Targeting & Positioning in Marketing

Target Marketing

In the next step, we decide to target one or more segments.  Our choice should generally depend on several factors.  First, how well are existing segments served by other manufacturers?  It will be more difficult to appeal to a segment that is already well served than to one whose needs are not currently being served well.  Secondly, how large is the segment, and how can we expect it to grow?  (Note that a downside to a large, rapidly growing segment is that it tends to attract competition).  Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers?  Firms may already have an established reputation.  While McDonald’s has a great reputation for fast, consistent quality, family friendly food, it would be difficult to convince consumers that McDonald’s now offers gourmet food.  Thus, McD’s would probably be better off targeting families in search of consistent quality food in nice, clean restaurants.

It is possible using to target very specific customer groups based on magazine subscriptions, past purchases, and demographic variables.  A number of list brokers will sell lists of names and addresses of homeowners in a particular area (information they get from county registrars) or the subscribers to various magazines. Firms will often sell lists of their customers to competitors since it is widely believed in the industry that more catalogs tend to result more in incremental sales than in losing share in fixed-size pie.  One can also buy e-mail lists, but it is generally not legal to send soliciting e-mails to individuals with which one does not already have an established business relationship, and these are also likely to be discarded by "spam" filters.  In the "merge-purge" process, lists from several sources are combined (since none contains every relevant individual by itself), after which duplicates are removed.  Here is an illustration of what could be used by an online merchant of surf gear seeking to find additional potential customers:

Strategies for Reaching Target Markets

Marketers have outlined four basic strategies to satisfy target markets: undifferentiated marketing or mass marketing, differentiated marketing, concentrated marketing, and micromarketing or niche marketing.

1. Mass marketing - Mass marketing is a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. It is the type of marketing (or attempting to sell through persuasion) of a product to a wide audience. The idea is to broadcast a message that will reach the largest number of people possible.

2. Differentiated marketing - A differentiated marketing strategy is one where the company decides to provide separate offerings to each different market segment that it targets. It is also called multi segment marketing. Each segment is targeted uniquely as the company provides unique benefits to different segments.

3. Concentrated marketing - Concentrated marketing is a strategy which targets very defined and specific segments of the consumer population.

4. Niche marketing - In marketing, a niche refers to a service or a product that occupies a special area of demand. It is that small corner in the market that accounts for a certain kind of specialty concerning an unmet customer need. Niche marketing is the process of finding market segments that are small but potentially profitable nonetheless.

Positioning

Positioning involves implementing our targeting.  For example, Apple Computer has chosen to position itself as a maker of user-friendly computers.  Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for “non-geeks.”  The Visual C software programming language, in contrast, is aimed a “techies.”

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that most successful firms fall into one of three categories:

• Operationally excellent firms, which maintain a strong competitive advantage by maintaining exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly lower cost than those of less well organized and well run competitors.  The emphasis here is mostly on low cost, subject to reliable performance, and less value is put on customizing the offering for the specific customer.  Wal-Mart is an example of this discipline.  Elaborate logistical designs allow goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will be needed.
• Customer intimate firms, which excel in serving the specific needs of the individual customer well.  There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the customer.  Reliability is also stressed.  Nordstrom’s and IBM are examples of this discipline.
• Technologically excellent firms, which produce the most advanced products currently available with the latest technology, constantly maintaining leadership in innovation.  These firms, because they work with costly technology that need constant refinement, cannot be as efficient as the operationally excellent firms and often cannot adapt their products as well to the needs of the individual customer.  Intel is an example of this discipline.