In the next step, we decide to target one or more segments. Our choice should generally depend on
several factors.
- First, what is the existing level of competition and how good at serving customer needs are they? The greater the numbers and better they are able to meet customer needs the more difficult it will be for another business to also be a success.
- 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.
- Fourthly, are weable to actual communicate with the segment?
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, McDonalds would probably be better off targeting families in search of consistent quality food in nice, clean restaurants. This is the first importantlesson in targeting - most firms cannot meet ALL market needs.
Target marketing is thus defined as the identification of the market segments that are identified as being the most likely purchasers of a company's products. Specifically, the advantages of target marketing are:
- Marketing opportunities and unfilled gaps in a market may be more accurately appraised and identified. Such gaps can be real (e.g. sweet, strong harsh or mild) or they can be illusionary interms of the way people want to view the product (e.g. happy, aloof, silly or moody). In the case of the former, product attributes can fulfil these criteria whereas for the latter these attributes might well have to be implanted in the minds of customers through an appropriate advertising message.
- Market and product appeals through manipulation of the marketing mix can be more delicately tuned to the needs of the potential customer.
- Marketing effort can be concentrated on the market segment(s) which offer the greatest potential for the company to achieve its goals - be they goals to maximise profit potential or to secure the best long-term position for the product or any other appropriate goal.