Instead of aiming a single product and marketing program at the mass market, most companies identify relatively homogeneous segments and accordingly develop suitable products and marketing programs matching the wants and preferences of each segment. It should, however, be realized that all segments do not represent equally attractive opportunities for a company. Companies need to categorize segments according to their present and future attractiveness and their company’s strengths and capabilities relative to different segments’ needs and competitive situation. The following sequential steps present a useful framework, managers can use for this purpose:
Establish criteria to measure market attractiveness and business strength position.
Evaluate market attractiveness and business strength factors to ascertain their relative importance.
Assess the current position of each potential segment on each factor.
Project the future position of each market segment based on expected environmental, customer, and competitive trends.
Evaluate Segment Profitability.
Evaluate implications of possible future changes with respect to strategies and requirement of resources.
Before making the final decision of choosing the market segment, it is necessary to examine that the segment is at least strongly positive on one of the two dimensions of market attractiveness and business strength and is at least moderately positive on the other. [ Market Targeting ]
A company may decide to enter a segment that otherwise does not currently appear to be a positive under certain conditions, such as when there is belief among the managers that the segment’s attractiveness or the company’s business strength is likely to improve in the coming few years, or they believe such segments would offer opportunity to enter more attractive markets in the coming years.
There are three basic Market Targeting strategies:
Undifferentiated Mass Marketing.
Differentiated Multiple Segment Marketing.
Single Segment Specialization or Niche Marketing.
Undifferentiated Mass Marketing: This strategy involves ignoring any differences among consumers and offer one product or service to the entire market. This strategy of mass marketing focuses on what is common in the needs of consumers rather than what is different. For more than 90 years, Coca-Cola offered only one product version to the whole market and hoped that it would appeal to everyone. Hamdard offers its Rooh Afza based on this strategy. Undifferentiated marketing provides cost economies.
Differentiated Multiple Segment Marketing: The marketer decides to enter several market segments and develops separate offers for each. For instance, Maruti is producing different models of cars for various segments, Nike offers athletic shoes for different sports and Coca-Cola and Pepsi are offering different versions of their soft drinks. Companies producing toiletries are offering different versions of toilet soaps for dry skin, oily skin, and normal skin. These companies expect higher sales volumes by offering product versions and a stronger position within each segment. Differentiated marketing strategy increases costs considerably.
Single Segment Specialisation or Niche Marketing: Many companies succeed by producing a specialized product aimed at a very focused market or a niche. This strategy also appeals to firms with limited resources. The company targets a segment and goes for a larger market share instead of a small share in a larger market segment. Recycled paper producers often focus on the market for greeting cards or wedding cards. Oshkosh Truck is the largest producer of airport rescue trucks. The concentrated strategy may involve more than normal risks. If a large competitor decides to enter the same segment, the going may become quite tough for the smaller company.[ Market Targeting ]