Most product designers agree that it is a good idea to talk to potential customers before designing a product. Potential customers can give you insights into what they want in the product. However, talking to a sixty-five year old male about what he wants in a snowboarding product is a waste of time. How many sixty-five year old snowboarders have you seen on the slopes? There probably are some sixty-five year old snowboarders and a company would never try to prevent anyone from buying their product but the majority of the snowboarders are going to be much younger.
In order to design a product that appeals to the majority of the potential customers, the overall market which is made up of all consumers is divided into groups with with common characteristics. The group most likely to buy your product is called the target market for the product. A target market is defined by the following characteristics:
Demographics are statistical measures like age, income and level of education that defines a market segment. Much statistical information can be found at the US population can be found at US census site.
Geography refers to where the product will be used or where your customers are located. Convertibles are not aggressively marketed in Canada. Few surfboards are purchased in Michigan, similarly few snowboards are sold in Florida.
Lifestyles can be classified according to a person’s beliefs, behaviors and socioeconomic class. Shopping habits, leisure habits, familiarity with technology and religious practices are lifestyle characteristics.
Benefits refer to the fact that different market segments may derive different benefits from the same product. For instance the Honda element was originally designed to deliver features that made the car affordable, reliable, easy to clean and easy to reconfigure to accommodate passengers or cargo. The designers believed that young car buyers would use these features to derive the benefit of supporting an active, outdoor lifestyle. They could use the vehicle to take a group of friends to the beach one day and carry cargo for a camping trip the next day. However, older consumers also used these features to derive a different benefit. They used the vehicle to carry home improvement supplies, garden equipment and take their children to college. This second market segment surprised the design team.
Loyalty refers to a customers affinity to specific brands or products. For instance frequent flier miles programs have made some people very loyal to specific airlines. Similarly, General Motors has had much difficulty in trying to convince Honda and Toyota customers to even consider a General Motors product when purchasing a new vehicle.
Consider the smart pen product shown in Figure 1.
The product description from the manufacturer is presented below.
The Pulse smart pen records audio and links it what you write. Missed something? Tap on your notes or drawings with the tip of your Pulse smart pen to hear what was said while you were writing.
No Need to Lug the Laptop
The Pulse smart pen automatically captures everything as you write and draw. Transfer your notes to your computer, organize them, and even search for words within your notes. Find what you want in seconds.
Share Your Notes
Transform your notes and audio into interactive movies. Upload your creations online for everyone to see, hear and play.
From the product information on the web and the manufacturer’s description, describe the target market for the smart pen. Begin with the five different characteristics of a target market.
- Demographics – The product information repeatedly reference notes, therefore the bulk of the customers may be traditional age college students, say 16 to 22 years old. Since the pen’s price is around $150 dollars and the product requires a computer, the students must have access to significant resources. Therefore we can assume that they are from the upper middle class and probably from a family that not only values education but the adults in the family have college educations. Since the head of the family are college educated the family income is probably greater than $75,000 per year.
- Geography – Even though the product is not particularly suited to a climate or location, it is does require a infrastructure that supports the use of computers and other high tech devices. Therefore you would not expect to sell many of the pens in developing countries like Nicaragua.
- Lifestyles – The majority of the users of the pen will be busy, serious and tech savvy students. These students care about their grades and desire to save time. Many will be holding down a part time job in addition to attending college.
- Benefits – If students use the product to improve grades and save time, professionals, like lawyers and doctors, may use the product to improve the accuracy and ease of finding the notes that they have taken. thus professionals who work in environments where they take a lot of notes and ease of searching notes is important, may be a secondary market for the product.
- Loyalty – Not applicable to this product.
How does this apply to new product development?
When you are developing a new product, people in the target market should be consulted to determine which benefits the product should deliver, how much they are willing to pay for the product and where would they shop for the new product. People in the target market should also be consulted when descriptions of the product, drawings or prototypes are developed. Finally, marketing professionals will need the description of the target market to determine how to reach potential customers. What web sites do they frequent?, What television shows do they watch? and What radio stations do they listen to?
Are people in the target market the only people that should be consulted when developing a new product? No, see the next section about the buyer type model to learn about other groups of people who have valuable information for a product developer!