Every company aims to maximize profit. Yet, in the frenzy of everyday work, it is not uncommon for "urgent" issues to supplant "important" ones, thereby shifting the focus of marketing professionals.

The most important contribution that marketers make to the company's success is consciously choosing a strategy for optimizing sales and marketing resources—and then sticking to it.

Selecting the 'Right' Target Market

Picking the right target market by selecting the most profitable group of customers is the critical first step in developing an effective marketing strategy. Doing so enables marketers to concentrate their firepower and limited resources on those prospects that will yield the greatest profit.

When identifying the most profitable market segment, look for the group of customers that...

  1. Derives the most value from your products and services and will therefore pay top dollar for them

  2. Is large enough to generate the desired revenue

  3. Is the least expensive to serve

A good example of targeting profitable customers is Jayne, a speech pathologist, who used to work with hospital patients and university students who needed speech therapy.

Through conversations with contacts in the business world, Jayne found a much more lucrative market niche: foreign business executives who needed help with accent reduction to improve their speech and presentation skills. These executives were willing to pay top dollar for her services because outstanding communications skills were key to their success.

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ABOUT THE AUTHOR

Barbara Bix is managing principal of BB Marketing Plus, where she helps companies enhance their brands by capturing and enhancing the customer experience.

 LinkedIn: Barbara Bix