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Spend marketing dollars on identifiable targets

By KENNETH PARROTT
Published October 2, 2006

In the mid 1970s I was trying to sell my '68 Buick for the (back-then) $100 going price of a 7-year-old beater. I had zero responses to my advertising.

Frustrated, I finally gave the car to my little sister and told her whatever she sold it for she could keep. Two days later she had three buyers standing over the car, each wanting to buy it for $500. The value of the vehicle hadn't changed in two days, but the marketing had.

Everyone in business has heard the term marketing. But does everyone understand it?

Too many new business owners begin with the grand illusion of hanging out their shingle or opening their storefronts and expecting customers to automatically appear. Unless you have a monopoly situation where you have the only place where customers have to go or go without, you need to market to attract customers.

The first thing the business owner needs to understand is his or her customer. When talking with a new business owner I'll ask them who their target customer is, and more likely than not they reply, "everyone."

Well, everyone may be a potential customer, but everyone does not have the same buying stimulus or characteristics.

By classifying your target customer as everyone you mistakenly treat your market as a whole, with each customer having all the same common needs and characteristics. This approach does work well when competition is scarce or the product has mass appeal. It relies on mass advertising to create cost savings from a large volume of sales. Doesn't sound like a small business, does it?

The large "everyone" market can be divided into various smaller submarkets based on customers' different needs and preferences. This is market segmentation.

Marketing opportunities increase as you recognize and are able to target those segments. The key is focusing on the little differences that are important to the customer and matching those differences with potential or actual buying behavior.

Things to consider for successful segmentation are: the segments must be identifiable and measurable; accessible; large enough to be profitable; have a correlation between members; and differences between segments.

There are many ways of segmenting your markets using demographics (age, family, education, occupation, income), behavioral bases (product knowledge, usage, attitudes) personality traits (lifestyle, values) and geographic regions. Knowing the needs and wants of the customer allows you to match your marketing strategy to the characteristics of that segment. Each segment requires a separate marketing plan.

Remember, your market strategy objective is to influence customers' choices leading to sales.

Another factor to consider is that market research found that the price to quality relationship is very important to the consumer. Consumer perception relates directly to buying behavior.

What my sister realized, and why she walked away with $500, is the correlation between customers' perception of price and quality. With the vehicle price too low for the quality desired, there were no buyers. With the price raised to the perceived value of quality, she turned away buyers.

Most likely, had she raised the price higher yet, the perception of price to quality at some point would have topped out, resulting again in no buyers.

The key here and in your business is matching your marketing strategy to the needs, wants and characteristics of the market segment.

For help with your market strategy, call SCORE at 621-0775. The knowledgeable counselors at SCORE are available to offer free advice. They will help you develop a marketing strategy that is effective and helpful to your business objectives.

SCORE is a nonprofit volunteer organization and is always looking for qualified members. I invite those interested to call and attend one of our meetings.

I'm Kenneth Parrott, wishing you a great month in business.

Editor's note: This column is one of a series of monthly columns by Kenneth Parrott that provide information supplied by Citrus County SCORE Chapter 646. SCORE, Counselors to America's Small Business, offers free, confidential counseling services to new and existing businesses in the county. For assistance or workshop information, call 621-0775 or visit its Web site, www.scorecitrus.org.

[Last modified October 1, 2006, 19:54:10]