Market Targeting

The second step in target marketing calls for market targeting. The company now has to evaluate the various segments and decide how many and which ones to serve.

Evaluating Market Segments

In evaluating market segments, a marketer must look at three factors:

1). One factor is segment size and growth.

a). Companies must collect and analyze data on current dollar sales, projected sales-growth rates, and expected profit margins for the various segments.

b). The company will be interested in segments that have the “right” size and growth characteristics.

c). The largest, fastest-growing segments are not always the most attractive ones for every company. The company must consider competition and whether their company resources are sufficient to pursue the opportunity.

2). Another factor to examine is segment structural attractiveness. The company must assess several major structural factors that affect long-run segment attractiveness. Areas to consider include:

a). Current and potential competitors.

b). The threat of substitute products.

c). Relative power of buyers.

d). Relative power of suppliers.

3). Thirdly, the company needs to examine its own objectives and resources. The opportunity should mesh with the company’s objectives and resources. The environmental hazards of pursuing the opportunity must also be considered.

“Can the company succeed in gaining this segment?” is a question that must be answered.

Selecting Market Segments

After evaluating different segments, the company hopes to find one or more market segments worth entering. It must engage in target-market selection.

1). Target market is defined as being a set of buyers who share common needs or characteristics that the company decides to serve.

2). The firm can adopt one of three market-coverage strategies:

a). Undifferentiated marketing is a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer (Hershey’s candy bars used this strategy with one candy bar for everyone).

1]. Undifferentiated marketing relies on mass distribution and mass advertising for its success.

2]. It aims to give the product a superior image in people’s minds.

3]. It provides cost economies.

4]. Modern marketers have strong doubts about this strategy.

Differentiated marketing is a market-coverage strategy in which a firm decides to target several market segments and designs a separate offer for each.

1]. By offering product variations and marketing, the company hopes for higher sales and a stronger position in a market segment.

2]. A growing number of firms have adopted differentiated marketing.

3]. Differentiated marketing typically creates more total sales than undifferentiated marketing does.

4]. However, a company’s costs rise as it seeks to provide the different variations and marketing.

5]. A marketer must weigh increased sales against increased costs when deciding on a differentiated marketing strategy.

Concentrated marketing is a market-coverage strategy in which a firm goes after a large share of one or a few submarkets.

1]. Through concentrated marketing, a company achieves a strong market position in the segments it serves because of its greater knowledge of the segment’s needs and the special reputation it acquires.

2]. The company can also achieve many operating economies because of the specialization.

3]. However, concentrated marketing involves higher risks. The particular market can turn sour (“all your eggs in one basket”).

4]. Rapid advances in computer and communications technology are allowing large mass marketers to act more like concentrated marketers. Using detailed databases, these marketers segment their mass markets into small groups of like-minded buyers.

Many factors need to be considered when choosing a market-coverage strategy. Among the more important considerations are:

1). Company resources —when a company’s resources are limited, concentrated marketing makes the most sense.

2). Product variability —standardization can be matched with undifferentiated strategies; variance can be matched with differentiated strategies.

3). Product’s stage in the life-cycle —in the beginning stages use limited product offerings and pursue undifferentiated or concentrated markets and expand product offerings (differentiation) in the latter stages.

4). Market variability —if tastes are the same, use undifferentiated.

5). Competitors’ marketing strategies —be careful of using opposites unless you can segment where they have not.

Socially Responsible Target Marketing

Smart targeting helps companies to be more efficient and effective by focusing on the segments that they can satisfy best and most profitably.

1). Target marketing sometimes generates controversy and concern.

2). Industries that have generated controversy include cigarettes, beer, and fast-food.

3). The meteoric growth of the Internet and other carefully targeted direct media has raised fresh concerns about potential targeting abuses.

4). In market targeting, the issue is not really who is targeted by rather how and for what.

Дата добавления: 2015-10-30