Selecting Target Markets
Strategic targeting can optimize the return on investment by selecting the best segments in the market for return on investment.
Recognize the importance of segmentation and how to translate data into smart decisions
- Identifying optimal segments within the broader market can improve the efficiency of both paid and organic marketing initiatives.
- Selecting the right segments relies heavily on good data. The first step is collecting as much information as possible on the industry, competition, key metrics, and consumers.
- Once the data is collected, organizations must strategically query the data to identify correlations that are statistically significant. In the era of big data, this is more important (and more complex) than ever.
- Once the optimal segments are identified, the organization can match their available resources with the opportunities in the market itself.
- segmentation: The act of dividing a larger population or market into smaller groups.
Why Pursue Target Markets
The purpose of identifying various market segments within the broader market is to refine the targeting of paid and organic advertising. Simply put, it’s best to narrow down an organization’s targeting to the individuals most likely to be interested in the product or service. These groups of interested consumers within the broader market is usually referred to as a target market, and should be a much more strategic place to invest capital in terms of marketing distribution.
How To Select Targeted Groups
To start, the organization should collect as much data as possible on the industry, competition, consumer behavior, and expected growth trajectories. Once enough data is collected, it’s useful to frame the targeting strategy by querying the data using the right questions. Some things to consider include:
- How big is each segment?
- What are the demographic, psychographic, behavioral, and geographic characteristics of each segment?
- Which segments have the competition and/or our organization already captured?
- Where is the highest growth potential?
- Which market is most closely aligned with the organization’s brand and/or operating philosophy?
- Is is practically feasible to enter where the ideal segment is (i.e. geographically)?
While there are countless other questions to ask, which will vary by industry and situation, understanding these basic concepts can quickly simplify the segmentation decision.
Selecting A Segment
At this point, with the available market data at hand, it’s fairly simple to assess internal resources and external opportunities to optimize the marketing plan. The key here is to get the greatest return on marketing spend by strategically selecting the appropriate channels and using the ideal messaging to reach the selected segment.