1st do market segmentation, 2nd come up with targeting strategies.
What is a target market?
Target markets refer to the market segments that the business plans to sell into. The firm aims to have a different Marketing Mix for a different market segment.
How to choose a target market?
Criteria for selecting a target market include:
- Size. The estimated size of the market to determine whether or not it is worth going after.
- Expected growth. The size of the market may be small, but if the market is growing significantly, it may be worth considering.
- Competitive position. The less competition in the market, the more attractive the industry is.
- Cost of reaching the market. Is the market accessible for firm’s marketing actions? If not, it should not be pursued as it is considered risky. Are barriers to entry high?
- Compatibility with the organization’s objectives and resources. All marketing activities should be reasonable, align the firm’s future plans and achievable considering available resources.
After selecting a target market(s), the business will look forward to compiling consumer profiles who might be ideal customers for the firm’s products.
Examples of target markets
Consumer profiles are the geographic, demographic, behavioral and psychographic characteristics of a standard customer within a given market segment. For instance, location, climate and population density; age, gender (sex), race and ethnicity, marital status, family size, occupation (job), income, language and religion; lifestyle, hobbies and interests, values and attitudes, social status, culture and personality.
Example 1: The typical retiree is a person over 60-years-old having lower-to-medium stable income from monthly pension who engages in outdoor activities such as hiking, learning a new language or gardening. This person most likely lives in his or her own house without a mortgage no more, shops in the supermarket while holding peaceful attitude towards life.
Example 2: The typical consumer profile for a motorbike company includes a young adventurous male. As he engages in risky driving activities, he is most likely a single professional or a business owner without a spouse nor children.
Example 3: The typical customer of Diet Coke or Coke Zero is a middle-aged woman who is health-conscious. She most likely lives an active lifestyle and goes to the gym often.
What is targeting?
Targeting refers to each distinctive market segment having its own specific Marketing Mix. Let’s think about business and first-class travelers are targeted in a very different way from those who travel in economy class.
A strategy is developed for each of the target markets.
What are typical targeting strategies?
In theory, targeting strategies include Mass Marketing, Niche Marketing and Differentiated Marketing.
- Mass Marketing targeting strategy includes one product for the whole market.
- Niche Marketing targeting strategy includes exploiting one small market segment.
- Differentiated Marketing targeting strategy is trying to sell different products to different market segments.
In practice, many business organizations choose to use various targeting strategies, or even blends of multiple ones.
In short, the more information about the customer, the better chance of a successful Marketing Mix. Remember that the three broad targeting strategies that businesses usually use include Mass Marketing, Niche Marketing and Differentiated Marketing.
