing effort more effective.
Mark Shepherd leads our marketing capabilities at Lighthorne Partners
He is also a member of the faculty of International Business Management at the University of Applied Sciences, Western Switzerland where he lectures in marketing management.
You can contact mark directly: Mark@lighthornepartners.com
+41 79 777 5879