TM 361 : Fundamentals of Marketing
Lecture 8
Market Targeting
Md. Shayekh Munir
Market Targeting:
Market segmentation reveals the firm’s
market segment opportunities. The firm now
has to evaluate the various segments and
decide how many and which segments it can
serve best.
1. Evaluating Market Segments
2. Selecting Market Segments
3. Choosing a Market-Coverage Strategy
Cont.
1. Evaluating Market Segments
• A. Segment Size and Growth:
• B. Segment Structural Attractiveness
• C. Company Objectives and Resources
1. Evaluating Market Segments
A. Segment Size and Growth: The company must first
collect and analyze data on current segment sales, growth
rates, and the expected profitability for various segments.
It will be interested in segments that have the right size
and growth characteristics.
But “right size and growth” is a relative matter. The largest,
fastest-growing segments are not always the most
attractive ones for every company. Smaller companies may
lack the skills and resources needed to serve larger
segments. Or they may find these segments too
competitive. Such companies may target segments that are
smaller and less attractive, in an absolute sense, but that
are potentially more profitable for them.
1. Evaluating Market Segments
B. Segment Structural Attractiveness:
The company also needs to examine major structural
factors that affect long-run segment attractiveness.
For example, a segment is less attractive if it already
contains many strong and aggressive competitors. The
existence of many actual or potential substitute
products may limit prices and the profits that can be
earned in a segment. The relative power of buyers also
affects segment attractiveness. Buyers with strong
bargaining power relative to sellers will try to force
prices down, demand more services, and set
competitors against one another—all at the expense of
seller profitability.
1. Evaluating Market Segments
C. Company Objectives and Resources: Some
attractive segments can be dismissed quickly
because they do not mesh with the company’s
long-run objectives .Or the company may lack the
skills and resources needed to succeed in an
attractive segment. For example, given the
current economic conditions, the economy
segment of the automobile market is large and
growing. But given its objectives and resources, it
would make little sense for luxury performance
car maker BMW to enter this segment. A
company should enter only segments in which it
can create superior customer value and gain
advantages over its competitors.
2. Selecting Target Market Segments:
• After evaluating different segments, the
company must decide which and how many
segments it will target.
• A target market consists of a set of buyers
who share common needs or characteristics
that the company decides to serve.
• Market targeting can be carried out at several
different levels.
2. Selecting Target Market Segments:
• Figure shows that companies can target very broadly
(undifferentiated marketing), very narrowly
(micromarketing), or somewhere in between
(differentiated or concentrated marketing).
I) Undifferentiated Marketing:
• Using an undifferentiated marketing (or mass
marketing) strategy, a firm might decide to
ignore market segment differences and target
the whole market with one offer.
• Such a strategy focuses on what is common in
the needs of consumers rather than on what is
different.
• The company designs a product and a
marketing program that will appeal to the
largest number of buyers.
II) Differentiated Marketing:
• Using a differentiated marketing (or segmented
marketing) strategy, a firm decides to target several
market segments and designs separate offers for each.
• Toyota Corporation produces several different brands
of cars—from Scion to Toyota to Lexus—each targeting
its own segments of car buyers.
• P&G markets six different laundry detergent brands in
the United States, which compete with each other on
supermarket shelves. And VF Corporation offers a
closet full of more than thirty premium lifestyle brands,
which “fit the lives of consumers the world over” in
well-defined segments—“from commuters to cowboys,
surfers to soccer moms, sports fans to rock bands.”
III) Concentrated Marketing:
• Using a concentrated marketing (or niche marketing)
strategy, instead of going after a small share of a large
market, a firm goes after a large share of one or a few
smaller segments or niches.
• Through concentrated marketing, the firm achieves a
strong market position because of its greater
knowledge of consumer needs in the niches it serves
and the special reputation it acquires.
• It can market more effectively by fine-tuning its
products, prices, and programs to the needs of
carefully defined segments. It can also market more
efficiently, targeting its products or services, channels,
and communications programs toward only consumers
that it can serve best and most profitably.
IV) Micromarketing:
• Differentiated and concentrated marketers tailor
their offers and marketing programs to meet the
needs of various market segments and niches.
• At the same time, however, they do not customize
their offers to each individual customer.
Micromarketing 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,
micromarketers see the individual in every
customer. Micromarketing includes local
marketing and individual marketing.
3. Choosing a Targeting Strategy:
• Companies need to consider many factors when
choosing a market-targeting strategy.
• Which strategy is best depends on the company’s
resources. When the firm’s resources are limited,
concentrated marketing makes the most sense.
The best strategy also depends on the degree of
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 cars, are more suited to differentiation or
concentration.
• Another factor is market variability.
• If most buyers have the same tastes, buy the
same amounts, and react the same way to
marketing efforts, undifferentiated marketing is
appropriate.
• Finally, competitors’ marketing strategies are
important. When competitors use differentiated
or concentrated marketing, undifferentiated
marketing can be suicidal.
• Conversely, when competitors use
undifferentiated marketing, a firm can gain an
advantage by using differentiated or
concentrated marketing, focusing on the needs of
buyers in specific segments.
Thanks For your attention