Joe, the founder of RealBig Seeds in Mozambique, is among a growing group of small business leaders who are helping to revolutionize agriculture in emerging markets. Joe knows that better seed genetics will dramatically change smallholder farmers’ lives, if only he can develop a message that appeals to a broad population of small farmers and then position his product to stand out from the competition. These marketing tasks need to be done taking into consideration, as most startups must, Joe’s limited staff, budget, and time. Selling into rural last mile markets is fraught with risk and generally provides low rates of return that can be expected in the early phases of market development. This risk makes it even more important to have strong marketing using segmentation, targeting and positioning concepts.
Such sophisticated marketing is data driven, requiring better, and more in-depth, knowledge of customers and their preferences. Companies, especially in early market entry, spend on average 20 to 30% of their budget on sales and marketing, including learning about customer attributes, assessing market size, and positioning and advertising their product to targeted group of consumers. For Joe, 20 to 30% of RealBigSeeds budget is a lot. He must ask: Does it make sense to spending on marketing in among customers that are poorly served by any product offerings, such as those we find in many emerging smallholder markets? And if so, how does a company find data on consumers who are widely disbursed, difficult to reach, and unlikely to provide much in terms of preferences and buying power?
The Basics of Segmenting, Targeting, and Positioning
Let’s take a look at some of the basics for product marketing. Segmenting, targeting and positioning (STP) is a common application used in product marketing. Segmentation of your customer base recognizes that, while large numbers of your customers may look for similar product attributes, not all are motivated by the same attributes and therefore should be grouped and targeted differently. Targeting requires looking at groups with similar segmentation attributes—income, age, education, profession, lifestyle, behavior, benefits sought, for example—and determining which group(s) are the largest, most accessible and/or most lucrative to pursue. Positioning uses segmentation and targeting information, as well as an analysis of the competitive landscape, in order to develop a marketing message that will be most appealing and persuasive to your target market.
The Data Companies Can Start Using Now for Segmenting, Targeting, and Positioning
A challenge with developing any product marketing campaign is to find, collect and analyze customer information. Large companies spend millions of dollars on collecting and analyzing customer information as they develop their marketing strategies in data-rich environments. What can companies in emerging markets do when customer information either doesn’t exist or may be unreliable? The fact is that customer information does exist and may be right under your nose.
For example, using existing sales information, businesses can determine where their products are in demand and where they are not selling. Asking your retail network to collect information on gender and mobile phone information can provide further data points and an opportunity to collect customer survey information. In many countries, in-depth household poverty surveys conducted by development organizations also provide a wealth of information about segments, including incomes levels as well as periods of the year (such as harvests) when farmers have more disposable income. What other sources of data can you think of?
Tell us below in the comments or visit the Ask the AgTech Team page to contact us with your questions about segmentation, targeting, and positioning OR read the next articles in this series: