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Targeting: How to Make Marketing More Efficient and Effective

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Who are you targeting?

Often when you ask a small business owner who they are targeting as customers, their response is “Everyone”, or “Anybody interested in…” They might refine this audience down to “homeowners” or “people who go to the gym”. This is still too broad. The problem is with this is, not all consumers think alike, and not everyone is going to purchase your product. Because of this broad focus, marketing can miss the mark.

Instead of trying to market to everybody, targeted marketing makes your product or service as attractive as possible to certain groups of people. Firms focus their marketing efforts on a specific and defined audience.

This week’s topic explores targeted marketing and how businesses use targeting to be more effective with their marketing and improve their ROI.

“Provided that sales in the target segment are higher than lost sales in the non-target segment, the firm is undoubtedly better off financially.” (Cahill, 1997)


What Is Targeting?

Targeting focuses all marketing efforts on the defined group or groups of people MOST LIKELY to become profitable customers. These groups of customers will have common characteristics and interests and could be based on existing customers, as there is likely to be similar people who you will also benefit. The targeted customers might also be groups of people who overlooked by the competition. If they are profitable, this then presents an opportunity for that business.

The benefits of targeting

With targeting, marketing becomes more affordable, efficient and effective at generating customer leads. Saving money on marketing and a better return on investment are the most obvious benefits of targeted marketing — especially for small businesses with frugal marketing budgets. Targeted marketing is far more cost-effective than mass marketing as firms are not wasting time and money marketing to people who will never be a customer. Instead, the target audience is specific consumers who are most likely to become customers.

“Firms can obtain significant benefits by targeting their promotions.” (Narayanan & Manchanda, 2009)

If we understand who our most profitable customers are, we will know which customers are not profitable, and we can also overlook them with our marketing which is important with paid advertising (why waste your money!?)

Targeting should begin with the customers and the marketplace. Therefore, it creates a strategic focus as the firm must take a realistic and well thought out approach to their product or service offering, their marketing and their customers. This integrated approach ensures everything is a good fit.

If you are not targeting specific groups of customers with your communication, the message can become blurred. The broader the targeted market is, the broader their preferences, needs and desires are. The more focused your message is, the more receptive the target audience will be.

What is a Target Market?

Identifying their target market/s is a crucial step for any firm when developing their strategic marketing plan. A target market is the group/s of customers that a business focuses their marketing efforts on. The people they want as their customers. It is a segment of the total market for a good or service. The consumers who make up a target market share similar characteristics, defined by demographics such as gender, location and age as well as criteria based on their consumer behaviour.

“A target market is, at its most basic, simply the market or submarket (such as a segment) at which the firm aims its marketing message(s).” (Cahill, 1997)

This target market determines other key factors for a product or service such as distribution and pricing, or it can influence aspects of the product or service itself. After identifying what group/s of customers you wish to target, you must learn their values and consumption habits. This will help you strategize how to communicate with them effectively and ensure your offering best fits their requirements. If something is not right, firms can modify aspects of the product or service itself, or its marketing such as the packaging, pricing or even the brand name to help facilitate a more successful result with their target market.

Target marketing sits alongside the positioning strategy. Positioning creates an image of a brand’s product or service in the mind of a target customer. It defines how the brand’s offering is unique and how it provides a distinct benefit to customers. Marketing communicates a brand’s positioning to consumers to influence their perception.

Your positioning must be attractive and credible to the people who require your product and are most likely to purchase it.

“This identification of target customer groups is market segmentation, where customers are aggregated into groups with similar requirements and buying characteristics.” (Dibb & Simkin, 1991)

Market Segmentation
An orange segment — think of your target market as a segment

Segmentation: defining your target market

The strategy of using targeted marketing to reach specific groups or clusters of customers is market segmentation. A firm can choose one or even numerous segmented groups as their target market, divided up based on their characteristics, based on their unique marketplace. As customers have unique buying patterns to try and understand, this process helps to match customer demands with a firm’s ability to satisfy them.

Firms can follow a range of different segmentation strategies such as concentrating on a single segment with one product or brand, concentrating on numerous segments with one brand or having many brands or products each targeting a unique segment.

Market segments are specific and objective, comprised of people with similar characteristics that are likely to respond similarly to a marketing campaign. This helps businesses to optimise their branding, advertising and sales.

For example, a Gym might choose to market to fitness-minded people between the ages of 15 and 40 in Hamilton, New Zealand. To make this segment even more defined, they might choose to market to people with strength and performance-based goals, attend the local university, and use a lot of social media. The gym could further break down this market into further niches, such as performance-based goals for sport, or powerlifting or CrossFit, or bodybuilding.

Indian International Students as a market segment
Indian International Students as a market segment

Target market characteristics

The process of dividing a target market into segments uses three key categorisation techniques. They are demographics, psychographics and behavioural.

Demographics: Demographic segmentation aims to build an accurate picture of who the target market “is” by using statistical characteristics of human populations to identify these people. These include:

· Age

· Location

· Gender

· Occupation

· Ethnic background

Psychographics: Psychographics segmentation looks at consumers as people (not customers), seeking to better understand the personal characteristics on a human level. This includes their lifestyle, key values and activities. These include:

· Personality

· Opinions, attitudes, and beliefs

· Values

· Interests/hobbies

· Lifestyles

Behavioural: Behavioural segmentation defines people based on their actions and thoughts as a consumer. This helps marketers to further define who they want to attract and who they do not want to attract. These include:

· Purchase Behaviour

· Customer Loyalty

· Occasion or timing

· Benefits sought

· Usage

Understanding the consumer behaviour of your target market

Brands need to understand what their target consumers believe are the most important components of a product or service when they decide to purchase. How will they use the product? What product features are most appealing to them? Market research is a crucial step to get your positioning in the market right.

Before releasing a new product, it is beneficial to test it with the target market. Using focus groups are a fantastic way to test perceptions and the performance of your offering with the types of people you want to purchase it. This constructive feedback will allow you to make improvements before it comes to the market. Analyse industry or talk to existing customers about what they want from a product. This will all help answer important questions you may have about your marketplace or target customers.

After the product is on the market, it is beneficial to monitor sales data or use customer surveys and other actions that help monitor performance and better understand customers and what they want. Measuring customer satisfaction allows brands to continuously improve their offering.

“Each target market needs to be addressed in different ways in order for a marketing campaign to be effective.” (Geraghty & Conway, 2016)

Communicating with your target market

It is important to market to your target market precisely, otherwise, you waste precious time and money. Targeted advertising helps improve the efficiency of matching brands with customers. To reach a target audience, marketers must consider how and where to communicate to reach these people and have them listen. Do they read the local paper every day? Are they browsing Facebook? They might watch a lot of television. Once you have chosen where to advertise, what marketing message will best resonate with them? Marketing must match customers preferences and behaviours. You will only learn this through trial and error or market research.

Traditional marketing communications include television, radio or film advertising or product placements, sponsorship of events or live sport, billboards, point of purchase placement, print advertising such as flyers, business cards or newspaper and magazine adverts. Studies have indicated that magazines have the longest life span of any traditional form of marketing (See Blakeman, 2014). People can share magazines around with their friends, or they are often left by businesses for customers to browse whilst they wait, such as in the waiting room at the Doctors, at cafés or the local fish and chips shop, and can be left for months or even years on end.

In-person events are the most successful form of lead generation for B2B businesses (See Tomas, 2015), making networking events, conferences or expos popular with salespeople. It is much easier to convert face-to-face than it is with any other marketing technique, it is just very time consuming and you do not have a massive potential audience as you do online. The important thing to consider is, will your communication method reach your target audience.

Advances in digital marketing

Innovations in technology and software over the past quarter of a century has made it possible for any business to collect valuable data about customers and potential customers. Digital marketing provides many targeted marketing tools such as email marketing, blogging and search engine marketing or optimisation and gives marketers a much higher capacity for in-depth analysis of consumer behaviour than was possible through traditional means of marketing. The growth and popularity of social media have helped businesses to create highly customised and personalised targeted advertising based on the behaviours we learn from peoples’ habits online.

“Online targeting consumers has been a great advantage to marketers as they can now see not only what a person is viewing but for how long, where and why” (Geraghty & Conway, 2016)

Social media is a powerful tool for targeted marketing
Social media is a powerful tool for targeted marketing

Facebook for targeted advertising

Facebook is hugely popular for creating targeted advertising. A big strength of Facebook is the enormous audience (1.79 billion daily users) and the ability to create hyper-targeted advertising based on a vast number of attributes. There are more than 240,000 attributes that marketers can combine to target highly specific groups of people based on combinations of attributes. Facebook even allows you to exclude people based on certain characteristics, which makes your advertising even more targeted.

Because of this potential, there are over 7 million people or business advertising on Facebook. Facebook provides four major techniques for targeting and users can use a combination of these methods. They are Personally Identifiable Information, Attribute targeting, Look-alike audience and retargeting.

· Personally Identifiable Information targeting is when the users provide a database of people with personal information such as name, email address and phone number. Facebook will then place adverts in front of these people browsing the platform. Create custom audiences based on characteristics such as liking their Facebook page, downloaded an app or visited their website.

· Attribute targeting allows advertisers to target people based on a wide range of elements that include user basic demographics such as age and gender, advanced demographics such as newly married, interests such as a basketball or videogames and behaviours such people who have recently purchased online. Combining more attributes makes the audience more specific for an advert. Interests can be predefined and chosen from a dropdown menu, or a relevant topic typed in and the user can browse related attributes.

· Look-alike audiences are another option the Facebook offers to help put your advertising in front of the right people. Users input a database of people, use a previous audience or this audience can be based on people who “like” their Facebook page. The Facebook algorithm then targets other people who share similar characteristics

“By compiling demographic data, purchasing history, and responses to past advertising messages, digital marketers can create and refine advertising messages tuned precisely to the psychographic and behavioural patterns of the individual.” (Montgomery & Chester, 2009)

· Retargeting focuses on people who have already interacted with the business. Many customers need numerous interactions with a brand before they decide to purchase, so it is important to stay in front of and relevant to these people. People who have visited your website can be targeting through using a tracking pixel, or businesses can target other behaviours such as people who have watched previous videos or “liked” previous advertisements. Facebook is a powerful tool for retargeting.


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