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Target Marketing
Part Two

See also:
Target Marketing -- Part One

          In addition to strengthening our present market position, target marketing is a critical tool in exploiting additive market opportunities. Quite simply, this dimension of target marketing seeks to define our potential and as-yet-unknown customers by income, household size, age, ethnicity, affinities and other variables, and then to locate where these customers tend to be aggregated. Armed with the careful profile of the most-likely customer and an "address" to connect with this prospective customer, a sharply-focused strategy can then be designed to transform a significant number of these "potential" customers into actual customers.

          The direct-mail campaign is the grandfather of this kind of target marketing and may still be the most common example. The US Bureau of the Census assembles a plethora of geo-demographic data that is readily available both to the owner/manager of the smaller business directly as well as to demographic marketing specialists. This data defines the profile of consumers not only within each five-digit postal zone, but can offer refined data for individual census tracts encompassing only a few city blocks. This data is invaluable in selecting virtually any sort of retailing location as well as targeting every kind of direct marketing effort. While the direct-mail campaign may still be the most popular form of direct marketing, higher postal rates and mailbox clutter are leading many businesses to other direct marketing strategies.

          However, before considering execution strategies, knowledgeable target marketing first requires that the market be defined and segmented with precision. For many smaller businesses, the target market is extremely local, and this market may be well understood and can be defined virtually intuitively. However, excellent data is available rather economically; in most instances, it is prudent to utilize the skilled services of a demographic marketing specialist. With some careful inquiries among our colleagues, experienced demographic marketing specialists are to found in most cities. The smaller business is often surprised upon discovering the competitive pricing also offered by the respected national services such as Claritas/NPDC Inc. (Arlington, Virginia) and R. R. Donnelley & Sons Company (Chicago, Illinois).

          For example, Claritas has developed and is continually upgrading its "PRIZM" lifestyle/lifestage market segmentation model that defines 62 primary clusters with further sub-segmentation. These clusters have been assigned cute descriptive names to characterize their demographic profiles, e.g., "Money & Brains," "Upward Bound, Age 34 to 45, without children," "Shotguns & Pickups," and "Gray Collars." A unique consumer profile is to be found in each of these demographic clusters.

          The owner/manager of the smaller business must define quite carefully the demographic profile of the potential customer it is seeking. A thoughtful survey of present and past customers may be an invaluable tool in determining the profile of our potential customer; smaller businesses are frequently surprised to discover that our perceived profile of present and past customers does not conform with their real-life characteristics.

          Once the customer profile has been defined accurately and the location(s) of these potential customers has been aggregated with precision, there are many avenues by which we can connect with this target market. The challenge is to use the ways that will be most cost-effective. As we each know from the muddle of our daily postal deliveries, direct-mail campaigns continue to be the most popular tool of target marketing despite questions concerning their high unit costs and often disappointing effectiveness. The past decade has witnessed the comparable overuse of telemarketing.

          However, knowing the location(s) of our potential customers, many other imaginative avenues of connection are available. Until the novelty of the electronic media is totally dissipated, target market communication for business-to-business via facsimile broadcast (FAX) or e-mail are attractive. One's own Web site as well as online advertising are increasingly effective ways of reaching certain very specific markets. Targeted advertising via community newspapers and cable television is often quite cost effective. Neighborhood outdoor advertising (billboards), product sample drop-offs, and/or redeemable coupon distribution can be sharply-focused communications. Of course, companies such as Avon Products, Inc. continue to flourish employing variants of door-to-door solicitations.

          The key for the owner/ manager of the smaller business to exploiting additive market opportunities is (1) define the profile of our potential customer realistically, (2) aggregate the location(s) of these customers with precision, and (3) employ the most cost-effective avenue(s) to connect with these targeted markets. We are equipped with a rifle -- not a shotgun!

Your comments and suggestions for these pages are most welcome!

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Thomas A. Faulhaber, Editor

Telephone: 617.232.6596 -- FAX: 617.232.6674

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Revised: April 5, 2004 TAF

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