All marketers talk about targeting audiences, but not everyone does it.
Target marketing is just one technique marketers use to focus their marketing efforts on a specific market.
What is “Target Market”?
Investopedia defines a target market as “the market a company wants to sell its products and services to, and it includes a targeted set of customers for whom it directs its marketing efforts.”
After developing offerings, companies spend a lot of time, money, and resources to define, target, and monitor their target market.
This is extremely important, as target marketing helps define the “ABCs” for any company’s offering:
A = Audience
The audience, or in other words, the prospective customers for the offering
B = Basis
The basis for the company’s marketing and advertising efforts and strategies
C = Competition
Other companies that create either substitutes or complements to your offering
A company defines its target market by the consumers that derive utility from its offering. Upon defining a specific target market, a company can easily tap into specific market channels to reach out to the target market, convert them, and create sales.
A target market also comes in handy right before the launch of a product. ‘Test Markets’ are made. A test market is somewhat like an exact replica of the target market for a company’s offering, only smaller in magnitude. For example, if a company’s target market refers to college students, the test market would be the students of a particular college. In test marketing, these students would be provided with free samples of the offering and then asked questions about their experience and whether they derived any benefit. The results are then used as insights into how the offering would perform in real market situations.
Since market targeting is an important part of marketing, it is important to follow an appropriate strategy that helps the company narrow down the market and streamline its marketing and advertising efforts.
4 Crucial Strategies for Selecting Target Markets
Generally, market targeting is done through these ways:
1. Unsegmented market targeting
Sometimes, situations arise where there isn’t one differentiating customer characteristic for a product or service. Therefore, if a company in such a situation tries to segment a uniform market, it would lead to increased costs. Thus, in this case, the market targeting is unsegmented or generic.
Let us consider, for example, the online grocery shopping companies like Target, Walmart, Peapod, EFoodDepot, and so forth. For such companies, the target market consists of everyone who has Internet access, needs groceries, and needs to eat food. None of these attributes help narrow down the population. Such companies, thus, follow mass-marketing strategies. For them, the whole market is one segment.
2. Multi-segment targeting
Contrary to unsegmented market targeting, companies generally find multiple differentiating attributes based on the various target market segments created. Marketers create individual marketing mixes for each of these segments, and marketing strategies are crafted, keeping in mind various demographics.
One example of a company using multi-segment targeting is Procter & Gamble (P&G). P&G is comprised of multiple product brands and sub-brand product categories that each serve different market segments.
3. Selective targeting
This technique is a subset of multi-segment targeting where the company may identify multiple target market segments but chooses to only serve or tap into a few of them.
Generally, followed by new companies, this method of targeting allows the company to create a brand image and brand loyalty among a few segments of people, which proves to be an advantage when they do decide to ultimately tap into the remaining segments. Selective targeting reduces R&D expenditures and has long-lasting benefits.
For example, Amazon, when it started out, sold only books and later tapped into different market segments to broaden its reach.
4. Customized marketing
This kind of market targeting strategy is followed in rare cases where a company’s offering needs to be customized and suited for individual customer needs and requirements. Here, the company’s marketers individually interact with customers and tailor-make services accordingly.
A simple example would be a situation where there exists a close relationship between the supplier and customer because the high value of an order justifies large marketing and sales efforts being focused on each buyer.
Focusing on your target market can be a great boon to your company’s revenue and brand recognition. Resist the urge to generalize your target to too many segments hoping to get a larger market share.