Business — Banking — Management — Marketing & Sales

Selecting Target Markets

Category: Marketing

Companies know that they cannot satisfy all consumers in a given market, at least not all consumers in the same way. There are too many different kinds of consumers with too many different kinds of needs. And some companies are in a better position to serve certain segments of the market. Each company must study the total market and choose the segments served profitably better as compared with its competitors. This involves four steps: (1) demand measurement and forecasting, (2) market segmentation, (3) market targeting, and (4) market positioning.

Demand Measurement and Forecasting. Suppose a company is considering possible markets for a potential new product. First of all the company needs to make a careful estimate of the current and future size of the market and its various segments. In order to estimate current market size, the company must identify all competing products, estimate their current sales, and determine whether the market is large enough.

Market Segmentation. The company now has to decide how to enter the market. The market consists of many types of customers, products, and needs, and the marketer’s task is to determine which segments offer the best chance to achieve company objectives. Consumers can be grouped in various ways based on geographic factors (regions, cities), demographic factors (sex, age, income, education), psychographics factors (social classes, life styles) and behavioural factors (purchase occasions, benefits sought, usage rates). The process of classifying customers into groups with different needs, characteristics, or behaviour is called market segmentation.

Market Targeting. After a company has evaluated market segments, it can enter one or many segments of a given market. A company with limited skills or resources might decide to serve only one or a few special segments. This strategy limits sales, but can be very profitable. Or a company might choose to serve several related segments, perhaps those that have different kinds of customers, but with the same basic wants. Or a large company might decide to offer a complete range of products to serve all the market segments.

Market Positioning. Once a company has decided which market segments to enter, it must decide the «positions» it wants to occupy in those segments. A product’s position is the place the

product occupies in the consumers’ minds as related to competitors. If a product is perceived to be exactly like another product on the market, consumers would have no reason to buy it.

« ||| »

Tagged as:

Comments are closed.