How well do you know your target market?

Identifying Customers

Your market may consist of different customers with different buying behaviours. Some may prefer impulse purchasing while others may prefer taking their time and getting assistance from others. Getting a good understanding of how consumers think, what their buying habits are and what factors influence these habits is essential for you to make the most of your marketing opportunities.   

There are six questions that are commonly asked in regard to consumer buying behaviour:

     Why do consumers buy? Why will they buy the products or services on offer?
     Who buys? What are the characteristics of consumers that are likely to buy from you?
     What do they buy? Which products or services do they typically choose? What brands do they prefer?
     How do they buy? What are their buying habits? Do they buy because it is convenient or do they buy because it is easily accessible? Do they pay cash, or do they use credit cards?
     Where do they buy? Do customers prefer to buy from mail order, retail stores, the internet or from door-to-door? How far are they prepared to travel to buy?
     When do they buy? How much is the behaviour of customers affected by seasonal influences? What about the holiday season? How does that affect their shopping patterns? What about inflation or recession, or higher interest rates?

Influences on consumer behaviour

There are many factors that can influence consumer buying behaviour. These can include personal factors; such as age and gender, social factors; such as social groups and culture and psychological factors; such as personality and attitudes.

Social groups may be made up of family, friends, social clubs or sporting teams. Each group develops its own set of normal behaviour and attitudes which can dictate their buying habits. For example, surfers tend to wear certain types and brands of clothing, while younger children are interested in toys or the latest craze such as skateboards or scooters.

Roles in the buying process

Identifying the roles in the buying process can help your organisation in developing the most effective marketing strategy for your business.  Different people have different roles in the purchasing process of a particular product. For instance, if you consider a family, there can be different roles occupied by various family members as follows;

     The person who suggests the idea of buying a particular product or service
     The person who advises or carries some weight in making the final buying decision
     The actual decision maker who would ultimately make the buying decision
     The person who would make the purchase
     The user of the product. Therefore a company needs to identify who occupies which role or roles and thereby tailor the marketing strategy to suit.

Knowing the main participants and their roles in the buying process can help you to fine-tune the marketing strategy. 

Targeting

Once you have segmented your market based on different characteristics, the next task is to choose one or more target market segments. Developing different marketing strategies for different customer groups is very important as no one particular strategy would satisfy all customer groups with different characteristics, lifestyles, backgrounds and income levels.

There are three general strategies for selecting your target markets:

Undifferentiated targeting

This approach views the market as one big market with no individual segments and therefore uses one single marketing strategy. This strategy may be useful for a business with little competition where you may not need to tailor strategies for different preferences.

An example of when undifferentiated targeting can succeed is if your business is the only one of its kind in a small isolated town where you would consider all people living in the town as your target market. However this strategy may not be effective if there are three or four competitors also in town.

Concentrated targeting

This approach focuses on selecting a particular market niche for targeting the marketing efforts. Because your firm is focusing on a single segment you can concentrate on understanding the needs and wants of that particular market intimately. Small firms often benefit from this strategy as focusing on one segment enables them to compete effectively against larger firms. Porsche for example, targets an upscale automobile market through "Class appeal, rather than mass appeal".

Multi- segment targeting

This approach could be selected if you wish to focus on two or more, well defined market segments and want to develop different strategies for them. Multi segment targeting offers many benefits to firms including greater sales volume, higher profits and large market share. However this method can be costly as it involves greater input from management, increased market research, and increased promotional strategies etc.

Prior to selecting a particular targeting strategy, you should perform a cost benefit analysis between all available strategies.

This information was provided to HBC by I&I NSW