How companies identify their target market.

Source: Foundr

Economic principle: “People generally respond to incentives in predictable ways”.

Research question: How do companies identify their target market

 The article “No Strategy, No Customers: How to Build a Profitable Marketing Strategy” published by Jonathan Chan an author for Foundr demonstrates this economic principle by showing how to create a buyer persona, interview the type of person that fits a firm’s buyer persona, and research competitors.

 First, many companies develop a buyer persona to understand their consumers behaviors. A buyer persona is creating a potential customer by analysing many demographics of their life such as location, age, gender, interests, education, job, income, relationship status and buying motivation. According to Chan, “You need to know your target customer as if they were a close, personal friend, like you might go out to see them for drinks this very weekend”. In other words, a companies buyer persona needs to be a specific as possible and the company should be familiar with the type of person it is selling to.

 Second, after creating a buyer persona, a firm can recognize the type of person they are selling their product too and interview them. It would be in a company’s benefit to interview someone who fits their buyer persona because it allows the company to contain data on how their consumers could react to a product or form of advertising. The most efficient way to obtain accurate information is to “find a way to incentivize people to do interviews with you, by potentially offering them a discount or a free product from your store”. This means that it may be difficult to find people to interview so adding an incentive would allow the company to collect data and if the incentive was a coupons, lead them into buying the product.

 Third, in addition to interviewing people that fit a firm’s specific buyer persona, investigating competitors provides useful data to a company. For example, “you can analyze online conversations that are happening about your competition” which gives valuable research to a company about what consumers think of a product and how successful it is. Chan claims another method of acquiring information is to “sign up to their email list and see what their email strategy is like”. By doing this, a firm will get news about new products and their overall marketing strategy.

A sample for the company Urban Outfitters would be a female who lives near a city or suburbs that is around 15-25. She has an interest in shopping and going to outings with her friends and is most likely single or in a relationship that isn’t marriage. Her motivation for going to the mall is to shop for the new fall trends during this season because she wants to look at school or with friends. She went into Free People before but their prices were obscene. At the mall, Urban outfitters will have a stand and an employee will ask her to take a survey about the company. At first she denied but after offering a coupon for 20% off her final purchase she agrees and takes the survey. This coupon would also extinguish any concerns about prices that she had before. Urban Outfitter has now revived data and a profit because the woman most likely bought something. If Urban Outfitters wants additional information about their competitor, Free People, they will look at their website and subscribe to their email list. I think this method is very effective because it allows Urban outfitters to know what is and isn’t working for their target market.

In my next blog post I will research the question: What type of marketing creates a direct response?