My brother runs a landscape gardening firm. I was talking to him about his customer base and asked him who his target customers were. He responded that his customer base was “anyone and everyone”.
This response took me aback. I was astonished that, for a business that relied significantly on word of mouth for its survival, my brother’s firm had so little knowledge of the differing customer groups in the market.
My brother’s company may well trade with the market as a whole but it was clear that some of its customers would be of more value to the firm than others.
It is also true that the needs and expectations of consumers vary. Rather than having a single promotional offer, my brother’s firm should be adapting its marketing mix so that it aligned with the expectations of different customer groups.
I explained the to my brother using the example of a large breakfast cereal manufacturer. This was a firm, unlike my brother’s which could truly describe itself as trading with “everyone and anyone” but they do not offer a single product to market or promote all their products in the same way. They sell low-fat cereals to those wishing to lose weight and advertise them through health and women’s magazines. They advertise chocolate covered cereals using cartoon characters and on television when children are watching. They produce basic cereals at a low price and distribute them through discount stores. In short, they split their market into different segments and adjust their marketing mix to meet the expectations of those segments.
In his book Market Segmentation, Professor Malcolm Macdonald uses the example of farmers buying chemical fertiliser. He identifies seven different market segments in the agricultural fertiliser customer base. Here are three of his market segments.
Firstly there are those farmers who are price sensitive. These farmers will always look for the cheapest option. Professor Macdonald estimates that this group makes up about 7% of the market.
Another group is the technological farmer. This group of farmer are interested in using technology to ensure that the best yields are achieved. These farmers will use satellite technology to identify the soil types on their farm and will use GPS to ensure that the correct mix of nutrients are applied in different areas of a field.
A third group is the farmer who wants to ensure that his farm is the best looking and smartest around. In fact, our family knows such a farmer. His farmyard is spotless, his farm equipment gleams and his field boundaries are neatly trimmed. Woe betide any weed which dare grow in his fields. This type of farmer will buy agrichemicals which promise the best crop appearance not price or yield.
A firm operating in the agrichemical market may not get anywhere trying to push a product to the latter two segments on the basis of price alone. Equally, they may get nowhere trying to sell expensive fertiliser to the first group of farmers and telling them that it will make their fields look nice.
Market segmentation and adjusting your marketing mix to match your key customer’s needs is a crucial skill in developing a successful business. Philmus Consulting Ltd can help your firm to carry out this process and ensure that your promotional activity meets the differing needs and wants of your consumers.