The market selection process can be very tedious work. Businesses and marketers look at already mass markets and divide them into smaller groups. There are 4 kinds of markets:

Potential Market: You’re potential market consists of the consumers who have interest in your product and have sufficient income to buy your product.

Available Market: The available market is a small portion of the potential market. This is where you reach and serve the consumer.

Segmented Market: The segmented market is where businesses look for distinct groups within the available market. This is the process of dividing potential groups into potential buyers of your product.

Target Market: The target market is the final choice that a business decides on. This is where a business will choose how many segments of the market and which ones it will serve.

Businesses need to remember that they won’t be able to satisfy everyone, but will be able to satisfy a group. Going through the market selection process is also like finding your niche. As a business targets a specific group it is using and creating more factors and variables to define itself for the groups it’s targeting. One thing a business needs to understand is that the more it understands its customers; later on the customers may desire to pay a premium price for their product rather than someone else.

Variables Affecting Market Selection
Demographic Variables: Demographic variables include a person’s age, income, wealth, gender, location, occupation, religion, nationality, and much more. Using demographics is one of the most popular ways businesses are targeting their consumers. This is usually considered the “classic” way to divide a market since it’s been around for a long time. Many marketers begin with demographics because the data is readily available, cheap, and more refined.

Geographic Variables: Geographic variables can include specific countries, regions inside a country, counties, cities (urban or rural), and much more. Businesses look at the geographic variables to decide where a product has potential to have the most success in a certain area. Many businesses gather their geographic information by logging their customer’s zip codes and area codes.

Wal Mart is a great example of a business that used it’s location to become successful. Sam Walton’s plan was to go into cities where the competitors weren’t and now their name is one of the most recognized of the marts.

Behavior Variables: Behavior variables can range from the use of a product, whether it’s heavy, light, or a new user. It can also be the consumer’s attitude or response to a product. Many businesses believe that this is the best starting point to target consumers. If a business is targeting behavior, consumers may or may not have similar traits.

Many people believe that choosing many niches is better than choosing one. My opinion sways on this topic because you can be very profitable if you concentrate on a targeted market. Consider this, I enter a 1 billion dollar market and my niche only targets 1% of that market. I have the potential to make $10,000,000 dollars in that market alone, which is still a great deal of money. Don’t get me wrong, but you can also be very profitable targeting many markets because your product is exposed to many more potential consumers. The better you define your market, the better position you’ll be in, whether you define many markets or only one.

Tags: Business, Finding a Niche, Marketing, Market Selection

If you liked this post please consider adding us to your RSS Feed