Narrow down your target market. 4 Ways to Help You Segment Your Target Market
Most people think that the easiest way to make sales is to have an offer for everyone. There is nothing further from the truth! You have to be aware that we are all human and that there are different types of people with different tastes and interests.
Narrowing your market down into manageable groups rather than trying to appeal to everyone, will help you find greater success in reaching your audience. You need to have a target market identified and clearly defined.
So the question I often get is HOW do you segment a market. There are many different ways but I’ll share four of the ways I use to segment.
You can segment your market by geographical area, customers, your product and price.
The first way you can narrow down your target market is by limiting or selecting the area in which you sell in or the area you provide your service to. An excellent example of this is changing the area locally, nationally or even on a global scale.
An excellent example of this is UberEats. UberEats deliver food from restaurants globally, in all different countries.
When UberEats launches into a new country, it doesn’t target the whole nation at once but rather the easiest area for the company to gain a solid beachhead (a good foundation to grow from). For UberEats this is high-density areas, and will often be the central city district as that will be the smallest area with the highest number of potential customers. This allows Uber Eats to hone down on its target market and reach them more affordable as they don’t have a large area to cover, making their marketing efforts go much further.
2. Audience or customers
Maybe you have a product or service that you can easily ship/ deliver to your customers (could be an app), so changing your audience and customer targets could be a great way forward initially.
This is one of the most common ways to narrow your target market and you can do this through, demographics (age, sex, marital status, etc), special interests (hobbies, past time activities, etc) or behaviour. To find out more about this, check out “Where to start” and “Know your customer”
A great example of this is Sharesies, a New Zealand based Fintech company.
Sharesies is in the business of increasing financial literacy and helping young kiwis to invest in the stock market. Its target audience is not everyone in New Zealand who wants to invest in the stock market.
Sharesies aim at the ones that haven't had the opportunity to do so in the past due to a lack of knowledge and know-how when it comes to investing. Sharesies allow small investments into managed funds throughout New Zealand, Australia and the United States allowing predominantly young, tech-savvy New Zealanders to future proof themselves.
3. Price point
The third way to narrow down target market is through price differentiation. You can choose whether you want to target budget services (low end of the market, usually requiring a high volume of sales), high-end services (focusing on quality and service but less sales) or mid-range affordable pricing (The middle between the low and high).
First-time business starters often try to differentiate and compete on pricing (making it cheaper than anyone else), budget services and cutting down costs to the lowest price. This is usually not the best way as when you do go for this strategy, you want to make sure that you are THE cheapest to stand out and gain massive reach, fast.
NOTE: There may be some products offered that have a significant mark up on them that you can sell for a better price while still remaining highly profitable.
A better way is to offer better quality service, better quality products and better overall experience for a premium price. I am often afraid to price myself at a higher rate than others but by doing so I have the ability to really differentiate myself with better high-level service rather than a 'one to many' solution.
Think about Apple vs other technology companies. Apple sells the highest priced mobile phones, yet people love and buy their products as they like the better service and perceived quality that comes with the purchase.
4. Sell or offer
The last way to narrow down is by changing the way you sell or offer your product or service. Let me give you an example, accounting services used to be very much focused on consulting fees. That is charge their clients per hour or on a monthly advisory fee.
These days, most accountants will plug in to Xero or MYOB (accounting software) and charge a monthly subscription for their services rather than their previous consulting/ advisory fee. This change allowed them to change their business model and stand out competitively to other management consulting companies.
If you think about Taxi companies and Uber, it’s a similar situation. Essentially they offer the same, that is take you from A to B on demand. However one is a lot more successful than the other because of the way they offer their service to their customers. While Taxi companies still demand you to call them so that they can dispatch a taxi to you, uber gives you instant access to their closest driver.
Narrow down your target market to increase your rate of success. Look at whether you can limited the area where you offer your services. Perhaps changing the people you target (demographic/ behavioural/ psychographic). Change your price or the way you offer your product/ service.