target marketing
With globalization and the development of new information technologies, changes in society have led to dramatic change in business strategies. In this new environment, there is a flow of products and services from many places to many different locations. Emerging markets and new operating rules are inducing companies to perform their business activities in a new way. As a consequence of those developments, marketing as theory and practice is currently experiencing a paradigm shift from a traditional approach to a relationship marketing approach. Like communication with other stakeholders including employees, shareholders, and investors, the relationship with consumers is vital for marketing management. Target marketing is an important marketing strategy that consists of selecting one or more market segments and developing products and services tailored to each segment. Target market selection helps to gather consumers with similar lifestyles, needs, and desires; this establishment of common ground leads to greater efficiency of marketing and communication strategies. As a result, marketing practitioners have a chance to deliver their messages with superior accuracy, which enables more efficient media use.
This entry focuses chiefly on the transformation of marketing strategies with the development of new media technologies and specifically provides a strong background on target marketing within the marketing and media context.
Fulfilling expectations of individuals by creating values in accordance with companies’ objectives is a key factor in marketing. As a management function, marketing helps to understand customer and consumer needs and to ascertain the level of demand for specific products and services, which makes it one of the significant dimensions of any business as well as finance, accounting, and human resources. The key objective of marketing is try to understand the behavior of consumers, which is never simple, so as to find out their needs, ideas, and motivations. Marketing provides businesses with tools to build sufficient demand for products and services. Marketing management should decide strategically on features of products and services, the price to offer customers, the channels to distribute their products and services, and the promotional efforts to communicate with their customers.
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In today’s rapidly changing world, identifying and satisfying changing needs is essential for marketers to make more profit. In the highest competitive environment, this need–profit matching is required to identify those needs, analyze the buying behavior of potential customers, and work on strategies to attract those people. Marketers use segmentation strategy to classify target audiences by using demographics, psychographics, and attitudes related to product category or product use–related behaviors. After that identification, one or more market segments are selected for the target marketing strategy, and all communication interventions are tailored to the selected segment. Marketing management selects the target market or markets according to the firm’s financial and managerial capacities.
Because people’s needs can change from day-to-day, the marketing management process has to be dynamic and responsive to changes in the market environment. Social scientists have been working on consumer behavior and trying to understand the purchaser’s decision process. Armed with this information, marketers are better able to choose among various alternatives and determine how to meet the buying criteria of consumers.
Accordingly, marketing as a crucial business function identifies who are the customers; what are their needs, their buying habits, and preferences; and concentrate on developing strategies to attract those potential customers. By carrying out those tasks, it is not possible for companies to connect with all customers. So, marketing activities usually have to focus on a target market that is the particular segment of the population.
The Sales-Oriented Strategy
As a matter of historical perspective, since the national and global marketplace became saturated in the modern industrial age, a sales-oriented approach has largely supplanted the traditional product-oriented approach. With a sales-oriented strategy, marketers focus on promotional activities that are preferred by consumers in a competitive environment. Hard-sell and soft-sell approaches are used to transmit the message of the product or service. The hard-sell approach aims to get the consumer to buy the product or service in the short term; direct and insistent language is used to persuade the consumer to make the purchase. In advertisements based on the hard-sell strategy, marketers address the rational side of the consumer. By contrast, the soft-sell approach is more indirect and subtle, attempting to influence consumers by appeals to emotion: Humor, fear, and guilt are some of the emotional conditions that marketers try to evoke.
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Concurrently, scientific advertising and product differentiation strategy arose and came into use. Companies needed a different strategy because of the sheer proliferation of products. The more rival products showed up in the market, the greater the need for a new perspective. Around the same time, segmentation emerged as an important strategy for marketers. Segmentation is the basic marketing process of splitting up the potential market on the basis of customers’ needs, wants, and behavior. Marketers developed new products and marketing mixes to satisfy the needs of specific market segments. Markets can be classified into groups by examining demographic, psychographic, and behavioral differences among customers. For example, behavioral targeting is a recent Internet-based strategy that delivers digital contents to customers based on their online behavior patterns. Advances in technology allow marketers to create specific ads by tracking individuals’ online previous behavior.
Given increasing market segmentation, companies may decide to focus on only one or more segments. With the shortening of product life cycles and the saturation of major market segments, marketers have developed varied approaches such as positioning, niche marketing, and one-to-one marketing. It is clear that segments are getting smaller. Today, with the help of new communication technologies, it is relatively easy to satisfy the needs of smaller segments and make a company profitable. The more information that can be obtained about existing or prospective customers, the better the ability to communicate and connect with them.
This strategic decision requires a deeper understanding of the market and of consumer behavior. Finding out the appropriate way to segment the market, determining the right segment to target, and positioning the company in the eyes of customers will enable a company to allocate its resources effectively. In addition to improving efficiency, companies are more likely to gain more revenue by preparing marketing programs tailored to each target segment.
After the segmentation process, companies can proceed to determine which of the segments are lucrative enough to warrant further investment. In this sense, target marketing strategy becomes significant for the next step.
Target Marketing Approach
A target marketing approach enables companies to be interested in one or more selected segments and to develop separate strategies for each group. Marketers give priority to one or more specific segments in which they have the best chance to satisfy the customers.
As we have seen, marketers first identify groups of buyers according to their needs and preferences, which is called market segmentation. As a second step, one or more market segments are selected as a focus for further activity, which is called target marketing. Marketers need to develop distinctive strategies for each segment using market positioning strategy. To reach customers in an effective way, target marketing considers the differences among customers and classifies them according to their similar needs and preferences. Aided by new communication technologies, it is more convenient for marketers to connect with smaller groups using pinpoint communication strategies. For instance, companies have been using micro-marketing strategies at levels including niches, segments, local areas, and individuals. Segmentation of markets offers many advantages to marketers compared with mass marketing. As noted earlier, an important factor for companies to choose target marketing is its efficiency; it enables firms to use their time and money very effectively. The most common approaches are undifferentiated, differentiated, and concentrated marketing strategies.
Target Marketing Strategies
An undifferentiated (mass) marketing approach seeks to connect everyone and treat the entire market as a target. It does not consider any differences and aims to reach the largest group of customers. Mass production, mass distribution, and mass promotion approaches are used for all buyers. Automobile manufacturer Henry Ford, with his Model-T Ford in one color only (black) is an early example of undifferentiated marketing strategy. The one-size-fits-all value proposition expresses the logic of the undifferentiated marketing strategy. The strongest argument favoring this approach is that it provides the largest potential market at the lowest cost and therefore can yield a high profit margin. One of the main disadvantages of this strategy is that standardization of products may be unsuccessful for meeting each customer’s needs. So, it is hard to speak of customer relationships in the case of an undifferentiated market strategy.
The differentiated target marketing approach is used when a company focuses on several different markets, mostly with a different strategy for each type of customer. Unlike the undifferentiated strategy, customer needs and preferences are considered carefully for each targeted segment. It is necessary to offer differentiated promises to have a competitive advantage. So, marketers adjust the marketing mix according to each segment. Although different products/services or marketing efforts increase the companies’ cost, the differentiated approach is typically more profitable than the undifferentiated strategy.
A concentrated marketing strategy involves choosing and focusing on just a single target market. This strategy is often chosen by new companies or by companies that are about to enter new areas in the marketplace. It is more favorable for companies that prefer to avoid direct competition with larger organizations. Volkswagen is a good example of a company focusing on a single market segment; it concentrates on the small-car market. By contrast, Porsche is focused on the sports car segment. This single strategy requires a deeper understanding of the segment’s needs and motivations. However, it may be risky to go with just one segment because of changes in buying patterns and high competition. Many firms choose to address more than one segment to avoid such risks.
Another significant point worth considering is niche marketing strategy. Marketers define narrow customer groups looking for a different kind of benefits or values. Such subsegments occur in the marketplace, and they constitute very specific target groups. Niche markets are comparatively small, but they are more likely to have profit and growth potential for companies. Many large companies have lost market shares to smaller competitors who succeeded on the basis of specialization and a strong product offering.
Ethical Concerns
Despite recognition of its importance in terms of efficiency and effectiveness, target marketing has been criticized for generating controversy among the public. As a primary concept in marketing activities, it is regarded by some authorities as unethical. Concerns stem from accusations of taking unfair advantage of vulnerable target groups, including children or disadvantaged people. In addition, some companies have been criticized for promoting products or services that are harmful for people. This controversial topic has yet received little attention theoretically and empirically, but marketers and policy makers are confronted by the need to deal with its causes and consequences. Along with the question of who is targeted, critics say, the issues of how targeting is conducted and for what purpose need to be answered properly by marketers. The overriding issue is seen as one of social responsibility, in which the interests of targeted people need to be considered, not just the interests of for-profit companies.
Conclusion
In the domain of business, there has been a clear shift from undifferentiated mass marketing to targeted, micro-marketing, with ongoing segmentation. Instead of speaking to the average consumer, marketers are increasingly tailoring their products and services to satisfy the needs and preferences of specific populations. Many such micro-markets have been identified in terms of age, sex, income, education, lifestyle, ethnicity, and other characteristics. Together with increasing segmentation, marketers are creating strategies according to emerging realities based on advances in communications technology including e-commerce, the mobile Internet, and the rapid growth of social media. Such advances have enabled marketers to acquire massive amounts of information about their customers and thereby to target them more effectively.
The original version of this article was published by SAGE Publications in The SAGE International Encyclopedia of Mass Media and Society.