For some brands, target market definition may be easy or intuitively obvious. But if generally you think it is a trivial exercise to define a brand's target markets, you may be not be thinking deeply enough.
We encourage clients to define primary, secondary and tertiary markets. We believe primary markets should be very tightly defined. They are the bulls-eye of the target. They are the most advantageous or lucrative group for the brand. They are the customers your brand would most like to serve.
The following goes into identifying/defining target markets:
- Identifying your brand's most important differentiating benefit or shared value. It needs to be purchase motivating, unique and believable.
- Identifying the market segment or segments to which this has the greatest appeal.
- This requires an in-depth understanding of customer attitudes, values, beliefs, hopes, fears, needs and preferences.
- This also requires careful segmentation based on a combination of demographics and psychographics, including differentiating attitudinal statements.
- Identifying the short- and long-term potential of the targeted segment. This includes estimating segment size, growth rate, purchasing power, purchase frequency and profitability.
Let's take a wealth management firm as an example. The firm could define its target market as "all individuals and institutions who have more than $250,000 in investable assets." However, having helped numerous wealth management firms brand themselves, I have found that each has its own unique target market. For instance, one firm decided that its target market was:
- Successful self-made entrepreneurs who have at least $1 million in investable assets and who feel as though they have not been adequately recognized for their accomplishments.
This firm decided to become a surrogate high-status organization with which its clients could associate to demonstrate to the world that "they were movers and shakers" and that "they had arrived."
Another wealth management firm I worked with decided that this would be their target:
- People who are retired or on a fixed income who have investable assets of between $250,000 and $500,000 and who are afraid that their retirement assets will not outlast them. These people are highly risk adverse and want to protect against downside risk, often because they had experienced a significant decline in their asset value in the past.
This firm had a unique methodology for guarding against downside risk.
The other wealth management firms with which I have worked had equally unique target customer definitions and brand positions. Unique target customer definitions always help clarify the associated unique brand positions.
Think twice before you define your target market as "all women between 25 and 55" or "all homeowners with household incomes exceeding $40,000." These are not highly targeted enough definitions to be useful.