LESSON TWELVE
MARKET TARGETING
MARKET TARGETING
Introduction
Before engaging in marketing campaigns and promotions businesses need to decide who they
would like to aim their products at. This involves analyzing and splitting (segmenting) the
market into different sectors. This is because, buyers have unique needs and wants, a seller
could potentially view each buyer as a separate target market. A target market refers to a set
of buyers who share common needs or characteristics that the company decides to serve,
(Kotler & Armstrong, 2006 P.210). The most effective way to segment the market will
depend on the product and the business producing the product. Therefore, after segmentation
firms can adopt one of three strategies to target customers.
1. Undifferentiated or Mass Marketing
Undifferentiated marketing is marketing that does not target a particular segment of the
market. Instead the firm adopts one marketing strategy and hopes that it will appeal to as
many people as possible. Sometimes referred to as mass marketing, undifferentiated
marketing usually involves targeting the whole market with one product. For instance, Coca
Cola's original marketing strategy was based on this format when they offered one product,
which they believed had universal appeal. However now that Coca Cola has introduced other
products like Stony, Minute Maid, etc, it has changed its marketing strategy to differentiated
marketing. An undifferentiated marketing strategy can be cheaper than the other strategies
because there is only one product to produce, distribute and market. It can also be cheaper
because the firm is not targeting multiple market segments. The disadvantage is the challenge
involved in producing a product and marketing campaign which is universally appealing
enough to make it profitable. Mass marketers also have trouble competing with more focused
firms that do a better job of satisfying the needs of specific segments and niches.
2. Differentiated or Segmented Marketing
If a firm decides to target several segments of the market, it is engaging in a differentiated
marketing strategy. Under a differentiated marketing strategy, a firm will develop products
and services with separate marketing mix strategies for each of the segments chosen by the
firm. For instance, SIMOTECH Investments Ltd an importer of ladies, gents and children’s
ware is an expert in crating differential brands that serve the taste of different market
segments; also an Airline company offering VIP first (segment 1), business (segment 2) and
economy class tickets (segment 3), with separate marketing programmes to attract customers
for each of the ticket types is an example of differentiated marketing strategy. Therefore,
differentiated marketing is a market coverage strategy in which a firm decides to target
several market segments and designs separate offers for each. By offering product and
marketing variations to segments, companies hope for high sales and a stronger position
within each market; developing a stronger position within several market segments creates
more total sales than undifferentiated marketing across all segments; combined brands give it
a much greater market share than any single brand could. However, differentiated marketing
also increases the cost of doing business for instance, a firm usually finds it more expensive
to develop and produce say, 10 units of 10different products than 100 units of one product;
developing separate marketing plans for the separate marketing plans for the separate
segments requires extra marketing research, forecasting, promotion planning and channel
management all these increases the promotional cost. Hence, the company must weigh
increased sales against increased costs when deciding on a differentiated marketing strategy.
3. Concentrated or Niche Marketing
Concentrated marketing occurs when a business concentrates its marketing effort on large
share of one/few segments of the market. The firm will develop a product that caters for the
needs of that particular group. For example Rolls Royce cars and the Harrods Group target
the premium segment of the market. Concentrated marketing can have lower costs than the
other two options hence it is highly profitable. It can be a good option for small or new
businesses. Through concentrated marketing, the firm achieves a strong market position
because its greater knowledge of consumer needs in the niches it serves and the special
reputation it acquires. This makes a firm to market more effectively (by fine-tuning its
products, prices, and programs to the need of carefully defined segments) and efficiently (by
targeting its products or services, channels and communication programs toward only
consumers that it can serve best and most profitably). The disadvantage is that it reduces the
number of customers that the firm is targeting. It also means that the firm needs to be sure
that they have selected the correct segment of the market. In addition, concentrated marketing
involves higher than normal risks for instance companies that rely on one or a few segments
for all their business will suffer greatly if the segment turns sour or larger competitors may
decide to enter the same segment with greater resources. For this reasons, many companies
prefer to diversify in several market segments.
In Summary
There are three targeting strategies that can be used by firms when aiming their products and
services at market segments. Undifferentiated marketing implements one marketing strategy
aimed at the whole market place, differentiated marketing tailors marketing efforts for each
market segment chosen by the firm, whilst concentrated marketing tailors marketing strategy
for one particular segment of the market. Each of the three targeting strategies has its
advantages and disadvantages; these should be weighed up when deciding which one to
adopt.
MICRO MARKETING (COMPLETE SEGMENTATION)
Differentiated and concentrated marketers tailor their efforts and marketing programs to meet
the needs of various market segments and niches. At the same time, however, customize to
each individual customer. Micro marketing is the practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations; rather than seeing a customer
in every individual, micro-marketer see the individual in every customer. Micro marketer
includes; local marketing and individual marketing.
a. Local Marketing: his involves tailoring brands and promotions to the needs and wants of
local customer groups, cities, neighborhoods and even specific stores. For instance, Banks
provides different mixes of banking services in each of its branches, depending on
neighborhood demographics; Kraft helps supermarket chains identify their the specific cheese
assortments and shelf positioning that will optimize cheese sales in low income, middle
income and high income stores and in different ethnic communities. Local marketing has
some drawbacks and these include; it can drive up manufacturing and marketing costs by
reducing economies of scales; it can also create logistics problems as companies try to meet
the varied requirements of different regional and local markets; brand overall image might be
diluted if the product and message vary to much in different localities. However, the
advantages of local marketing outweigh the drawbacks in that; local marketing helps the
company to market more effectively in the face of the pronounced regional and local
differences in demographics and lifestyles. It also meets the needs of the first company’s first
line customers-retailers who prefer more fine-tune product assortments for their
neighborhood.
b. Individual Marketing: This refers to tailoring the products and marketing programs to the
needs and preferences of individual customers. Individual marketing has also been labeled
one-to-one marketing, mass customization and markets-of-one marketing. The widespread
use of mass marketing has obscured the fact for centuries consumers were served as
individuals; The tailor custom-made the suit, the cobbler designed shoes for the individual,
the cabinent-maker made furniture to order. Thus, mass customization is the process through
which firms interact one-to-one with masses of customers to design products and service
tailor made to individual needs.
Choosing a Target Market Strategy
Companies need to consider many actors when choosing a target marketing strategy. Which
strategy is best depends on:
 Company resources: When the firms’ resources are limited, concentrated marketing
makes the most sense.
 Product variability: Undifferentiated marketing is more suited for uniform products
such as grapefruit or steel. Products that can vary in design, such as cameras and
automobiles are suited to differentiation or concentration.
 The products, life cycle: The PLC must also be considered. When a firm introduces a
new product, it may be practical to lunch only one version and undifferentiated
marketing or concentrated marketing may make the most sense. In the mature stage of
the PLC, however begins to make more sense.
 Market variability: If most buyers have the same tastes, but the same amounts and
reacts the same way to marketing efforts, undifferentiated marketing is appropriate.
 The competitors: When competitors use differentiated or concentrated marketing can
be suicidal. Conversely, when competitors use undifferentiated marketing, a firm can
gain an advantage by using differentiated or concentrated.
MARKET POSITIONING
Kotler defines Positioning as an “act of designing the company’s offering and image to
occupy a distinctive place in the minds of target market.” The goal is to locate the brand in
the minds of consumers to maximize the potential benefit to the firm.
A good brand positioning helps guide marketing strategy by clarifying the Brand’s essence,
what goals it helps the consumer achieve, and how it does so in unique way.Everyone in the
organization should understand the brand positioning and use it as context of making
decision.
5. Positioning
The third and final step in the market segmentation process deals with positioning. Once the
company has identified the segments and chosen which segment or segments to target the
final step is to decide on, what position it wants to occupy in those segments. Positioning is
concerned with how the customers perceive the products and how it is defined by the
customers in order to maximize the potential benefit to the company. The result is a
persuasive reason why the target market should buy the product or products (Kotler and
Keller, 2009: 308).
Customers are not capable of remembering information about each product and thus the
consumers organize the products, services and companies in their minds in order to simplify
the buying process. This process happens with or without the help from the companies.
However, the companies are not interested in jeopardizing their products’ position and
therefore it is necessary for the companies to plan positions to gain advantage to their
products in selected target markets (Armstrong and Kotler, 2005: 208).
In order for the company to achieve a particular product or service positioning there are steps
the company must follow. These steps include:
 Understand what the target customers expect and believe to be most important when
deciding on a purchase.
 Develop a product or brand which caters specifically for the customers’ needs and
expectations.
 Evaluate the positioning and images, as perceived by the target customers of
competing products in the selected market segment or segments.
 Select a credible image that differentiates from competing brands and products on the
basis of the characteristics of the brand or product, the needs and expectation of the
target customers and their perception of competing brands’ positioning.
 Communicate with the targeted customers about the product via promotion and make
the product available at the right price. (Dibb and Simkin, 1996: 18)
A successful positioning occurs when the target customers find that the product or brand
satisfies their expectations and desires (Dibb and Simkin, 1996: 17).
In conclusion to the market segmentation process it is necessary to sum up the points made.
When identifying the target customers it is necessary to consider the variables of the different
types of segmentation. These types are the demographic segmentation, the geographic
segmentation, the psychographic segmentation and the behavioral segmentation. The next
step is to evaluate the market segments and decide on which segments to direct their
marketing strategies at. The final step is to position the product so the product satisfies the
target customers’ expectations and desires.
TARGET MARKETING
Target marketing refers to selection of one or more of many market segments and
developing products and marketing mixes suited to each segments.
STEPS IN TARGET MARKETING
Target marketing essentially consist of the following steps:
1. Define the relevant market
The market has to be defined in terms of product category, the product form and the specific
brand.
2. Analyze characteristics and wants of potential customers
The customers wants and needs are to be analyzed in terms of geographic location,
demographics, psychographics and product related variable.
3. Identify bases for segmenting the market
From the profiles available identify those has strength adequate to a segment and reflection
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4. Define and describe market segments
As any one basis, say income is meaningless by itself, a combination of various bases has to
be arrived as such that each segment is distinctly different from other segments in buying
behaviour and wants.
5. Analyze competitor’s positions
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found our kjgfksjdfgds fgs consumers and the list of attributes which they consider important
is determined.
6. Evaluate market segments
The market segments have to be evaluated in terms of revenue potential and cost of the
marketing effort. The former involves estimating the demand for the product while the latter
is an estimate of costs involved in reaching each segment.
7. Select the market segment
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capacity of the grow in size.
8. Finalise the marketing mix
This involves decisions on product, distribution, promotions and price. Product decisions will
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brand name and image will help in promoting the product to the chosen segment and pricing
can be done keeping the purchase behaviour in mind.
Hence, it can be seen that targeted marketing consists of segmenting the market,
choosing which segments to serve and designing the marketing mix in such a way that it is
attractive to the chosen segments. The third step takes into account the uniqueness of a
company’s marketing mix in a relation to that of competitors. The uniqueness or
differentiation may be tangible or intangible depending upon the physical attributes or the
psychological attributes of the product. Establishing and communicating these distinctive
aspects is termed positioning.