Finding Your Target Market - An Introduction

Lesson #26–FINDING YOUR TARGET MARKET: INTRODUCTION

This is internet income course lesson twenty-six, which simplifies the difficulties of starting and running a profitable online business by breaking down important principles in simple English. Course author, George Little, continues to reveal tips, real-world advice, and in-depth, step-by-step instructions on setting up your Internet-based business. Read the previous lesson 25 here.

WHAT YOU WILL LEARN
This is the first in a multi-lesson series to assist you in identifying your target market. There is much to discuss on this subject and we begin that discussion with a general introduction and acquaint you with personas.

Personalization

Marketing has been driven by technology for some time now. Over the last few years, the technology to dynamically generate content based on a user's individual traits has not only become possible, but has become quite advanced. When that technology emerged, things began to change dramatically. It has become more important than ever to know not only your target audience in general terms, but to know individual customers as well.

For example, if I do a Google search from my home computer in Florida and another person does the same search from his work computer in Western Europe, we will see different results–even though we use the exact same search phrase. Google employs personalization. It sorts its results in light of the individual characteristics of the person making the search, including, among many other factors, their geographical location and whether they are at home or at work.

Most independent entrepreneurs do not have the technology available that Google does, but still have many ways to target market segments and modify their content for each particular group accordingly.

As just one example, Facebook currently allows you to sort your friends into "lists." I have many friends on Facebook who are writers, so I have created a list for them. I also have many friends on Facebook who are paddling enthusiasts, so I have created another list and included those people in that list. Many of my friends are concerned about our natural environment, so I have added them to another list. Facebook allows me to post specific posts that will only be seen by friends on a specific list or specific lists of my friends. In this way, I can create and target content for specific groups of people.

To fully take advantage of available technology, it is necessary to tailor your content to speak to particular segments of your target market and then target that content to the specified group intended.

Personalization vs. Market Segmentation

It is tempting to confuse Personalization with Market Segmentation. Both have a similar goal: providing relevant content to attract and engage a potential customer. Both involve identifying the specific characteristics of your customers. The difference between Personalization and Market Segmentation is a matter of degree. If you divide your potential customers into "people in the U.S.," "people in Eastern Europe," "people in Western Europe," "people in the Middle East," and "people in other places," and then direct different content to each accordingly, you are using market segmentation, but you are a long way from personalization. As you add more factors to the mix, your segmentation narrows. For example, "rich people in the U.S." and "poor people in the U.S." This additional factor gives you more detail. The more you drill down into different factors, the more you approach Personalization.

It doesn't become true Personalization, however, until you reach the individual level. If you know a particular potential customer lives in the U.S., is female, is single, is about to graduate from an Ivy League college with a professional degree, likes fashion, likes sports cars, likes clubbing, drinks alcohol moderately, enjoys handball, etc., then you are moving into the realm of personalization. In this latter case, you know that this individual, when she graduates and enters the job market in a matter of weeks, will likely change her buying habits. She has expensive tastes that will no longer be limited by a student budget. That's a good thing to know.

It also doesn't become true Personalization until you know the individual circumstances of individual potential customers and have the technology to dynamically generate content for each individual user.

While personalization is obviously the best approach, many factors limit a struggling entrepreneur from achieving it completely. Data on potential customers as individuals as well as the resources necessary to best utilize that data to target those individuals are not readily available to independent entrepreneurs or even smaller companies.

The obvious strategy for individual entrepreneurs and small companies is to start out with some high level market segmentation (different content for people in different countries, etc) and steadily move from there to approach personalization. It's a journey, a refinement that occurs over time as your knowledge, skills, and resources improve. Technology is available today for personalization in marketing, but that technology is not readily accessible to everyone. Everyone, however, can use market segmentation and work to approach personalization over time as knowledge, skills, and resources improve.

Sorting Your Potential Customers

So, where do you start? Determining the factors and personal characteristics that affect buying decisions is both a science and an art. Different companies have different strategies. Obviously, you have to start by identifying those factors that you believe will have the most impact in predicting the behavior of your potential customers. To do that, you must first know what you are selling. Common sense may tell you that whether a potential customer has blond hair or black hair will not significantly affect that person's decision to buy "industrial strength" cleaning products vs. all-natural cleaning products. Hair color will certainly, however, affect the buyer's choice of color for hair treatment and even the buyer's choice of color for apparel. The factors that matter depend upon your product or service. If you're selling cleaning products, hair color will not be significant. If you are selling hair treatment or apparel, it will be important.

So, you start by having a good grasp of exactly what you are marketing. Then, you begin to sort out your potential customers based upon factors that affect the choice to buy what you are selling.

The Many Ways People Can Differ

There is no finite set of properties with which to sort people out. There is no master list of all of the ways that people can differ. People differ from each other in many ways we do not yet understand. There are things about genetic makeup that science has not yet fully explored. There are ways that different environments affect people with the same genetic makeup to make them different even though their genes are similar. People come in all different heights and weights, shapes and sizes. People have different levels of innate ability. People with the same innate ability can have different achievements in education and skills. Some people like classical music. Some like country music, some like rock and roll. Some like all three. There is no end to the ways that people can differ. Thus, there is no one list of factors that will sort everyone out.

The problem is determining which differences matter in your marketing strategy. If you are selling music, it matters greatly whether a potential customer likes country or classical or rock and roll. If you are selling educational software, musical preferences likely have little impact. If you are selling snow (like we used for our example in an earlier lesson), where someone lives will have great importance. If you are selling toothbrushes, where they live will not matter as much, if at all.

I encourage you to approach it the way scientists do. Start out with your common sense and intuitive understanding to formulate some hypotheses, but then test those hypotheses. Test them rigorously and continuously against the data you accumulate over time.

Use of Databases

When sorting out and analyzing the various characteristics that identify your potential market, it is crucial to have some basic knowledge of databases to keep up with and analyze the data you acquire. There is a good introduction to databases in the Internet Income Lessons Archive, Lesson 32. Some of the software and services mentioned in that lesson are out of use now, but otherwise the information is still applicable and provides a good background for planning to track and organize your target market.

Using Personas

Turns out, it is much more engaging and much more fun to deal with specific personalities when planning and implementing your marketing strategy than to concentrate on the less exciting subject of market segmentation. Thanks to a concept created by an interface designer in the early 1980s (for use in designing computer programs rather than marketing), even those of us without the data or the resources to use true personalization in our marketing can still deal with specific personalities instead of cold statistical tables of data.

Let's say you sell solar chargers for smart phones. You've learned that there are two main categories of customers:
  1. Outdoor enthusiasts who need their smart phones ready at a moment's notice, but are often away from power outlets for long periods of time; and
  2. College students who are busy all day running back and forth around campus to their various classes and busy at night partying, often forgetting to charge their smart phones when crashing for the night.
These two market segments have quite different personalities from each other. When designing your marketing strategy and monitoring its implementation, it's just more fun to refer to "Fred Freshman" and "Carol Co-ed" rather than "college students" for the one segment and "Paul Paddler" and "Helen Hiker" rather than "outdoor enthusiasts" to refer to the other segment. It's more engaging to look at a profile of a fictional character (often complete with photo) than to look at a database report. Using personas makes that possible.

A persona is not a real person. It's not an actual customer. A persona is a fictional personality created from the characteristics of a segment of the population for which you have real data. A persona is made to appear as a real person. Then, when thinking and communicating about marketing strategy and implementation, you can refer to reactions of "real" personalities rather than to impacts on certain segments of a population. Compare these two statements:
  1. Certain individuals within the college student segment, particularly females, will have more positive reaction to youth oriented aesthetic design and a lighter weight product.
  2. Carol Co-Ed wants a colorful design and light weight.
Which of these two statements would you prefer to make in a meeting? Which would get you through the meeting quicker. Which would be more fun to think or talk about?

Using personas allows for creativity and empathy while attempting to understand the characteristics of the different segments of your target market.

CONCLUSION
Finding and analyzing your target market is crucial to creating your brand and to your marketing strategy and implementation. It is crucial to your ultimate success.

Personalization is utilizing technology to communicate individually with specific customers. Market Segmentation is outlining certain characteristics that affect buying decisions among different members of the population and then creating and targeting your content to specific segments. The obvious strategy for individual entrepreneurs and small companies is to start out with some high level market segmentation and steadily move from there to approach personalization. It's a journey, a refinement that occurs over time as your knowledge, skills, and resources improve. You start by having a good grasp of exactly what you are marketing. Then, you begin to sort out your potential customers based upon factors that affect the choice to buy what you are selling. You look for those characteristics that you believe will have the most impact in predicting the behavior of your potential customers. To do that, you must first know what you are selling. You should approach it the way scientists do. Start out with your common sense and intuitive understanding to formulate some hypotheses, but then test those hypotheses. Test them rigorously and continuously against the data you accumulate over time. A knowledge of databases is very helpful in accomplishing these things.

Finally, even if you can't achieve pure personalization in your marketing, you can still make it engaging by creating personas to represent market segments. Using personas allows for creativity and empathy while attempting to understand the characteristics of the different segments of your target market.

WHAT'S COMING NEXT
In our next lesson, we will delve into personas in more detail. Read the next topic here: Personas and their value to your marketing strategy.

Author
By George Little, Panhandle On-Line, Inc. For more information on the Internet Income Course and other works and courses by George Little, see http://www.profitpropulsion.com

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