Effective tools to help small B2C businesses segment and target their best customers in a trade zone using Market Segmentation tools from the Arkansas State University Small Business and Technology Development Center
Simple target marketing tools for small businesses
Really Simple Market Research Tools to Help Any Small Business Find the RIGHT Customers By Herb Lawrence, Arkansas State University Small Business Development Center Most successful entrepreneurs know that long‐term growth comes from developing lasting relationships with their customers. These business owners know that it is not the product they sell nor the service they offer, it is their ability to establish and maintain meaningful relationships with a specific segment of buyers where both parties value what they receive from one another. Obviously you can’t develop meaningful relationships with every possible customer in your market area, nor should you try. Instead savvy marketers find ways to narrow the field to locate those segments of customers who would most value a relationship with their business that will result in mutual benefit to both parties. For retailers and service related businesses operating in a specific geographical trade zone, the challenge is how to divide up all of the household consumer units in their trade zone into meaningful sub groups that share: similar traits, demographic features, even life styles To whom they can deliver an effective marketing message that is most likely to spark interest in that consumer.
The challenge most small businesses face when they attempt to segment their markets is a lack of access to meaningful information upon which to make rational decisions. In the business world whether it is Wall Street or Main Street the access to the right information is the difference between success and failure. But in this electronic world of information overload, mining relevant data and then putting that data into a coherent plan is often a daunting task for small business owners. Knowledge is power in the business world but finding relevant information, understanding how to interpret the information and then putting that information Insights into the lifestyle to a usable plan is often seen as an impossible task. characteristics of your Many of our small business clients at the Arkansas State BEST customers University Small Business and Technology Development Pictures or maps of Center mistakenly believe that developing effective market where these customer segmentation plans would: groups live Plans to target take too much time just to research all of the previously underserved possible information sources, neighborhoods and would cost a fortune to hire some fancy market develop new research firm, or opportunities Take a Ph.D. in Marketing just to figure it out. Strategies that attract customers to stores Nothing is further from the truth! repeatedly to purchase your products or This map shown above, called a Dominant Tapestry Map, I services. pulled information from one of our rural counties in North‐ Central Arkansas. PINPOINT CORE CUSTOMER This map of Independence and surrounding counties GROUPS OR GROUPS WITH provides a visual representation for any retailer or service OPPORTUNITY USING MARKET business to use that segments the trade zone into seven SEGMENTATION. dominant groups based on a concept called Community Tapestry Segments. These segments were developed by ESRI Business Information Solutions and can be applied to any geographic trade zone. It is based on a concept that any business can use segmentation to divide and group their markets to more precisely target only their business customers and prospects if they have the right tools.
Segmentation operates on the theory that “people with similar tastes, lifestyles and behaviors seek others with the same tastes and lifestyles” (the idea that “like seeks like”) and that these behaviors can be: measured, predicted, And targeted. This Community Tapestry Segmentation System combines the WHO of lifestyle traits with the WHERE of local neighborhood geography to create a tapestry of various lifestyle segments of actual neighborhoods or distinct behavior market segments. In my example you will notice that in each differently shaded section of the map are sets of numbers. These numbers relate to one of 66 distinct groups of households who display similar features. In the map around the Batesville area the number 42 is the most prevalent. Those household clusters listed as number 42 are named Southern Satellites by ESRI. If a consumer lives in an area listed as a Southern Satellite segment that consumer is most likely to display similar demographic and socioeconomic factors with his neighbors. Additionally residential factors in that segment tend to be similar AND the preferences of those households are similar. What do we know about typical households in the Southern Satellite Segment? Demographically, the households in the Southern Satellite area are primarily found in rural south. It is:
Sparsely populated market segments in the country, Most are married couples, with or without children. Median age is 37 years, and more than 40% of these householders are 55 or older. Is not ethnically diverse, more than 87% of the segment are white. Socioeconomically the median income for Southern Satellites residents is $37,000. Their neighborhoods are usually dominated by one or two major manufacturing and/or construction industry that provide much of area employment. Almost 1/3rd do not have a high school diploma a figure well above the national average of 1/5th. Residentially most are single family dwellings and mobile homes, 2/3rds are single family homes and 1/3rd are mobile homes. Most of these homes are newer with over 66% being built after 1970. Median home value is $79,000 and most own their own homes rather than rent. They tend to move less often than the national average. Preferences – Southern Satellite residents enjoy country living and: Fishing and hunting are two favorite leisure activities, They spend money on magazines, clothes and other gear related to these interests, Their taste in music is predominantly country, Their rural setting makes satellite dishes common and in many cases necessary when cable is not available, These households include pets especially dogs, Home activities do not include extensive home improvement projects but they do invest in their property, many have gardens, They are most likely to own riding lawn mowers, garden tractors and tillers. Trucks are more common than sedans, Prefer domestic car manufacturers to foreign ones. Due to rural setting most households have two or more vehicles to meet transportation needs. Politically they consider themselves conservative, newspaper and magazine readership is low, but they do listen to radio. They enjoy watching television; their favorite channels include Country Music Television and ESPN. Favorite programming includes hunting/fishing show and NASCAR racing. Home personal computers and accessing the Internet have not made significant inroads in this market to the same degree as other segments.
The same type of information is available for the other six dominant segment groups in this target market area. These include: Segment 37 – Prairie Living, Segment 43 The Elders, Segment 46 Rooted Rural, Segment 49 Senior Sun Seekers, Segment 50 Heartland Communities and Segment 56 Rural Bypasses. ESRI Community Tapestry report provides the same detailed information about these six segments. Other Uses for Segmentation Data:By understanding behavior, socio‐economic, demographic commonalities in each of the seven Look for best location for new groups it becomes a very easy task for a retailer or store service business in that area to determine which of Evaluate success of exiting store these segments would most likely value their locations Select merchandise or service mix products or services. that best suits customer By understanding their behavior you can determine preferences how to develop specific marketing messages that Direct advertising and marketing messages with the RIGHT message will be the most affective in reaching these to the RIGHT audience groups. Target direct mail or other Additionally by overlaying a similar map of area promotions to the most income levels or population density it is a very easy responsive audience prospect to determine which areas should be targeted with your particular marketing message. This powerful information is will allow any small business owner to access easy to apply information needed to understand its consumers, to supply them with the right products and services, to reach them more effectively by their preferred media, AND to know how to approach them to develop a common bond that will help establish that long term relationship so vital to business success. This information is easy for ANY small business to obtain at virtually no cost. Through the Arkansas State University Small Business and Technology Development Center any business owner in our 15 County area of Northeast & North‐Central Arkansas can access this type of information at no charge through our consulting assistance programs. If you would like more information about how the Arkansas State University Small Business and Technology Development Center consultants can help you target your market, call (870) 972‐3517, e‐mail us at firstname.lastname@example.org or read more at the ASU Small Business Blog. Helping Small Businesses Grow from the Delta to the Ozarks.