Ask the experts: The importance of targeted marketing

Q. What is the importance of targeted marketing?

JOHN CHERRY: Targeted marketing isn't merely important; it's your statement about who you are in the competitive marketplace, what benefits you have to offer, and most important, who exactly are your customers and your competitors. The answers to these questions are the very foundation of your business success, and provide an appropriate set of concerns as we begin another year. But I'll say here: If you aren't targeting and your competitors are, you're at a distinct disadvantage. One dollar bill is about as good as any other, but that's just about as far as we can go in suggesting that differences in customers and products don't matter. Targeting isn't just important, it's required.

It's worthwhile to back up a bit here, though. The idea of targeting suggests that there are meaningful differences among customer groups, and any business person can probably quickly come up with a short list of who is and is not a potential customer. Do you sell to business users or ultimate consumers? Do you sell to price-conscious consumers or users who value performance and reliability over price? Those meaningful differences can be identified in the way your customers use your products and services, what benefits they seek, their demographics (age, gender, household composition, income), how they can be promoted to, etc. And I'm willing to bet the markets you compete in have several natural segments. Just look at that most basic of commodities: water. There's distilled, spring, drinking water and water for infant formula, all sold in one-liter, one-gallon and five-gallon bottles, in a variety of locations and formats (off-the-shelf, in vending machines, in-home delivery). Or toothpaste: Some people want toothpaste that whitens, others want toothpaste that controls cavities and plaque, others want toothpaste that tastes good, others need special toothpaste for dentures. But what marketer can possibly meet all these needs? Procter & Gamble or General Foods, perhaps, but probably not your company. So given the differences in customers, and the infinite variety of means to satisfy those needs, why would you ever NOT target?

And at the very same time you recognize the importance of making the strongest offer to the customers most likely to value (and hopefully pay a premium for) your product, you need to think about your product lines. Again, I'm willing to bet that most readers of this column can identify three to five distinct bundles of benefits they can offer the marketplace. If the "water people" can come up with five distinct user-groups, probably your business can, too. But do yourself a favor: Keep it short! No one can be all things to all people, and no one product or service can satisfy all the needs of a great and diverse marketplace. To compete better, to stand out in a crowded field, you have to get focused. Targeted products for target markets.

So by all means, target. And take a look at your product lines and/or services. Identify the three or four things you do best, most profitably and efficiently, and can do better than your competitors. Or in the best case, some need you can meet that's not currently being served well (or at all) by existing product and service offerings.

Now let's think big and ask the question that separates winners from followers: Can I create a new product category out of unmet consumer needs? When most business people were doing the same old familiar things, companies like Red Bull and Facebook managed to unlock new worlds of opportunity by creating and owning markets in energy drinks and social networking as the competition toiled away looking in the rear-view mirror, failing to identify tomorrow's target markets. You can be a market-maker or a follower. But if you want to win, find a market, make it your target and own it. If you don't, someone else will.

And at the risk of repeating things I've said earlier in this column, keep in touch with your customers. Reward and keep your best ones. Know how to get in touch with them, what their needs are, what areas of your product or service could offer greater satisfaction.

After all, would you prefer to do business with someone who doesn't know you? Whose products are one-size-fits-all? You should demand more. Because your customers will, too.

GERA LEGRAND: Targeting your marketing ensures that you make the best use of your available marketing budget by investing in ways you can reach your best potential customers with enough frequency to influence their buying decision. Targeting becomes more important when the demographic profile of consumers of your product or services is very narrow, or when your budget is very limited.

Who is your best potential consumer? If most people, or households, use and need your product and you have a large budget, targeting is not as important. Consider a general household product, such as toilet tissue, for this example.

When the consumer base for your product or service is narrowed by age, income, geography, occupation or another factor, targeting becomes more important. Consider supplemental insurance for those on Medicare, for this example. Obviously you would want to reach consumers over 60, and therefore may not choose a radio station that plays rap, or a television station that airs only cartoons. For geographic targeting, consider where most of your current customers live. If most of your consumers live in a 30-mile radius of your store, you may not need to invest in media outlets that reach a large number of consumers outside that area. You could concentrate your dollars within your area and have better frequency and better results.

Targeting also becomes more important when your budget is very limited. The rule of thumb in marketing is to reach as many of your best consumers that your budget will allow with adequate frequency, each week or each month depending on the buying cycle of your product or service. Marketers can over target and get too caught up with "reaching the best targeted consumer." Remember all consumers do not consume media exactly the same, and many media outlets may reach potential consumers for your product. Targeting cannot take precedence of a good message. It's amazing how many people can become the right people to market to, when you have a good offer and a good message.

DREW JANES: Have you ever met someone who had a great product, service or idea and heard comments like, "you should really market that," or "good marketing could really help you grow." I'm sure every business owner has heard comments like these and probably agreed. It's great to agree with these statements, but you must have a target market or "audience" that you are trying to reach.

The old adage comes to mind, "failing to plan is planning to fail." In order to wisely spend your marketing dollars, you have to know where and why you are spending them. Here are three quick tips to keep in mind when you are trying to keep a simple target market, and why it is important.

1) Aim your marketing efforts to a specific audience or group of people that you know are, or could be, your best customers. Keeping your eyes on the budget, your target market should help keep costs down by only spreading your message to those who need to hear it the most and giving you the greatest impact.

2) Follow trends through social media and utilize web presence to attract and communicate to your audience. If you are selling iPod accessories targeting 20-somethings, consider non-traditional advertising through web and social media. If you are selling vacuum cleaners, consider traditional types of advertising like newspaper, radio or television. Again, know your target market.

3) Keep it simple. Try to take a step back and look at the big picture. Your consumers need to see your business as a solution to a problem, or a resource full of answers. Once you determine your target market, be seen and heard by being a resource for that audience. Find out where they are and spend your marketing dollars there. Don't spread yourself or your resources too thin in places where your audience is not.

DANA HUKEL: A common question we ask clients is "Who are you trying to reach through your marketing efforts?" Too often, the response is "everyone." Attempting to promote your product/service to all demographics will not give you the ROI you need. Through target marketing, you can define your ideal customers, making it easier for you to find and attract them.

Ask yourself to describe the perfect customer for your business. Are they female/male, young or old, traditional or urban, etc. Target marketing consists of breaking a market into audiences and then focusing your marketing efforts on one or a few key groups. This can be done in many ways, although the three most common types of market segmentation are:

• Geographic segmentation

• Demographic segmentation

• Psychographic segmentation

Once you determine the most appropriate customers for your business, you can choose the advertising mediums that most represent those groups. For example, if your best audience is women ages 25 to 40, you would not want to advertise in a publication that attempts to reach the masses; you are essentially wasting valuable marketing dollars. Once you determine your audience and your marketing medium, it is time to choose the message that will appeal to that consumer base. Now you have a captive audience who will react to your messaging at the time and location that proves most beneficial for your business.

By focusing your attention on a specific market area, the results of the promotion, pricing and distribution of your products/services is easier and more cost-effective. Your marketing materials are highly relevant to your target's needs are less likely to be ignored.