Target marketing includes three activities: market segmentation, market targeting and market positions. Segments are large identifiable groups of customers who share similarities. Marketers will sometimes break down groups into even smaller target markets. Target markets can be at four main levels: mass, multiple segments, single or niche, and individuals. Only large companies can be successful at using mass marketing. More companies are choosing to do mass customization. Marketers must choose target markets in an ethical and socially responsible manner.
A. Bases for Segmenting Consumer Marketing
1. Target marketing is when marketers identify and profile distinct groups of buyers who differ in their needs and wants, select one of more market segments to enter, and establish and communicate the offering’s distinctive benefits to each target segment.
2. France’s Club Med is a company that through the years has targeted different customer groups. As the marketing environment changed, they would change their target segment in order to grow and expand.
3. Market segmentation divides the market into smaller sections. A segment consists of a group of customers who share a similar set of needs and wants. There are geographic segments (groups such as nations, states, regions, counties, cities, or neighborhoods), demographic segments (age, family size, family life cycle, gender, income, occupation, education, religion, race, generation or cohort, nationality, and social class), psychographic segments (psychological/personality traits, lifestyle, or values) and behavior segments (knowledge of, attitude toward, use of, or response to a product).
B. Bases for Segmenting Business Markets
1. Business markets can be segmented in many of the same ways as consumer markets with a few others also – operating variables, purchasing approaches, situational factors, and personal characteristics.
2. Business marketers generally identify segments through a sequential process.
C. Market Targeting
1. Market targeting is breaking down groups into even smaller segments perhaps using the seven-step approach: needs-based segmentation, segment identification, segment attractiveness, segment profitability, segment positioning, segment “acid test”, and marketing-mix strategy.
2. A bank may identify a group of wealthy customers, and then within that group target retired customers. A marketer may identify teenagers as a group and then break it down into males and female.
3. To be useful, market segments must rate favorably on five criteria: measurable, substantial, accessible, differentiable, and actionable. They must have long-term segment attractiveness, according to Michael Porter, who has identified five forces that determine such: the threat of intense segment rivalry, threat of potential entrants, threat of substitutes, threat of buyers’ growing bargaining power, and the threat of suppliers’ growing bargaining power. Marketers must be skilled in evaluating segments because they can waste a lot of money targeting the wrong market. Marketers have a range of possible levels of segmentation. They can use full market coverage, multiple segment specialization, single segment concentration (niche), and individual marketing. Marketers must be wary and not violate any ethical standards when selecting their market segmentation.
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