targeting strategy

Definition

The selection of potential customers to whom a business wishes to sell products

or services. The targeting strategy involves segmenting the market, choosing
which segments of the market are appropriate, and determining the products
that will be offered in each segment. A business offering multiple products can
determine if the various segments should receive one generic product (such as in
mass marketing), or if each segment should receive a customized product
(multi-segment), based upon the market's diversity, maturity, the level of
competition and the volume of sales expected. Also called targeting.

A target market is a group of customers that the business has decided to aim its
marketing efforts and ultimately its merchandise.[1] A well-defined target market is the
first element to a marketing strategy. The target market and the marketing mix variables
of product, place(distribution), promotion and price are the two elements of a marketing
mix strategy that determine the success of a product in the marketplace.

Once these distinct customers have been defined, a marketing mix strategy of product,
distribution, promotion and price can be built by the business to satisfy the target market

Market segmentations
Target markets are groups of people separated by distinguishable and noticeable aspects.
Target markets can be separated into:

• geographic segmentations (their location)

• demographic/socio-economic segmentation (gender,age, income occupation,
education, sex, household size, and stage in the family life cycle)
• psychographic segmentation (similar attitudes, values, and lifestyles)
• behavioral segmentation (occasions, degree of loyalty)
• product-related segmentation (relationship to a product)[2]

[edit] Strategies for Reaching Target Markets

Marketers have outlined four basic strategies to satisfy target markets: undifferentiated
marketing or mass marketing, differentiated marketing, concentrated marketing, and
micromarketing.

Mass 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. It is type of marketing
(or attempting to sell through persuasion) of a product to a wide audience. The idea is to
broadcast a message that will reach the largest number of people possible. Traditionally
mass marketing has focused on radio, television and newspapers as the medium used to
reach this broad audience.

For sales teams, one way to reach out to target markets is through direct marketing. This
is done by buying consumer database based on the segmentation profiles you have
defined. These database usually comes with consumer contacts (e.g. email, mobile no.,
home no., etc). Caution is recommended when undertaking direct marketing efforts -
check the targeted country's direct marketing laws.

[edit] Examples
CVS Caremark’s target market is women since they make up 80 percent of the pharmacy
chain’s customers. CVS has marketed its stores to aid women who are constantly
multitasking. They recently redesigned 1,200 of its 6,200 stores to women, including
shorter wait times for prescriptions, wider and better-lit shopping aisles, and more beauty
products.[3]

The Oreo cookie is a popular cookie in the U.S., known for its two discs of chocolate
with a white cream filling. The Double Stuf Oreo cookie is also marketed to U.S.
consumers. However, Kraft has formulated a different version of the Oreo to target
consumers in China. The Chinese version consists of four layers of long, thin biscuits
coated in chocolate. Kraft CEO, Irene Rosenberg, trusts his executives who live and work
in China to know what consumers would prefer in order to maximize their profits. In
Germany, Kraft is appealing to the tastes and preferences of German consumers by
creating dark chocolate products. It is also introducing premium instant coffee in Russia,
which is a beverage that is popular to consumers.[4]

World Wrestling Entertainment’s (WWE) target market is young males. Monday Night
RAW® is the number one entertainment program on primetime cable among male
viewers (2 million+) including the male demographics of 18-34, 18-49 and 25-54. It is
shown at 9:00 PM ET to reach its target market.[5]

Kohl’s department store has a target market consisting of consumers buying for
themselves and their families.[6]

[edit] The Psychology of Target Marketing

A principal concept in target marketing is that those who are targeted show a strong
affinity or brand loyalty to that particular brand. Target Marketing allows the marketer /
sales team to customize their message to the targeted group of consumers in a more
focused manner.

Research has shown that racial similarity, role congruence, labeling intensity of ethnic
identification, shared knowledge and ethnic salience all promote positive effects on the
target market. Research has generally shown that target marketing strategies are
constructed from consumer inferences of similarities between some aspects of the
advertisement (e.g., source pictured, language used, lifestyle represented) and
characteristics of the consumer (e.g. reality or desire of having the represented style).
Consumers are persuaded by the characteristics in the advertisement and those of the
consumer.[7]

market segmentation - targeting strategies

Once a firm has successfully identified the segments within a market, the next step is to target
these segments with products that closely match the needs of the customers within that
segment. There are a number of targeting strategies, including:

Niche/concentration marketing – this is concerned with targeting one particular, well-defined

group of customers (a niche) within the overall market.

Jordan’s, the cereal company, adopted this approach by targeting groups of customers
interested in organic products at a time when this group of consumers represented a relatively
small proportion of the overall market.

Niche markets can be targeted profitably by small firms who have relatively small overheads
and, therefore, do not need to achieve the volume of sales required by larger competitors.

The main disadvantages of niche markets are that the potential for sales growth and economies
of scale may be limited, and the survival of the firm may be seriously affected if sales begin to
decline.

Mass/undifferentiated marketing – this is concerned with selling a single product to the whole
market. This strategy is based on the assumption that, in respect to the product in question,
customers’ needs are very similar if not identical.

The main benefit for the firm is that it can produce on a large scale, benefiting from low unit
production costs via economies of scale. These lower costs can be passed on to the consumer
in the form of lower prices because, although profit margins on each item sold may be lower,
high sales volume should generate large profits overall.

The main disadvantage of mass marketing is that, increasingly in today’s markets, consumers
are less interested in standardised products and often prepared to pay premium prices for
products that cater for their specific needs.
Differentiated/selective marketing – this is concerned with targeting each segment with a
product with its own marketing mix designed to match the needs of the consumers within the
segment.

By tailoring products to meet consumer needs more closely, firms are likely to increase
consumer satisfaction and generate a greater degree of consumer loyalty.

The differentiated approach also allows the firm to spread risks, so that it will be less affected
by a decline in demand from one segment.

The main disadvantages of this approach include confusion amongst customers when faced with
dozens of brands and lost economies of scale from shorter production runs and the additional
costs of having to advertise several rather than one brand.