Paper: 14 Marketing Management

Module: 30, Target Marketing

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Dr. Kulbhushan Chandel

Paper Coordinator Department of Commerce and Management
Himachal Pradesh University, Shimla
es
BPSMV, KhanpurKalan, Sonipat
Ms. Neetika Sharma
Content Writer Assistant Professor, Department of Commerce,
GGDSD College, Rajpur.
 Items Description of Module
Subject Name Management
Paper Name Marketing Management
Module Title Target Marketing
Module Id Module no.- 30
Pre- Requisites Basic knowledge of marketing
Objectives To study the components of target marketing
Keywords Target marketing, markets, Consumers.

QUADRANT-I

Module 30: Target Marketing

1. Learning Outcome
2. Introduction
3. Meaning of target market
4. Guidelines for selecting target market
5. Strategies for target market
6. Difference between undifferentiated, concentrated and differentiated
marketing strategy,
7. Evaluation and selection of target market
8. Ethical choice of target market
9. Levels of target market selection
10. Major segmentation variables for business target market
11. Summary

1. Learning outcomes:
After completing this module, the students will be able to:
 To understand meaning of target market.
 To understand guidelines for selecting target market.
 To understand different approaches to target market.
 To understand how to select target market.
 To understand how we ethically select target market.
 2. INTRODUCTION

Now a days customers are large in number and their requirements are also different .A firm or a
company to serve effectively to these customers their products and services uses target marketing.
With the help of target marketing the person who sells his goods and services differentiate the major
market segments and select one or more from these segments. Target market selection means to
choose which or how many units if whole market in which the company will compete.

3. MEANING OF TARGET MARKET

To understand the concept of target market first of all the we have to understand the meaning of three
words namely: market segment, market target and market positioning.

 MARKET SEGMENTAccording to FREDRICK F. WEBSTER ,” Market

segmentation is a method for achieving maximum market response from limited
marketing resources by recognising differences in the response characteristics of
various parts of the market it is a strategy of divide and conquer that adjusts
marketing strategies to inherent differences in buyer behaviour.”It means to divide
the whole market into different units according to nature of buyers, their buying
needs and their preferences. Market segment helps the marketer to offer beneficial
and effective products and services to a particular segment or unit of market instead
of providing it to whole market or mass customers.

According to PHILIP KOTLER,” The purpose of market segmentation is to determine difference

among buyers which may be consequential in choosing among them or marketing to them.”

The marketers have three approaches for segmenting the market namely, mass marketing , product
differentiation marketing and target marketing.

 MARKET TARGETING in simple words it means to target or select one or more

segments out of large number of market segment in this the person who wants to sells
his product and services target few market units where he will provide his services
and effectively satisfied the needs of that particular unit.
 PRODUCT POSITIONINGaccording to JAMES L. HESKET ,”Product
positioning is a process of identifying the needs of market segments , product
strength and weaknesses and the extent to which competing products are perceived to
meet the consumer needs .”

According to PHILIP KOTLER ,”product positioning is the act of designing the company’s image
and value offer so that the segment’s consumer understand and appreciate what the company stands
for in relation to its competitors.”Market positioning is a plan which is concerned with the selection of
marketing mix which is most accurate to each market segment. It is the act of creating the better
image of company’s product in the minds of consumer, so that the consumer thinks that the
company’s product is more superior that other competitors.

In this way market targeting refers to selection of few units of market out of large number of market
segments on which the seller will operate and sells his goods and services effectively.

4. GUIDELINES FOR SELECTION OF TARGET MARKETING

 The target market should be according to the objectives of organisation .the customers of that
particular market segment are such that they help marketer to achieve goal of the
organisation.
 The marketer should select that particular market segment that are constant or compatible
with the resources.
 The marketer should select such market segment from whom he can earn maximum profit
instead of selecting the market segment in which maximum sale occur . in simple the
organisation should select market segment according to maximum profit or not according to
maximum sales.
 The marketer should select that market segment in which he can get competitive advantage it
means the number of competitors in that particular market segment is too small.

5. APPROACHES OR STRATEGIES TO TARGET MARKET

Approaches mean how to draw plans and standards for selection of target market. Strategies are those
market plans which are made to move from the competitors and effectively select the target market
and how to serve.

While selecting target market the marketer must consider three factors for making strategies are:-

 Segment size and growth.

 Segment structural effectiveness.
 Objectives and resources of the company.
 SEGMENT SIZE AND GROWTH the marketer after collecting and analysing various
necessary information like volume of sales, volume of profit. The firm must select that
market segment which is less attractive but gives maximum profit to the company.
 SEGMENT STRUCTURAL EFFECTIVENESSThe Company should select that segment
which has attractive structural factors and having fewer competitors. If the bargaining power
if the customers in that segment is high it is also affects the segment attractiveness.
  OBJECTIVES AND RESOURCES OF THE COMPANY the company should select that
market segment which matches the resources and objectives of the company .if the segment
has right growth and size the firm has to make maximum efforts to satisfy the needs if the
particular market segment.

Three main marketing strategies are:-

5.1 Undifferentiated marketing strategy it is also known as mass marketing and market
aggregation strategy . In this whole market is taken into consideration instead of making
segments or units of market in this one type of product is put forward to all type of customers
the firm or a company uses same marketing mix for whole market . in this the marketer design
a product by considering the common needs of customers so that maximum advantage is earn
by him. Same price , same product , same advertising programmes are used by marketer for
whole market.

Merit :-simple product line or same product and easy advertisement.

Demerit :- not suitable for dynamic needs of customers because it considers common needs of
customers.

5.2 Differentiated marketing strategy it is also called market segmentation . in this the
customers from entire market are divided into different units according to their age , taste ,
preferences , religion , education etc. These units are known as segments .the marketer design
a product according to different needs of customers of that particular market segment .the firm
uses different product prices , advertising for different products.

Merit:- More customer satisfaction and product is designed according to taste of customers.

Demerit:- Separate advertisement cost for every product.

5.3 Concentrated marketing strategy According to PHILIP KOTLER’” Instead of going

after a small share of a large market , the firm goes after a large of one or a few submarkets
.but another way instead of spreading itself thin in many parts of the market , it concentrates its
forces to gain a good market position in a few areas.”In this type of strategy the marketer
selects one particular segment instead of whole segments or more segment of total market . in
simple words , an organisation instead of going for a smaller share in entire market consider
larger share in one or few sub markets .the seller selects an area where there is no more
competitors and there are maximum number of customers . The marketer also gets the benefit
of specialisation according to this strategy . it is suitable when new products are introduced in
the market.
 Merit:- same marketing efforts for one particular segment leads to effective marketing of a product
and more customer satisfaction.

Demerit:-if wrong market segment is selected by marketer , the survival of organisation is in danger.

6. DIFFERENCE BETWEEN UNDIFFERENTIATED , CONCENTRATED AND

DIFFERENTIATED MARKETING 

6.1
PRODUCT

Different product for

Limited number of One product for one different group
services for many particular group. (differentiated
type of customers. Marketing)
(concentrated
(undifferentiated Marketing)
marketing )

(((

6.2

PRICE

One popular price.

One price according to
Differentiated price for
(Undifferentiated consumer group.
different group of
marketing strategy)
(Concentrated customers. (Differentiated
marketing strategy) marketing strategy.)
6.3
TARGET MARKET

Broad range of One well defined Two or more well

Consumers consumer group defined consumer
(Undifferentiated groups. (Differentiated
(Concentrated
Marketing). Marketing)
Marketing)

Basis Undifferenciated Concentrated Differentiated

Marketing Marketing Marketing

1. Service Limited number of One brand for one Different brand for
Products services which provides consumer group only. each consumer
one brand for many group.
consumers.
2. Distribution For all possible outlets. For all suitable outlets All suitable outlets
depends upon the
segment.
3. Promotion Mass Media Suitable Media All suitable media
depends upon the
segment
4. Price A popular price One price selected to Different price
the consumer group range for each
consumer group.
5. Strategy Suitable to large number Suitable to one specific Suitable to two or
of consumers. group of consumers. more different
market segments.
6. Target Market Broad range of One well defined Two or more well
consumers. consumer group . defined consumer
group.
 7. EVALUATION AND SELECTION OF TARGET MARKET

When the firm is evaluating target market it should consider two factors namely:-

A) Segments overall attractiveness.

b) Objectives and resources of company.

The firm when select target market can think upon following things that are : whether the segment
helps the firm in achieving its goal. The firm is able to satisfy the needs of customers and sufficient
resources are available or not.

There are five patterns of selecting target market

 Single segment concentration.

 Selective specialisation.
 Product specialisation.
 Market specialisation.
 Full market coverage.

 SINGLE SEGMENT CONCENTRATION In this a single segment is taken into

consideration. The firm selects only one segment out of whole market . because of single
segment concentration the firm get the intense knowledge of segment needs and segment’s
presence. The firm also gets operating economies because of specialisation of production ,
distribution and promotion. If the firm earns leadership in whole segment it gains high return
on their investment.

 SELECTIVE SPECIALISATIONin this the firm selects one or more market segments and
operate in these segments .when the firm is selecting these segments it must consider that
every selected segment helps the firm in earning profit .this pattern of target market selection
also diversify the firm’s risk.

 PRODUCT SPECIALISATION In this the firm selects not the segment but a single
product that is sold by him in different segments of the market .the selected product should
satisfy the needs of the customers.

 MARKET SPECIALISATION in this the firm make himself to serve or provide its
products and services to many needs of particular customer group .in this the customer group
 is provided with variety of products and services and hence the firm get reputation because of
distribution of various kinds of products and services.

 FULL MARKET COVERAGEin this the firm consider whole market instead of making
segments and groups .it provides its goods and services to whole market .a large number of
customers are provided with the products according to their needs and requirements.

8. ETHICAL CHOICE OF TARGET MARKET SELECTION

Selection of target market sometimes creates disputes .from society’s point of view the market should
target those customers that are not only beneficial to company’s interest but the firm is also beneficial
to customer’s interest.

A super segment is a set of segments that shares similarities .thus the market should try to select super
segments instead of giving their concentration on different segments. Ethics are those moral principles
that are helpful in successful conduct of organisation .thus if we select our target market according to
satisfaction of society and their interest and resources.

Three other basic consideration for selecting target market are 

 Segments interrelationship.
 Segment by segment invasion plans.
 Inter segment cooperation.

 Segment interrelationship while selecting target market the firm also check the
relationships among the different customers in that particular market segment. The customers
wants similar products , their needs are same or not .

 Segment by segment invasion plansthe firm must operate in single segment at a time
instead of revealing its whole expansion plans. If the firm reveal its whole expansion plan at a
single time the competitors come to know to what segment the firm will move in next step.
So, the firm should operate one by one in different segments.

 Intersegment cooperation it means how effectively the segments cooperate with each
other. T he effective method for management of these segments is that the managers are
appointed for every segment and also given some authorities and responsibility.
 9. LEVELS OF TARGET MARKET SELECTION

 Segment marketing .
 Niche marketing.
 Local marketing.
 Individual marketing.

 Segment marketing A segment is a group of customers from whole market having same
requirements needs and wants. There are number of segments in whole market and the
marketer selects one or more of them and operate in that is known as segment marketing. The
marketer provide its goods and services only to those segments.

 Niche marketing

According to PHILIP KOTLER ,”A niche is a more narrowly defined group of customer ,
typically a small market whose needs are not being well served.”It is a small defined group
and come into existence by making sub segments of particular segment which gives different
mix of benefits. There are following characteristics that a niche have :-

The customers of niche have different set of needs , they gain certain set of economies , the nicher
must not attract other competitors

 Local marketing
in this the marketer provide its goods and services to local trading areas , neighbourhoods ,
and even individual stores.

 Individual customer marketing

today every customer have different needs and requirements. Their wants are large in
number .the market target an individual having large demand of many products and services.

10. MAJOR SEGMENTATION VARIABLES FOR BUSINESS TARGET MARKET :

The business markets can also be segmented on the basis of some variables which used in consumer
market segmentation, like as geography, benefits sought , demography , usage rate etc. But business
marketer also use other variables.
 a. Demographic
Industry : Which industry should we serve ?
Company size : What size companies should we serve ?
Location : What geographical areas should we serve ?

b. Operating Variables
Technology : What consumer technologies should we focus on ?
User or nonuser status : Should we serve heavy users , medium users , light users , or
nonusers ?
Customer Capabilities : should we serve customers needing many or few services ?

c. Purchasing Approaches
Purchasing – function organisation : Should we serve companies with highly centralised
or decentralised purchasing organisation?
Power Structure : Should we serve companies that are engineering dominated , financially
dominated , and so on ?
Nature of existing relationships : Should we serve companies with which we have strong
relationships or simply go after the most desirable companies ?
General purchase policies : Should we serve companies that prefer leasing ? Service
Contracts ? System purchases ? Sealed Bidding ?
Purchasing Criteria : Should we focus on large or small orders ?

d. Situational Factors
Urgency : Should we serve companies that need quick and sudden delivery or services ?
Specific application : Should we focus on certain applications of our product rather than
all applications ?
Size of order : Should we focus on large or small orders ?

e. Personal Characteristics
Buyer – Seller similarity : Should we serve companies whose people and values are
similar to ours ?
Attitudes Towards risk : Should we serve risk – taking or risk – avoiding customers ?
Loyalty : Should we serve companies that show high loyalty to their suppliers ?

( Source : Adapted from Thomas V. Bonoma and Benson P. Shapiro, Segmenting the
Industrial Market)
 11. SUMMARY

Target market is an effective technique to earn maximum profit by serving minimum customers
.Target market means selecting one or more market segment instead of serving whole market. Target
marketing involves three activities namely market segments, market target and market positioning.
The market can be target at four levels namely at segment level , at niche level , at local level and
individual level .the marketer must consider two basic things while segmenting customers is
consumer characteristics and consumer responses. The marketer should also consider the above
discussed guidelines for effective selection of target market. The target market must helpful in
achieving the goal of the organisation. The marketer having three types of marketing strategies
namely undifferentiated marketing strategy , concentrated marketing strategy and differentiated
marketing strategy should select only that which is beneficial to him .while selecting target market the
marketer must consider various patterns according to his resources it means he should think that he is
able to serve one particular segment or one or more segment or full market or one particular product
to whole market and strategies are also made according to this. The marketer should also take in mind
ethics, interrelationships, cooperation and expansion plans while target market segment. Target
market selection is the choice of which and how many market segments the company will compete in.
Target markets are essentially groups of people for whom the marketer design a particular marketing
mix. Some major segmentation variables are followed for business target market i.e. demographic,
operating variables, purchasing approaches, situational factors and personal characteristics. These all
factors helps business market segmentation according to the market needs.