How to Identify the Most Profitable Targets

A top ten list of criteria used to identify financially-optimal targets.

What's the best way to identify market segments? While many marketing managers use demographics, corpographics, attitudes, behavior, heavy users/light users, we believe it's necessary to look at hundreds of different ways to segment the market, using all possible market drivers—from category involvement and product preference motivators to media habits and psychographics. By using all relevant factors, you can create distinct proprietary segments—segments your competitors do not know exist—and then rank them by current and estimated profitability.

Here's our Top 10 list of criteria we've found to be most useful in identifying financially-optimal targets:

1. Decision-Making Power
   The more responsibility the target has for making a buying decision, the more valuable the target.
2. Sales Potential
   The more a target buys or uses from the product category, the more valuable the target.
3. Growth Potential
   The more a target group is growing, the more valuable the target group.
4. Lifetime Value
   The more product a target is expected to buy over its lifetime, the more valuable the target.
5. Retention Potential
   The more likely it is that a target can be economically sustained and, therefore, retained over time, the more valuable the target.
6. Common Motivations
   The more homogeneous and preemptible a target's needs are, the more valuable the target.
7. Problem Potential
   The bigger the problem the target has that the marketer can solve, the more valuable the target.
8. Responsiveness
   The more a target responds to a company's marketing efforts, the more valuable the target.
9. Media Exposure Patterns And Media Costs
   The easier and less expensive it is to reach a target in media, the more valuable the target.
10. Findability
    The more easily a target can be identified in databases, the more valuable the target.

-July 2010

This content was provided by Copernicus Marketing Consulting and Research. Visit their website at www.copernicusmarketing.com.