Ford said “give the customer any color they want, so long as it is black”. This strategy worked for a while, because people just wanted a car. However, the market changed when GM decided they would offer a range of cars to suit different “purposes, purses and personalities”.

Between 1920 and 1923, Ford’s market share plummeted from 55 to 12 percent.

These days, auto manufacturers segment the market, rather than treat it as one homogeneous mass. There are cars for the rich, cars for the less well off, cars built for speed, and cars built for shopping.

Manufacturers do this because few manufacturers can cater to very large markets where the consumer has infinite choice. To be all things to all people is impossible, but to be the best for a smaller, well-defined group of people is a viable business strategy. It costs less to target, and therefore has less risk of failure. Search marketing is all about targeting, so let’s take a look at various ways to think about targeting in terms of the underlying marketing theory which might give you a few ideas on how to refine and optimize your approach.

While there are many ways to break down a market, here are three main concepts.

Segments

Any market can be broken down into segments. A segment means “a group of people”. We can group people by various means, however the most common forms of segmentation include:

Benefit segmentation: a group of people who seek similar benefits. For example, people who want bright white teeth would seek a toothpaste that includes whitener. People who are more concerned with tooth decay may choose a toothpaste that promises healthy teeth.

Demographic Segmentation: a group of people who share a similar age, gender, income, occupation, education, religion, race and nationality. For example, retired people may be more interested in investment services than a student would, as retired people are more likely to have capital to invest.

Occasion Segmentation: a group of people who buy things at a particular time. Valentines Day is one of the most popular days for restaurant bookings. People may buy orange juice when they think about breakfast time, but not necessarily at dinner. The reverse is true for wine.

Usage Segmentation: a group of people who buy certain volumes, or at specific frequencies. For example, a group of people might dine out regularly, vs those who only do so occasionally. The message to each group would be different.

Lifestyle segmentation: a group of people who may share the same hobbies, or live a certain way. For example, a group of people who collect art, or a group of people who are socialites.

The aim is to find a well-defined market opportunity that is still large enough to be financially viable. If one segment is not big enough, a business may combine segments – say, young people (demographic) who want whiter teeth (benefit). The marketing for this combined segment would be different – and significantly more focused – that the more general “those who want whiter teeth” (benefit) market segment, alone.

How does this apply to search and internet marketing in general?

It’s all about knowing your customer. “Knowing the customer” is an easy thing to say, and something of a cliche, but these marketing concepts can help provide us with a structured framework within which to test our assumptions.

Perhaps that landing page I’ve been working on isn’t really working out. Could it be because I haven’t segmented enough? Have I gone too broad in my appeal? Am I talking the language of benefits when I should really be focusing on usage factors? What happens if I combine “demographics” with “occassion”?

Niches

Niches are similar to segments, but even more tightly defined based on unique needs. For example, “search engine marketing education” is a niche that doesn’t really fit usefully within segments such as demographics, lifestyle or occasion.

The advantage of niche targeting is that you may have few competitors and you may be able to charge high margins, as there is a consumer need, but very few people offer what you do. The downside is that the niche could weaken, move, or disappear. To mitigate this risk, businesses will often target a number of niches – the equivalent of running multiple web sites – reasoning that if one niche moves or disappears, then the other niches will take up the slack.

Search marketing has opened up many niches that didn’t previously exist due to improved marketing efficiency. It doesn’t cost much to talk to people anywhere in the world. Previously, niches that required a global audience in order to be viable were prohibitive due to the cost of reaching people spread over such a wide geographic area.

To function well in a niche, smaller companies typically need to be highly customer focused and service oriented as small niche businesses typically can’t drive price down by ramping volume.

Cells

Cells are micro-opportunities. This type of marketing is often overlooked, but will become a lot more commonplace on the web due to the easy access to data.

For example, if you collect data about your customers buying habits, you might be able to identify patterns within that data that create further marketing opportunities.

If you discover that twenty people bought both an iPhone and a PC, then they may be in the market for software products that makes it easy for the two devices to talk to each other. Instead of targeting the broader iPhone purchaser market, you might tailor the message specifically for the iphone plus PC people, reasoning that they may be having trouble getting the two devices to perform certain functions, and would welcome a simple solution.

Further Reading:

• Net MBA on Market Segmentation
• New Meaning For The Term Niche Market
• Targeting The Next Generation

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty

If you’re one of the many webmasters feeling hammered by Penguin and Panda, you’d be forgiven for thinking the best opportunities in search are long gone. Perhaps it’s all gotten just a bit too complicated.

In reality, internet marketing is still just a toddler taking baby steps. Opportunity abounds. It’s a case of looking for it, finding it and capitalizing on it.

So how?

In this post. we’ll look at the nature of opportunities, and how to spot them.

People Always Have Problems

If you look at these stories, you’ll notice a common thread.

Honest Tea solved a problem. People wanted bottled organic tea. VMail solved a problem. Small businesses needed a cheap VoIP solution. Ben and Jerry solved a problem. There was no ice cream shop in their town.

Opportunity is the chance to solve a problem. To fill a need. If no one is solving that problem, and that problem is a difficult one the customer, and the customer is desperate to solve it, then the stronger the marketing opportunity will be.

Are there any fewer needs than there were last year? Than before the financial crash? There are just as many needs, as there are just as many people, and as life grows ever more complex, their needs become greater. Their needs may change. They might want fewer luxury products and better deals on everyday products. Next year, it might be the other way around.

Where There Are Problems, There Are Marketing Opportunities

We find marketing opportunities – good ones – when there is a high probability we’ll satisfy a market need, and do so profitably.

• Is it about finding a keyword with high search volumes?
• Is it about doing what the the successful people are doing?
• Is it about doing what everyone else is doing, but just being better at SEO than they are?

Possibly, but this type of thinking is more to do with tactics than opportunity. A marketing opportunity is better evaluated for a higher level. Take the 5,000 ft view.

Ask:

• Can I supply something in short supply?
• Can I improve on an existing product or service in way that is considerably superior?
• Can I supply a genuinely new product of service?

For example, there is a market opportunity for search engine news. Is it a good opportunity for a new entrant? Probably not, as this market is saturated by established players. The audience already have their needs met.

However, there might be better opportunities for news on, say, 3d printers, or some other emerging technology where there is a need, but it isn’t well served. Of course, these opportunities can narrow over time as more and more people see the opportunity, and move into the space.

Perhaps the most lucrative opportunities score highly in each area. They are in short supply, they are relatively new, and you can improve on something people already do.

A good example would be the iPhone. When they came out, there was only one iPhone, they were new(ish) idea for the target market, and they integrated functions people already performed, but did so in a superior way. It’s little wonder Apple could charge such high margins on them, and it took competitors a long time to catch up. Anyone releasing a smartphone today would have to improve on those areas – price point is probably the obvious opportunity – in order to be able to compete.

How To Nail Down The Opportunities

There are various methods marketers do to test their conceptions. Let’s look at three.

One method is the problem detection method. Try asking people if they have any problems with their existing service. For example, a prospective SEO customer might say “I’d like to spend more on SEO, but I don’t know if my spend will be worthwhile”. The opportunity is to figure out a way to show it will be worthwhile if the customer spends more, which might involve offering a money-back guarantee, or a pay on performance arrangement, or some other way to improve that problem the customer has with existing services.

Another way is the ideal method. Ask the customer what would be their ideal product or service. Often, customers will describe fanciful things, but listening to their whims can help you think of products and services you may not have thought of yourself, as it’s easy to fall into the trap of thinking within the constraints of your industry. At one time, a customer may have wanted no time delay between ordered a meal and receiving the meal. This probably sounded like an impossible ideal to a restaurateur at the turn of the century, used to waiters and a kitchen staff, but an opportunity to Mr McDonald, who thought more in terms of an industrial process. And Ray Kroc scaled it from there.

Another method is the consumption chain method. You track the consumption of the product or service from start to finish, and see if there are any steps in the chain that can be improved upon. Questions to ask are how people become aware of the product or service, how do customers make their purchase decisions, if they need to consult someone else to make the purchase decision, how they get the product or service, where they store it, how often they use it, and so on. At each step in the chain, there is a chance to make a change, to optmize, and to make better.

We’ve only touched on the ideas on ways to seize opportunities. How have you discovered opportunities in the past? What is your process for spotting new opportunities? Please add them to the comments!