#SWDub Mentor Series: Nailing Your Target Market
This post originally appeared on blog.up.co
Shane Murphy is Marketing Director EMEA at AdRoll and has worked for over 10 years taking new products and services to market and growing them for brands like Orange and PaddyPower. He is passionate about helping people build and grow their businesses.
On this third edition of the #SWDub Mentor Series, sponsored by Bank of Ireland, Shane really digs in on how to go about nailing a target market.
Too often people immediately rush into executing the first idea they have before truly refining it and ensuring that the concept is set up for success. You must take your core product or service and define a fully fledged value proposition around it. You need to know how to position it, how to price it, what brand tone of voice to use, all these other elements that take a concept and bring it to life for a target market. Almost every single successful company does not have a unique product, they have a unique customer proposition.
The absolute most critical step in building out your full value proposition is defining your target market. From this, all other things will flow.
Ryanair didn’t win because they are an airline, they won because they clearly understood their target customer, defined a “Low cost and on time” value proposition to target that market, and then executed that value proposition in all their customer touchpoints. Similarly the Nintendo Wii didn’t win when it launched because it was the best console. In fact, on traditional metrics such as processing power it was the worst, but it won by going after a different market segment (families rather than gamers) and then executing the value proposition in everything they did from pricing, graphic design, distribution and marketing.
So how do you define your target market? Let’s dig in!
Defining your target market
Step 1: Use customer segmentation techniques to build a picture of your market
Many of you will have heard about “customer segmentation” before, this is the art of cutting a market up into “segments” and articulating which one you are going after. There are a number of different types of segmentation all of which have their merits. In order to define your target market I would suggest you have a bash at trying to define your customer across all three main segmentation types:
Demographic: what age are they? What sex? Typical job they have? Income level? Where do they live?
Attitudinal: what are their political beliefs? What do they care about in life? What are their attitudes towards your product area? What motivates them?
Behavioural: what behaviours do they display when using your product type? How often do they use your product type? When do they use it? Do they snack on it or binge?
You should take creative licence with making as many assumptions as you like. If you had a massive budget you would commission research to figure this stuff out but for the average startup even just using your own intuition will force you to think much more clearly about your target market than most people do.
Step 2: Write your ‘Pen Portrait’
Writing a Pen Portrait brings everything you know about your target customer into one place and tries to describe the bullseye customer using the Demographic, behavioral and attitudinal information you mapped out in step 1.
Some Questions to ask yourself before writing yours:
1. What’s their name, age, education, sex, job?
2. What are their motivations in life?
3. What makes them happy?
4. What are their fears?
5. What are their political beliefs?
6. What media do they consume?
7. What other brands do they love?
Now try to articulate exactly who your target customer is and write your ‘Pen Portrait’. Write it in the first person. Give them a name. Describe them like you were telling a story about them. Below is an example of one done by Yves Saint Laurent. Notice how incredibly specific it is. You might be worried that if you are that specific about your market you will not be mass market enough. Don’t worry about that. If you hit the bullseye customer you will bleed into a much wider segment than you originally defined. If you don’t define the bullseye you will just fade into irrelevance.
“My name is Elizabeth Duke and I am 29 years old. I currently work as the PR manager for a top London Public Relations Firm.
I have a keen interest in Fashion, and i like to do a 'season' shop, once every 3 months. I buy Investment pieces; items that i feel with withstand new trends and offer a classic and simplistic feel. I like to shop in Yves Saint Laurent and Gucci for the more timeless items, but i also shop at Stella McCartney, especially in the summer months, for the fresh and feminine style of the brand.
I currently live in Chelsea, London in a penthouse apartment with my husband, an Investment Banker. We like to visit our country house in the Cotswolds and also enjoy regular visits to our holiday villa in St. Tropez, France.
My interests include Gastronomy and fine wines, Fashion, as previously mentioned, traveling and experiencing new cultures as well as luxury spa retreats. I like to indulge myself with regular treats, and i take great pride in my appearance. In terms of my dislikes, I am not a 'bargain hunter', i have little interest in 'Fashionable but cheap' items, and I despise high street retailers who create replicas of the designer brands.
I read Vogue, Harper's Bazaar and Tatler; the lower market gossip magazines such as Heat, Closer or More are of no appeal to me. The lives of celebrities should be private and not advertised as a public spectacle.
As far as my career is concerned, work comes first and a family comes later at this present point. I love the fast paced, dynamic and ever changing variety of my industry, and I constantly thrive for more”
Great so now you’ve defined your target market. The next step is to define clearly your value proposition.
Defining your Value proposition
A Value Proposition is a statement which outlines how your product or service adds value over and above similar offerings to your defined target customer.
It is a critical statement of intent to outline this value proposition as it forms the basis for how you position your marketing. By defining this you are outlining who you are targeting and why they should care. This then should feed into every element of your marketing.
As mentioned, maintaining proposition consistency is one of the key factors to long term success. Look at companies like Ryanair and Apple, two companies with polar opposite propositions, Low Cost in Ryanair’s case and Product Quality and Simplicity in Apple’s case. They unflinchingly stay loyal to their core propositions and this can be seen in every part of their marketing mix from their communications to their pricing. They have completely different strategies but have achieved long term success by doggedly sticking to their core proposition.
The first step in defining your Value Proposition is to map out your positioning on Bowman’s Strategy Clock. This is a tool used to ensure that you are competing in an effective strategic positioning. Companies who fail often do so as they fail to have a differentiated strategy. Give it a go yourself and make sure you are clear where you sit on the clock.
Position 1: Low Price/Low Value
This is a very clear but not very often used strategy. It involves providing an unapologetically lower quality product / service but for a very low price. When Aldi and Lidl launched this is the positioning they adopted to good effect.
Position 2: Low Price
This strategy usually requires high volume in order to use economies of scale to drive down costs and allow for a profitable low price strategy. If you are going to compete here you will want to be ready for a price war as the likely competitive response is to drop prices. If you are a startup it’s highly unlikely you have higher margins than bigger incumbents and so this strategy can be risky and difficult to scale.
Position 3: Hybrid (moderate price/moderate differentiation)
Companies who compete here offer a low price but for reasonably high quality service. This can be a risky strategy as you can easily send out mixed messages. Also as a startup it’s a difficult strategy to maintain as it again usually requires a higher than average margin to sustain the low prices. It’s unlikely as a startup you are operating at this higher margin. A good example of a company operating here would be Aer Lingus who have started to compete on price with Ryanair while still promoting a quality service message. Aer Lingus have however struggled with this as they neither win on price nor on service.
Position 4: Differentiation
This strategy offers products or services of a high perceived value. Often this means that a higher price is therefore required in order to ensure quality is profitably achieved. Branding and quality in every customer touch point is critical to achieve this. Even if you are selling a physical product customers expect a high level of service from companies operating here so ensure that you have invested appropriately in your customer care and other touch points like your retail presence. Apple is a good example of a company who operate effectively with this strategy. High quality mass market products. This quality can be seen in their unique retail experience.
Position 5: Focused Differentiation
This position on the clock is reserved for the high quality goods which come with high prices. Designer labels such as Hugo Boss or Ferrari are great examples of this. This position can lead to high margins but requires absolute focus on quality in every customer touchpoint. The packaging of a perfume is almost more important than the smell itself.
Positions 6, 7 & 8:
As a startup you should not attempt one of these strategies. You will fail. That is all.
The Value Proposition Statement
OK, so now you know generally how you want to position yourself and your target customer, you’re now ready to write your proposition statement. Essentially a proposition statement outlines what you are going to offer, to whom, and what makes you better than the competition. Below is a simple template you can use to make sure it’s to the point.
1.For “insert target customer”
2.Who “insert statement of need or opportunity”
3.Our (product / service) is: “insert product description”
4.That: “insert statement of benefit”
5.Unlike: “insert competitors”
6.We: “insert statement of differentiation”
Example proposition statement for fictional online estate agent:
For internet savvy, cost conscious people who want to let or sell their property, The Good Agent is an online estate agent that provides a low cost, flexible solution that gives the customer complete control of the letting and selling process.
Unlike traditional estate agents like Sherry Fitzgerald, we do not charge high commission rates for an inflexible service. We charge one low fee and only charge for the services the customer uses. If they want to do their own viewings.. they save. If they want to provide their own photos… they save. If they want to handle negotiations themselves… they save. We offer the first truly customer focused estate agent service.
Shane will be around mentoring and coaching teams at the Startup Weekend Dublin. Do share and stay tuned for the next post in the #SWDub Mentor Series courtesy of our sponsor, Bank of Ireland.