Marketing, Sales, and Support

Understanding Your Market Niche

By Casey Jones

To understand the concept of market segmentation, let’s examine something most of us love: food. Indeed, it’s something we’re all experts on.

Consider restaurants, for example. Look at the number of eating establishments in your community. If you were a restaurateur, how would you market your establishment? Assume you own a steak house done in a southwestern decor. Specifically, you want to increase your dinner crowd. Who would you target your advertising dollars to? A consumer can get full by eating at McDonald’s for a few bucks or at a fancy French restaurant down the road for $75. At whom will you aim your advertising to get the most return?

Why do different people go to different restaurants? Restaurants can’t offer all foods to all patrons. Each restaurant has some appeal to some group of people. Successful restaurants, like other successful businesses, focus on a segment of a given population—or the specific needs of a given population. The next time you’re in a restaurant, watch people. Unless it’s the only place in town, you’ll likely notice common denominators.

Are people eating at a restaurant because the food is fast, because the food is good, because the atmosphere is romantic, because the food is healthful, because the food is cheap, because the food is not cheap, because the food is in style? Is the restaurant frequented because of a chef, because of the service, because of selection? Is this a good restaurant to have a business lunch in? Is the food ethnic—Chinese, Mexican, Japanese, Italian?

Why do people come to one place at a given time and not another? Would you consider taking a prom date to a fast-food restaurant? Would you go to an uptown French restaurant for lunch between classes?

Each restaurant appeals to a segment of the population. How would you advertise your steak house? A good place to start would be research. You’d want to look at the customers who would patronize your place. You’d want to identify the common traits of the patrons. Once you’d done this, you’d have an idea about where to start.

You notice that the folks in your place are mostly in their late 20s and 30s. Most dress well but in casual clothes. A lot of sport utility vehicles are in the parking lot. A large percentage of the customers pay with credit cards. Nearly everyone has a small cell or digital phone, and at least half carry planners. Diners, as a rule, are couples, usually two or three couples to a table. You assume that most are white-collar workers with at least several years of college.

What common denominators can you find? Is there a pattern? Why?

Look for patterns or trends this group has in common. How do they dress? How do they wear their hair? What types of cars do they buy? Do they carry cell phones? How much money do they spend? What age-group do they fall into? What income bracket do they fall into? Are they blue-collar or white-collar? What is the gender? Do they have computers? Any geographic considerations? How does this group play?

It makes no sense to start advertising until you’ve homed in on your audience. For better or worse, no product, not even a good one, can be right for everyone. It would be futile to try to sell a hamburger to a vegetarian or needlepoint samplers in MotorWeek.

To jump the marketing ditch, you need to know exactly how far you must leap. You must study the population carefully to know what common traits your potential customers have. This is called segmentation or market segmentation.

Once you have segmented your market, you need to target or focus your efforts on that group. How you accomplish this is your marketing strategy. Your purpose is to increase your business by appealing to a group that is sympathetic to or that needs your product. You can’t do this if you are spending your advertising dollars in the wrong place.

It won’t matter if you have the latest high-end rod and reel; the best flies, lures, and bait; or even the best fishing vest. If you fish in water that has no fish or where the fish are never hungry, you’re wasting your time. If you want to catch fish, you need to focus on the waters where the fish are eager to take your hook.

It’s important that you do your homework before you begin. A great ad, even if it’s carefully crafted and developed, is useless if it’s pitched, or presented, to the wrong market segment. For this reason, most advertising is focused. Few ads are directed specifically to the mass market (a general audience that has not been segmented).

Corporations and marketers have learned that, even if it’s time-consuming and expensive, the first part of advertising is finding your market niche—your product’s place in the market—and gearing your advertising to the right consumer.