SMART TARGETING


Trying to sell to everybody can be wasteful, not everyone will buy your brand. “Fish where the fish are” describes the principle of targeting which aims to achieve an acceptable level of market response for the minimum level of marketing expenditure. Or, more usually, to maximise the level of market response for a given marketing budget.

Targeting offers the possibility to reduce waste and maximise market response, but there are significant traps for the unwary. To say that these traps are not widely known is an understatement—they are seldom, if ever, mentioned. This report shows how to avoid these common mistakes and how to use smart targeting to maximise market response.

Key points:
Strategy

Like adding salt to a recipe a little bit of targeting can be good, but it does not follow that more is better. Very easily targeting can, in effect, turn into ignoring or not trying to sell to some buyers – this can be a slow marketing suicide.

Targeting the most attractive segment need not be the most sensible strategy.

Customising mixes to individual segments can be less effective than a single mix offered to the entire market for the product.

Variety does not usually require targeting

Brand proliferation is seldom the same as targeting. Nor do separate brands require special targeting. Brands within a category sell to the same sort of customer base.

Product (or SKU) proliferation is seldom the same as targeting. Nor do separate SKUs require special targeting. Most SKUs within a category sell to the same sort of customer base.

80/20?

Strategies that concentrate on heavy existing buyers of the brand can never grow a brand. Used exclusively they will result in ongoing erosion of market share.

A large portion of any brand’s sales come from buyers with a low propensity to buy the brand (ie light, occasional buyers of the brand). Growth comes largely from nudging upwards the buying propensities of these light buyers and non-buyers of the brand. So targeting must still include category buyers who rarely or never buy your brand – this is an important marketing challenge.

Early buyers of a new brand tend to be heavier buyers of the category, but ultimately a brand’s sales depend on attracting all types of category buyer.

Implementation

Targeted media that offer low wastage in terms of reaching non-buyers can still be inefficient, very expensive ways of reaching consumers.

Low rating programs tend to reach heavy TV viewers. High rating programs reach the hard to reach light TV viewers (as well as the heavy viewers). So expensive mass media can still be good value.


Conclusion

Major take out – the logic of target marketing can easily lead to poor marketing strategy, all targeting strategies need to be empirically (pre) tested against market response data.

The best targeting strategy will often be one that reaches all buyers of the product category, not a segment. Key targeting strategy considerations are then how to do this cost effectively and with what branding, media, timing and weight.

Our R&D Initiative full report explains each of the above points, with supporting empirical data. The report gives practical guidelines on how to do 'smart targeting'.