Saturday, March 29, 2014

The Importance of Market Segmentation

Importance of Market Segmentation
A useful guide of using market segmentation to maximize your marketing efforts and identify potential prospects.

What is Market Segmentation? And how it can helps in my marketing efforts?

Market Segmentation, by definition, is a marketing strategy of sub-dividing a broad market into identifiable smaller group of consumers who share a common need and characteristics, and will respond similarly to a marketing action. By focusing your attention and efforts on this targeted segment of the broad market, it allows you to be able to design your product or service to better match the needs and desires of your prospects, and also to plan out a more effective marketing campaign that can better reach out to your targeted audience.

Factors to consider when Assessing your Segmented Market

(1) Identifiability

Your targeted market segment should be identifiable and has a clear definition to identify your potential customer profile, so as to avoid any possible ambiguity and confusions. The segment as a whole should be behaving homogeneously, and respond similarly and consistently to a certain marketing action. Some common characteristics to identify a market segment include:

  • Geographical - Regions, Countries, Cities or Towns
  • Demographic - Age, Gender, Education, Social Status
  • Behavioural - Purchase pattern, usage rate, brand loyalty, price sensitivity

(2) Market Size

Is the market size of your targeted segment big enough for you to justify your cost of marketing to promote your product to this group of customers? If you are targeting a very niche market, for example, providing tailored costume to cosplay hobbyist (people who dressed and put on accessories to represent a specific character from manga or anime), is the market demand large enough to absorb your product and for you to have an acceptable profit potential?

(3) Purchasing Power 

How is the purchasing power of your targeted customer profile? Do they have a stable and regular income? Which income group do they belong to? For example, if you are selling collectible figurines from popular manga or movies, students who are still schooling may not have the budget to purchase the items from you. A better idea would be to promote to young working adults who have the financial ability to support their younger days passions.

(4) Reachability

How can you reach out to your targeted audience with your marketing message? Are they easily accessible through a certain delivery medium? Is there any magazines or publications that this group of customers will often read? Is there is, putting up a flat advertisement in these publications would be a good idea. Do they frequent a certain location or shops? If that is the case, a signboard advertisement in these area could be a viable option. Are your targeted customers young and tech savvy? If yes, you might probably want to promote your products through internet marketing or social media marketing to reach out to them.

(5) Measurability

Can the results of your marketing efforts easily measured and quantifiable? It will be good if the results can be measured against the marketing costs incurred, and to check if there is any way you can fine-tune the marketing efforts to make it more effective and more cost efficient. Are your group of customers in an already established market segment and much market information and characteristics are known about them? Or are they a new market niche waiting for you to venture into and there is a general lack of information about them? Is the cost of marketing research you plan to conduct justifiable?

(6) Stability

Is your targeted market segment stable and consistent, and is likely to remain so for the next 10 years or more? Or is there going to be a likely change in the short term due to economical or political changes. For example, low to middle-income group customers in a fast developing country may be getting more affluent quickly, and that might likely change their spending habits and behaviors. Is your targeted customers residing in areas that are prone to political unrest or unexpected natural disasters? These can damage the economic structures adversely and as such affect the inherent behavior of your market segment.

Learning The 4Ps of Marketing Mix

The 4Ps of Marketing Mix is a business tool often used and the most fundamental marketing model to use when you are marketing your product. It is first proposed by E. Jerome McCarthy in the 1960s, and consist of the following:

  • Product - The product or service that you are offering, and if they meet the needs and demands of your targeted market segment
  • Price - The price that you set for your product or service, and if it fit into the purchasing budget of your targeted market segment
  • Promotion - How you are going to promote or advertise your product or service to your targeted market segment, and how can you reach out to them most effectively
  • Place - Where are you going to sell your product or service that is the most convenient for your targeted market segment to access. Are you going to sell them through an open shop or store, or would you be distributing them to re-sellers or franchisers?

Further reading material:

Saturday, March 15, 2014

Understanding the Sales Process

Understanding the Sales Process

"Understanding the Sales Process in 5 Minutes" - Learning a simplified step-by-step flow of sales activities from clients prospecting to deals closing, and watch how your results can be elevated!

Thoughout my years of experience dealing with clients and sales, and my past encounters with remarkable sales professionals who are the very best in the industry, I had come to the observation that most sales follow a general pattern and process. Most sales, if not all, follow these similar series of stages in the process, named the Sales Process in this article, irregardless of the price and type of products. There are only slight variations to the process due the wide variety of products and services in the market, and the varying characteristics and preferences of individual salespersons. It is recommended that salespersons use this Sales Process as a guide, fine-tuning it slightly to suit each individual's products and objectives, and adopted the system to see how it can improve your sales results significantly.

Sales Process Diagram

(1) Qualifying Prospects

Not everybody is going to buy your product or service. There is bound to be a group of people who are more likely to have a need for your product and will purchase it as compared to the general public. Who are the customers that had already bought your product? Do they share a common traits? or do they fit into a specific demographic profile, such as living in a certain area, their age group or gender? By qualifying your prospects who have a higher probability of doing business with you, you are able to better make use of your time and effort while meeting with them.

(2) Building Relationship and Trust with your Prospects

Building good relationship and trust with your prospects is a very important step in the Sales Process. If you failed to gain your prospect's trust, you will never get him to close the deal no matter how attractive your proposal seems to be. This is because he is likely to suffer a huge loss should anything happen. Trust takes many years to build, but takes a moment to be destroyed. As such, it is advisable to always to be truthful to your clients, and not do anything that might hurt your reputation. As once the trust is broken, you might never be able to re-build it again.

(3) Understanding your Prospect's Needs

This is the most important stage in the Sales Process, but also the most overlooked one. How many a time had we seen or heard salespersons trying to push a product or service to prospects without first trying to truly understand the actual needs of the prospects. A prospect will not buy a product which he do not need, no matter how cheap the product is.

(4) Meeting your Prospect's Needs

After understanding your prospect's need, how is your product or service able to fulfill that need? Paint a picture in your prospect's mind how he is able to enjoy the benefits of your product after he had purchased it. If a client can see how your product is able to solve his problem or meet his needs, it will be easy for him to make the decision to commit to the purchase.

(5) Establish your Unique Selling Proposition (USP)

If you are selling a product and service that are similar to what others are already offering in the market, why must your prospects buy it from you? What makes you different and stand out from the crowd? Unique Selling Proposition (USP) is a marketing strategy that successful campaigns used to differentiate their products and services from their competitors'. By establishing your USP that your competitors are unable to provide, you will be able to gain a group of loyal fans who will come back for your products again and again.

(6) Always Ask for Action

Most often than not when a prospect is not ready with the purchase, a natural response would be to procrastinate and delay signing on the dotted line. It is advisable for a salesperson in this situation to always ask for action, either to ask for close or for an appointment to the next meet-up. This can help in moving the prospect a step closer to making the final decision.

(7) Follow-Up with Prospect

Contacts with a prospects should not stop after the deal is closed, and it is adviceable for a salesperson to follow-up with the prospect after the close. He can always follow-up with the customer by giving him a call or paying him a visit a few days after the close, to check with him if he is satisfied with the product or service or had him encountered any problems or difficulties. Resolve the issues immediately if any. A salesperson can also follow-up with his customers periodically or during festive seasons. This can help to build relationship and increase the number of repeated sales or referrals from his existing customers.

Hubpages - Understanding Sales Process