The first step to developing a successful business plan is answering the questions "who needs my products or services?" and "why?" The answers to these questions determine your target market, the specific group or groups who should be the focus of your marketing and sales efforts.
- Target marketers divide potential customers into groups with similar characteristics, called segmenting. Common segments include demographics, psychographics and geographic.
- Demographically segmented customers share statistically similar characteristics such as age, income, gender or occupation. Selling to white-collar professional women between ages 30 and 45 is an example of demographic segmentation.
- Psychographically segmented customers share similar lifestyle characteristics such as being vegetarians, dog lovers or suburbanites.
- Geographically segmented customers share a similar location. For example, a store may send postcards to everyone in a certain ZIP code or area code.
- According to the United States Small Business Administration, target marketing keeps a business owner focused on the most important aspect of their business--the customer. Targeting the right customer for your product or service will increase the efficiency of your sales and decrease marketing and operation costs, potentially translating into a larger profit margin.
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