Carving Up the Market
Some marketers believe that it is important to reach as many potential customers as possible; they don't want to pass up a single one. Although this goal might seem to make sense, it ignores the factor of cost efficiency. Reaching "everyone" costs money and sends lots of unwanted messages to people who aren't customers (and are unlikely to ever be customers). It makes more sense to narrow the audience to people who are most likely to buy.
Segmenting identifies those groups of customers and prospects who are most likely to respond to marketing communication messages. One segmentation strategy used by marketers looking for new customers is to profile a brand's current profitable customers, then look for those that are similar. Targeting prioritizes the identified segments and selects segment characteristics that can help in creating MC messages and selecting media to reach the targeted segments. A segment that should always be targeted is current customers because it costs significantly less to create a transaction with them than with prospects.
Progress in marketing research and database technology has allowed companies to learn more about current customers and the differences among them. Now companies are able to track which consumers purchase what products, how often, and in what quantities. Companies can often track which messages customers heard or saw, what else their customers are buying, and who they are-how old they are, where they live, and other profile information. Most important, companies can determine which customers are profitable and which are not.
