Now we have gone over the seven Ps of marketing. As we have mentioned several times already, a critical part of any marketing strategy is understanding your customers.
Do you know what type of customers do you have? Which potential customers would it make sense to target? How can you differentiate your product to cater specifically for this group of customers?
In this chapter, I will cover three additional marketing concepts: segmenting, targeting, and positioning.
Segmenting
Segmenting is the process of dividing the market into segments based on customer characteristics and needs. The reason for segmenting a market is based on the fact that not every customer has the same needs. For one product the market can be divided in different customer groups. There are four key ways to segment customers.
1. Demographic characteristics of your customer: With the use of population data, such as sex, age, income, education level, etc. you can determine whether your product would be mostly suitable for women or men, young children or elders? For example, agricultural products are primarily purchased by people who cook for their families; women in most countries.
2. Behavioral characteristics: Do you want to target customers that will continue to buy your product or is this a one-time purchase? For example, a house will more likely be a one-time purchase while pumpkin products would ideally be a repeat purchase.
3. Geographic characteristics: Would your target customers who live in Nairobi or in rural areas? Do you have a specific neighborhood in mind? If you sell a technology product, you would want to sell in an urban area like Nairobi where there is higher adoption of technology.
4. Psychographic characteristics: What is your target customer’s personality, values, opinions, attitudes, interests, and lifestyles? For example, if you are designing a soft drink for young people, they prefer products that look ‘cool’.
For my business, the behavioral and geographic characteristics are largely the same for all customers. Customers view pumpkin products as repeat purchases. Since I only have one store for now, customers live in Kiambu county. As my business expands, I will consider targeting customers in nearby counties such as Nairobi.
However, there are differences in demographics and psychographics. There are three key types of customer segments for my business. (1) a woman in her 30s or 40s who want to provide the best possible food to her family. She cares about the quality of the pumpkin products I sell. (2) A dad in his 30s or 40s who is purchasing the pumpkin products on the way home from work. (3) A student in late teens or early 20s who is looking for a convenient snack.
Do you know what different types of customers who could buy your products/services? Go out and ask your friends, family members and others you know. What seems to be the typical target group(s) for your business?
Targeting
The first step to selecting the target customer is to think through the problem you are solving with your product. With that in mind, of all the customer segments you have identified, which are the most attractive to you? Who would be most interested in the unique value proposition you are delivering?
At the same time, which customers are your competitors targeting? If all your competitors are going after the same segment, you may want to consider targeting a different segment or strengthening your value proposition so that customers will choose your product.
Given that my value proposition is providing high-quality pumpkin products, I decided to target the first segment as these customers value quality over convenience or price. Although my competitors also target women in their 30s and 40s with children, I specifically target the sub-set of women who are more health-conscious so that they would care about quality and also wealthier so that they can pay the higher prices.
Positioning
Positioning involves communicating the unique value proposition to appeal to the target customer. Positioning focuses on the rational or emotional benefits that buyer will receive or feel by using the product or service. The process of defining the position of your product also includes identifying your competitors and then showcasing how your product is different from others. You can also refine the positioning based on talking to customers.
After talking to customers, I realized that they care about providing healthy, high-quality food to their families. They feel happy when they see their families enjoying the pumpkin products. Therefore, I positioned my business as providing the best quality pumpkin products that will make families happy.