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On Target!

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Does your business have a customer or market niche? If so, you can conduct target marketing and focus your efforts directly on potential customers. If not, your business is functioning in a generic or commodity market where it is hard to distinguish your product or service from that of your competitors. Many businesses have products or services that can serve multiple niches. Finding the niches that your business can serve and marketing directly to them can reduce the cost of obtaining new customers and increase revenue at the same time, resulting in a higher profit margin.

Most large companies employ the Pareto Principle in their approach to marketing. They understand that 80% of their business comes from 20% of their customer base. By focusing the majority of their efforts on the niches in that 20%, they are able to maintain a high return on their marketing expenditures. Target Stores is a good example that begins with their logo. It exemplifies the company’s laser-like focus on meeting the needs of its niche customer. The typical Target customer, according to www.pymnts.com/news/retail, is young, affluent, and looking for products that are unique and stand out from the “run-of-the-mill” variety. Target’s customer demographics show the average customer is female (63% of total customers), between the ages of 18 and 44, and earning $12,000 more per year than their counterparts shopping at other stores.

Having determined that their niche customer prefers upscale unique products has allowed Target to develop merchandising programs with manufacturers who are willing to design specific products for the company that aren’t available elsewhere. Target also seeks out smaller manufacturers of boutique and upscale products that are not carried by their competitors. While small businesses don’t have the volume of sales to develop similar arrangements, they can take actions to attract niche customers to their establishment. The first step in the process is to identify the niches that your business can attract and serve. A photographer, for example, can have multiple niches: weddings, pet photography, real estate photos, classic and collector car photography, and so on. Each of those niches has customers with different characteristics. Those characteristics include the customers demographics, their geographic location, and their psychographic preferences.  Continue reading here.

Speaking of Business Blog by Dr. Philip R. Geist, Area Director, Florida SBDC at UNF



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