Chapter 6
1. Effective Targeting
• Segmentation: Identifying distinct groups of buyers based on their needs and preferences.
• Targeting: Selecting one or more of these segments to focus on.
• Developing a Value Proposition: Communicating and delivering the right benefits for each target
segment.
2. Identifying Target Customers
• Needs-based targeting: Focus on identifying customers whose needs the company will prioritize
in its offerings.
• Targeting involves deciding which customers to serve and which to ignore, optimizing the
company’s resources toward high-priority segments.
3. The Logic of Targeting
• Mass Marketing: Offering one product to the entire market (e.g., Ford’s Model T).
• Targeted Marketing: Different products for different groups (e.g., Estée Lauder brands like
Clinique, M·A·C, Aveda).
• One-to-One Marketing: Customizing offerings for individual customers (e.g., Wagner’s
individualized marketing).
• Mass Customization: Combining mass production with personalization (e.g., MINI Cooper’s
configurator).
• Service Customization: Personalizing services for individual customers (e.g., airlines, hotels).
4. Strategic and Tactical Targeting
• Strategic Targeting:
o Focuses on identifying customers whose needs align best with the company’s offerings.
o Objective: Ensure offerings are designed to meet these needs.
o Example: A tech company offering premium products to high-end customers.
• Tactical Targeting:
o Focuses on how to reach these customers (e.g., which channels, messaging, and
promotions).
o Example: Using social media ads to reach a high-income audience identified in strategic
targeting.
5. Strategic Targeting Key Concepts
• Target Compatibility:
o The company's ability to meet customer needs better than competitors.
o Requires access to scarce resources, skilled employees, technological expertise, strong
brands, and a solid collaborator network.
• Core Competency Characteristics:
o Should provide a competitive advantage and contribute to customer benefits.
o Must be applicable across different markets and hard for competitors to replicate.
• Target Attractiveness:
o Monetary value: Customer revenue is driven by factors like market size, growth rate,
and brand loyalty.
o Strategic value: Includes social influence (customers influencing other buyers), scale
value (growing by targeting low-margin customers), and information value (gathering
useful data from early adopters).
6. Tactical Targeting
• Defining the customer profile:
o Demographic factors: Age, gender, income.
o Geographic factors: Location.
o Behavioral factors: Loyalty, usage rate.
o Psychographic factors: Lifestyle, values.
7. Targeting Approaches
• Single-segment targeting: Focus on a single segment (e.g., Porsche focusing on sports car
enthusiasts).
• Multi-segment targeting:
o Selective specialization: Targeting different segments with specific products (e.g., Crest
Whitestrips targeting brides and gay males).
o Product specialization: Selling a specific product to multiple markets (e.g., microscope
manufacturers selling to various labs).
o Market specialization: Offering a variety of products to a single market (e.g., Hallmark’s
diverse product range).
8. Market Segmentation
• Demographic segmentation: Age, life stage, gender, income, education.
o Example: Different generations (Millennials, Gen Z) have distinct preferences.
• Geographic segmentation: Markets divided by location (e.g., Yelp focuses on local businesses).
• Behavioral segmentation: Based on behavior, like user status (new users, regular users), loyalty,
and purchase occasion (e.g., air travel for business vs. vacation).
• Psychographic segmentation: Based on lifestyle, values, and personality (e.g., Honda attracting
both younger generations and Baby Boomers with the Element model).
9. Segmenting Business Markets
• Demographic factors: Industry, company size, location.
• Operating variables: Technology use, customer capabilities.
• Purchasing approaches: Organization's buying processes and criteria.
• Situational factors: Order size, urgency of need.
• Personal characteristics: Buyer-seller relationship, risk tolerance, loyalty.
Summary:
This chapter focuses on the importance of identifying and targeting specific market segments.
Companies must choose segments where they can provide superior value and strategically reach these
customers through tailored marketing approaches. Segmenting markets—both consumer and business—
allows companies to prioritize resources and deliver highly relevant offerings.