What is targeted marketing?

Targeted marketing refers to dividing the customers into sets and targeting particular customers for better growth and adaptability. A specific group of customers on whose needs and wants a company focuses its marketing efforts. From this strategy the company can focus upon selected customers and satisfy their needs with suitable products and services.

Targeting entails determining which of the identified segments is the most appealing. Essentially, you’re trying to figure out how commercially appealing each segment is.

You can select a target market by considering the following factors:

  • Size: The segment’s current size as well as its growth potential.
  • Profitability: What market segments are most willing to pay the highest price for your goods or service? What is a customer’s lifetime value (LTV)? These give an estimate of the profitability we get by targeting this segment.
  • Reachability: How easy or difficult is it for you to get out to your target audience with your marketing? Is it possible for your distribution networks to simply reach this market? What is the customer acquisition cost (CAC) for the specific segment we want to target?

In the end, it’s not simply the size of a segment that matters but also its overall profitability. In an ideal world, you’d identify a growing and highly profitable market with a high lifetime value (LTV) and a cheap cost of acquisition (CAC).

PEST and SWOT analyses are important strategic tools for thinking about the possibilities and risks that any market you’re evaluating might face.