Wednesday, April 11, 2012

Segmentation: One product for all? Or all for one?

Segmentation: Selling to everyone?
If when somebody asks you who your customer is, you don’t know what to say, don’t have it clear or you belong to those who says, "I would like to sell to anyone who can buy from me", this article is specially written for you.

I’ve had the opportunity to talk about this several times, when trying to define with a customer which is the market they’re interested in selling their products to. The answer is something like this: "I want to sell my product to everybody!"

And while it’s still a valid option, or at least a desirable one, to properly define a target audience is a fundamental aspect in planning a marketing strategy for any product or service, regardless of their specific features.

Wanting to sell to everyone could be nothing but a pipe dream.

Imagine for a moment the money you have to invest in reaching out to everyone in the world. Impossible, right? Segmentation is a necessary process for all business and allows you to effectively spend the money and focus your efforts to reach only the people who:

  • Have a need that your product fulfills.
  • Have the money to pay the price you’re asking for.
  • You’re interested in having them as your customers.

The first one is self-explanatory: If your product can’t meet the need the person has, the sale will not happen. There is no meeting point, the cycle will not be closed, regardless of what kind of need the person has: If your product doesn’t have what it takes to fill the gap, customers won’t buy.

The second one follows the same reasoning. Even if you offer the broadest financing / payment options for your customers, if they don’t have the money or the financial capacity to pay what your product is worth, even when it does fulfill their need on their entirety, buying won’t occur. And if the person has to make a superhuman effort to pay for your product, then you might be falling into number 3’s trap: It could be you aren’t so interested in having them as your customers.

But how could you "not be interested in having someone buying your product?"

Because not everyone is a interesting customer for you and I will explain myself, as usual, with an example: Do you think BMW or Porsche are interested in having me as a customer? Either one could be the vehicle of my dreams but, as much as I want it to happen, is a luxury item I can’t afford, at least as of now :-D

Surely both of them are interested in keeping me "dreaming about someday being able to buy their products," but as of this moment, I’m not the kind of prospect they’re going after or directly focusing their marketing efforts on because I can’t afford to do business with either one.

That I can do a huge effort to get the money, or funding, and buy the product? Sure I can but then it’s not about the car itself, but about something buried deep inside of me that is forcing me to do such a strong effort to buy something.

But still, do you think that either brand, BMW or Porshe, is truly interested in having each of their customers borrowing up to their neck just to buy their cars? Don’t you think it’s more interesting for both and for what they do represent, to have celebrities, wealthy and affluent people, artists, influential businessmen, public personalities as their customers?

Market segmentation and brand positioning go hand in hand.

In this case we’re talking about brand positioning. And it's what we started talking about at the beginning of this post: If you want to sell your product to everyone that simply has the money to pay for it, then your brand’s positioning is somehow diffuse, as you will only be aiming to the pocket and not to the customer. It’s more likely you’ll be interested in focusing your marketing efforts in those you are truly interested in having as customers, instead of reaching out to everybody.

Surely competition in the market becomes a strong temptation to desperately seek to sell to anyone showing some kind of an interest in your product. And while it’s normal in a situation like the one we’re living on nowadays, is not necessarily the best way to go. The consequences will surface on the long term.

If you focus your marketing efforts to reach audiences that meet the above three questions, you’ll then get better results. Wanting to sell to everyone is fine, but it’s impossible to achieve in the real world. Do as those who are seeking for gold: with a grid they filter every rock and pebble, to finally keep for themselves the shiny one piece of gold.

If you think of a question that can help us all to make a better segmentation of our market, share it with us in the comments section below.

Related article: Can a business exist without customers?

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