Targeted marketing can be the key to increasing sales
How does targeted marketing work?
The beauty of targeted marketing is that focusing your marketing efforts on specific consumer groups makes promoting, pricing, and distributing your products and/or services easier and more cost-efficient, providing focus for all your marketing activities.
Market Segmentation
Although you can approach market segmentation in different ways, depending on how you want to segment the market, three of the most common types of segmentation are demographic segmentation, geographic segmentation, and psychographic segmentation.
Demographic Segmentation
Demographic segmentation is based on measurable statistics such as gender, age, income level, marital status, education, ethnicity, and religion. Demographic segmentation is often considered the most important criterion for identifying target markets, meaning that knowing demographic information is essential for many businesses. For example, a liquor store might want to focus its marketing efforts based on Gallup poll results, which indicate that beer is the favorite drink of people under 55 years old – particularly in the age group of 18 to 34 – while those over 55 tend to prefer wine.
Geographic Segmentation
Geographic segmentation involves segmenting the market based on location. Home addresses are one example, but depending on your business scope, you can also use: neighborhood, zip code, area code, city, county or state, region, country (if your company is international). Geographic segmentation is based on the idea that consumer groups in a specific geographic area may need a particular product or service. For example, a landscaping service might want to focus its marketing efforts on a town or neighborhood with a high percentage of seniors.
Psychographic Segmentation
Psycho-graphic segmentation divides the market based on social class or lifestyle preferences. The social class scale ranges from the wealthy and highly educated at the top to the uneducated and unskilled at the bottom. The national social reading study in the UK divides social class into six categories:
- Upper class: Upper management, administrative, or top professionals
- Middle class: Middle management or middle professionals
- Lower middle class: Supervisory, clerical, small administrative, or small middle professions
- Skilled working class: Skilled manual labor
- Working class: Semi-skilled and unskilled labor
- Lower class: Unemployed, seasonal, or informal work
Classifications related to lifestyle preferences include values, beliefs, interests, and the like. For example, examples include people who prefer an urban lifestyle over a rural or suburban lifestyle, people who love pets, or people who have a strong interest in environmental issues.
Example of Targeted Marketing
According to QSR magazine’s 2021 report, McDonald’s is the largest fast-food chain in the United States by sales. It is also one of the most successful examples of demographic targeted marketing, as it targets its products towards children, teenagers, and young families living in urban areas by offering play areas and parties, the Arch Card (a reloadable cash card), free Wi-Fi, and Happy Meals that include toys like Marvel studio characters, special promotions, and innovative advertising campaigns. Targeted advertising and aggressive pricing have allowed McDonald’s to capture about 29% of the fast-food market share in the U.S. as of the second quarter of 2022.
However, around the time when millennials surpassed boomers in 2016 to become the largest generation in the workforce in the U.S., McDonald’s saw a sharp drop in revenues as fast-food menu items like the Big Mac and fries became less appealing to millennials. In response, McDonald’s changed its marketing strategy to target millennials by advertising fresher and healthier menu options and premium coffee products like espresso.
Concept
Target Marketing
The concept of target marketing believes that your marketing can be highly effective when you focus your marketing efforts on specific segments of the population.
How many target markets are there?
The number of target markets varies depending on whom you ask. Generally, target markets typically fall into one of three categories: demographic, geographic, and psychographic segmentation. You may also hear about firmographic and behavioral categories.
What are the main types of target markets?
The main types of market segmentation are demographic, psychographic, behavioral, and geographic segmentation.
Sources:
- Gallup. “Liquor Ties Wine as Second-Favorite Adult Beverage in U.S.”
- National Readership Survey. “Social Grade.”
- Qualtrics. “What Is Psychographic Segmentation?”
- QSR. “The QSR 50: The Fast-Food Industry’s Leading Annual Report.”
- CSIMarket. “MCD’s Competition by Segment and Its Market Share.”
- Macrotrends. “McDonald’s Revenue 2010-2022 | MCD.”
- Pew Research Center. “Millennials Are the Largest Generation in the U.S. Labor Force.”
Source: https://www.thebalancemoney.com/target-marketing-2948355
Leave a Reply