Marketing Management

IDC 2203 - Principles and

Practices of Marketing

Target Marketing
Lesson 05
Target Marketing
What is Target Marketing ?

• Market is defined as the collection of potential buyers who are interested to participate in
exchange process and have the purchasing power in order to satisfy individual and
institutional needs and wants. A marketer’s main function is to identify this potential
buyers of the product.
• With the existence of resource constraints, one Marketer cannot fulfill the needs and wants
of the entire market successfully. As a result ‘ Target Marketing concept’ has been
emerged.
• In other words, Concept of target marketing has been emerged as a result of Marketer’s
requirement to select the best market where the marketer can cater efficiently &
effectively.
Every Marketer is not following the same approach and there are different approaches that they
are using to enter the market as follows.

1. Mass Marketing
2. Product – Variety Marketing
3. Target Marketing

• Mass Marketing and Product – Variety Marketing approaches are being considered as
outdated and are of less efficiency & effectiveness. Target Marketing is considered as an
approach to Strategic Marketing and has been evolved over the years.
1. Mass Marketing
What is Mass Marketing ?

Mass marketing is a Marketing Strategy in which a firm decides to ignore Market

segment differences and appeal the whole market with one offer or one strategy, which
supports the idea of broadcasting a message that will reach the largest number of people
possible.
• In Mass Marketing, heterogeneous Characteristics such as Nationality, Religion, Social
classes , attitudes are not considered and a one common product is offered to the entire
market.
• It assumes that , consumers will prefer for the product that offered by the Marketer.
Eg :

Ford T model
• The rationale behind applying Mass Marketing approach is that Large scale production
which sell for a broad market, assures lower unit cost and thereby an optimal market will be
emerged. It reveals that they can reduce the unit price as lower expenses incurred in
distribution, marketing research in narrow markets.
• In Mass marketing concept, there is no any identification of group of target consumers.
2. Product Variety Marketing

Product Variety Marketing deals with making changes to an existing product in order to
differentiate them from Competitors. When making changes, it is focused on factors such as
sizes, designs, quality and features of the product.
Eg:
• With this extended approach to the Market, it make closer to the consumer more than
mass marketing. In this approach, many cost items are being emerged such as product
innovation, Stock maintenance and different promotional campaigns.
3. Target Marketing

Target marketing is a marketing strategy that breaks a market into segments and then concentrates
your marketing efforts on one or a few key segments consisting of the customers whose needs and
desires most closely match your product or service offerings. It can be the key to attracting new
business, increasing sales, and making the business a success.

In other words, Target Marketing is identifying the most preferable set of customers ( Market) which
the Marketer can service well.
Target Marketing consist of three main steps.

1. Market Segmentation
2. Market Targeting
3. Market Positioning
1. Market Segmentation

• Market Segmentation is the process of deciding sub markets from the mass market by using
various consumer characteristics like gender, age, income and occupation. The mass can be
segmented using many variables .

• Segmentation is the process of dividing the entire market with variety of

characteristics into homogeneous market segments which make Marketers convenient
to cater.

Eg:
Anchor : There are separate products for kids and adults
Pre- Process of Market Segmentation

1. Survey Stage
In this stage, Organization is conducting Market researches, informal interviews, Focus
group interviews with customers in order to get clear understanding about consumer
preferences, attitudes and behavioral changes.

2. Analysis Stage

Identifying common factors identified in above stage and analyzing different statistical
and comprehensive methods to segment the market.
3. Planning development stage

Identifying the differences within various segments using demographic, geographic,

Psychographic and Behavioral characteristics

After the pre- segmentation process, it has identified some common patterns for Market
Segmentation. It is based on “ Consumer Preference’.

1. Homogeneous Preferences
It reflects that every consumer has equal preferences. In this scenario, there is no any
requirement of market segmentation. One brand can satisfy all the consumers.
2. Diffused Preferences

In this concept, Consumer preferences are spread over the broad market. There is a
possibility to provide different brands which fulfill the same need.

3. Clustered Preferences

Consumer segments who have equal preferences are clustered as groups. Different brands
can be presented to these different clustered groups.
Bases for Segmenting Consumer Markets

1. Geographical Segmentation
2. Demographic Segmentation
3. Psychographic Segmentation
4. Behavioral Segmentation
 Bases for Market Segmentation

Consumer Traits Consumer Responses

1. Geographic Factors 4. Behavioral Factors

2. Demographic Factors
3. Psychographic Factors
 Segmentation Variables

Geographic Factors Demographic Factors Psychographic Behavioral

Age
Gender
Family Size Occasions
Region Family Life Benefits
Cycle Social Class
City User Status
Lifestyle
Density Income Usage Rate
Personality
Climate Occupation Loyalty Status
Education Attitude
Religion
Race
Requirements for effective Segmentation

• Size, purchasing power, profiles of

Measurable segments can be measured.

Substantial • Segments must be large or

profitable enough to serve.

Accessible • Segments can be effectively

reached and served.

Segments must respond

Differential differently to different marketing mix
elements & actions.
• effective program can be formulated
Actionable

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2. Market Targeting

Act of selecting one or more segments to enter.

Targeting involves two tasks.

1.Evaluating attractiveness of each segment

2.Deciding how many and what segments to target

Evaluating market Choosing a targeting Selecting target

segments strategy segments
Criteria of evaluating Market Segments

•Segment Size and Growth

–Analyze current segment sales, growth rates, and expected profitability for various
segments.

•Segment Structural Attractiveness

–Consider effects of: competitors, availability of substitute products, and the power of
buyers & suppliers.

•Company Objectives and Resources

–Examine company skills & resources needed to succeed in each segment.
–Offer superior value & gain advantages over competitors.
Five Patterns of Target Market Selection

Single-segment Selective Product

concentration specialization specialization
M1 M2 M3 M1 M2 M3
M1 M2 M3
P1 P1
P1
P2 P2
P2
P3 P3
P3

Market Full market

specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P = Product
M = Market P2 P2

P3 P3
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3. Market Positioning

As the company is answering the first question of segmentation, (Which customers will we
serve?)

It must be asking the second question (How will we serve them?).

Market positioning strategy would answer the question.

Positioning is the act of designing the company’s offer and image so that
it occupies a distinct and valued place in the target customers’ mind.
Positioning the Market Offer

• How to differentiate and positioning its marketing offer in relation to its competitors.
• The company has to offer something different and of higher value to customers to attract
customers to the company’s offer instead of competitors.
Steps in Market Positioning

Step 1. Identifying
Possible Competitive Differentiation
Advantages

Step 2. Choosing the

Right Competitive Positioning
Advantage
Step 3. Communicating
and Delivering the
Chosen Position
1. Differentiation

Differentiation is the act of designing a set of meaningful differences to distinguish the

company’s offer from competitors’ offer.
2. Identifying Possible Competitive
advantages

• Key to winning and keeping customers is to understand their needs and buying processes
better than competitors do and deliver more value.

• Competitive advantage – extent that a company can position itself as providing superior
value to selected target markets.
Defining Associations
Points-of-difference (PODs) Points-of-parity (POPs)

Attributes or benefits Associations that are not

consumers strongly associate necessarily unique to the
with a brand, positively brand but may be shared with
evaluate, and believe they other brands
could not find to the same
extent with a competitive
brand
Rolex example for POP vs POD
Point-of-Parity (POP) Point-of-Difference(POD)

Swiss watchmaker History of heritage

Durable Crown
Fine martial Exclusive imagery
Quality craftsmanship Premium price
Accurate Innovation
Attractive Distribution
Step: 1 Identifying Possible Competitive
Advantages( How a marketing offering can be differentiated along
5 dimensions)
Services
Product Differentiation
Differentiation i.e. Delivery, Installation,
i.e. Features, Performance, Repair Services, Customer
Style & Design, Attributes Training Services
E.g. LG Door Cooling E.g. Singer
Channel
Differentiation
E.g. coverage,
Image expertise,
Differentiation People
performance Differentiation
i.e. Symbols, Characters i.e. Hiring, Training Better
People Than Competitors
E.g. ODEL Do
E.g. HSBC
Step 2 : Choosing the Right Competitive
Advantages

1. Which differences to promote?

2. How many differences to promote?

1. Which differences to promote ?

Several positioning strategies;

• Attribute positioning
• Benefit positioning
• User type positioning
• Product category positioning
• Price-Quality positioning
2. How many differences to Promote ?

• Single benefit positioning

If a company uses the single benefit positioning, the benefit will act as the unique
selling proposition (USP) of the brand. The brand must be positioned as number one on
that benefit.

• Double benefit positioning

When another competitor also trying to claim the same benefit, the company may think
of double-benefit positioning.
• Multiple benefit positioning

Sometimes we can see there are situations where triple or multi benefit positioning is
used. increasing the number of claims might confuse the customers.
 Positioning Maps
A way to represent consumer perceptions of alternative products in visual Format

Expensive

Cinnamon Garden
Hilton
Taj

High Moderate
Service Renuka Service

Galle face

Less Expensive
Benefits of STP marketing

• Improved engagement: Because you're targeting precise audience segments with personalised
messages, your audience finds you relevant and is more likely to engage and convert.
• Reduced marketing costs: Since you're going after only those segments with a high potential
return on investment, you're no longer wasting your budget on channels and segments that don't
work.
• More robust product: Because you know precisely whom you're pitching your product to, you
can make improvements based on feedback from that audience segment, fostering focused
product innovation
 STP Case studies
Apple

Apple has nailed the STP model. It positions itself as a lifestyle, targeting those audience
segments with a keen design aesthetic, who want to stand out from the crowd, and are well-
off. Apple follows a "closed" software ecosystem with an emphasis on security. In doing so,
it creates an aura of exclusivity that makes people feel privileged to own Apple products.
Apple's STP model works so well that the brand name has become synonymous with
expensive, high-performance, luxury gadgets.
McDonald's

McDonald's name evokes images of a family with kids enjoying a 'happy meal' of burgers,
fries, and Coke. McDonald's target audience is low to middle-income segments, and it
positions itself as an accessible, budget-friendly brand, consciously staying away from the
luxury fine-dining market. You can find a McDonald's on almost every street, which is a sign
of its accessibility.
Coca-Cola

Coca-Cola is one brand that has the entire world as its market. But it also has cut-throat
competition in the form of another brand, Pepsi. To gain a competitive edge over Pepsi, it
introduced new variants such as Diet Coke and Coke Zero to target niche, health-
conscious audience segments. It also brought in more flavoured variants to target the
younger, experiential population.
Beyond segmentation and targeting, Coca-Cola positions itself as a drink that brings
families and friends together. This is evident from its advertisements, which typically
feature get-togethers, festivals, and celebrations in which Coke plays an integral role.
Thank you!