Last April, I was at a British Council Management Express event where a marketing expert was brought to Lagos from the UK to speak on “how to thrive in an increasingly competitive business landscape”. After his lecture, the audience was given the opportunity to ask questions on any [marketing] challenge they were facing. There was this question by a lady who said she was in the business of selling packaged powdered milk. She said her problem was that despite the fact that her milk offered greater value than those of the established brands, people still don’t buy her milk.
A lot of suggestions were given to her, both by the guest speaker and the members of the audience. She was advised to:
- Price cheaper
- Package better
- Employ direct marketing
- Advertise more
Personally, I believe the prescriptions (even though given with good intentions) were all wrong. Why? Because they all ignored a fundamental requirement for marketing success—segmentation and targeting. She just can’t compete with the big brand in an undifferentiated way. The big brands have more marketing resources and they can easily out price, out advertise and out package her.
Does that mean she cannot successfully market powder milk in the Nigeria? No. But her marketing success will not come by marketing to the mass market – it will only come by her targeting and focusing on a segment of the market. For instance, she can focus on selling healthy milk to people with weight problems. By doing this she would have calved a niche for herself and captured a valuable position in the market.
The point is that you cannot connect with all customers in large, broad, or diverse markets (except your marketing budget is limitless). But you can divide such markets into groups of consumers or segments with distinct needs and wants. And experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable.
Segmentation and targeting are a two-stage process.
(1) determine which kinds of customers exist, then
(2) select which ones you can serve effectively.
Suppose you are into selling music. You could sell hip hop, Yoruba, classical, gospel or Islamic music. But you have a higher chance of market success if you focus only on say, Christian music. And the reason for this is not farfetched; it simply makes your marketing more efficient and effective. Everything, from message design, to medium of delivery, and even actual customer interaction will be greatly enhanced by effective segmentation and targeting. As Drayton Bird wrote in his book Commonsense Direct Marketing, even the worst message sent to the right people will do better than the most brilliant message sent to the wrong people. And Gary Halbert put it even more succinctly when he said the most important advantage in marketing if you were running a hamburger joint was to have a starving crowd.