- The primary types of markets are consumer markets, industrial markers, institutional markets, and reseller markets. A business may encompass multiple categories, or a product may be sold in multiple markets. These categories are not always clear-cut so selecting a target market may be more complex.
- An important concept in target marketing is that those who are targeted show a strong affinity or brand loyalty to that particular brand. Target marketing allows the marketer and sales team to customize their message to the targeted group of consumers in a more focused manner.
- There are several different ways to satisfy target markets: mass marketing, differentiated marketing, concentrated marketing, and niche marketing. The method chosen will depend on the product and the target market.
- Marketing mix: The marketing mix is often crucial when determining a product or brand's unique selling point (the unique quality that differentiates a product from its competitors), and is often synonymous with the four Ps: price, product, promotion, and place.
- Target market: A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise toward.
The Oreo cookie is a popular cookie in the U.S., known for its two discs of chocolate with a white cream filling. However, Kraft has formulated a different version of the Oreo to target consumers in China. The Chinese version consists of four layers of long, thin biscuits coated in chocolate. Kraft CEO, Irene Rosenberg, trusts her executives who live and work in China to know what consumers would prefer in order to maximize their profits. In Germany, Kraft is appealing to the tastes and preferences of German consumers by creating dark chocolate products. It is also introducing premium instant coffee in Russia, which is a beverage that is popular with consumers.
Target Market Defined
A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise toward. A well-defined target market is the first element of a marketing strategy. The target market and the marketing mix variables of product, place (distribution), promotion, and price (the four elements of a marketing mix strategy) determine the success of a product in the marketplace. A product provider might ask: Given that my product will not be needed or wanted by all people in the market, and given that my organization has certain strengths and weaknesses, which target group within the market should I select?
Types of Markets
While we have defined target markets in a general sense, it is still useful to discuss the characteristics of the primary types of markets: (1) consumer markets, (2) industrial markers, (3) institutional markets, and (4) reseller markets. It should be noted that these categories are not always clear-cut. In some industries, a business may be in a different category altogether or may even encompass multiple categories. It is also possible that a product may be sold in all four markets.
- Consumer markets - When we talk about consumer markets, we are including those individuals and households who buy and consume goods and services for their own personal use. They are not interested in reselling the product or setting themselves up as a manufacturer.
- Industrial markets- The industrial market consists of organizations and the people who work for them, and those who buy products or services for use in their own businesses or to make other products. For example, a steel mill might purchase computer software, pencils, and flooring as part of the operation and maintenance of their business.
- Institutional markets- Another important market sector is made up of various types of profit and nonprofit institutions, such as hospitals, schools, churches, and government agencies. Institutional markets differ from typical businesses in that they are not motivated primarily by profits or market share. Rather, institutions tend to satisfy somewhat esoteric, often intangible, needs.
- Reseller markets- All intermediaries that buy finished or semi-finished products and resell them for profit are part of the reseller market.
The Psychology of Target Marketing
A principal concept in target marketing is that those who are targeted show a strong affinity or brand loyalty to that particular brand. Target marketing allows the marketer and sales team to customize their message to the targeted group of consumers in a more focused manner. Research has shown that racial similarity, role congruence, labeling intensity of ethnic identification, shared knowledge and ethnic salience all promote positive effects on the target market. Research has generally shown that target marketing strategies are constructed from consumer inferences of similarities between some aspects of the advertisement (e.g., source pictured, language used, lifestyle represented), and characteristics of the consumer (e.g. reality or desire of having the represented style). Consumers are persuaded by the characteristics in the advertisement and those of the consumer.
For example, CVS Caremark's target market is women since they make up 80% of the pharmacy chain's customers. CVS has marketed its stores to aid women who are constantly multitasking. They recently redesigned many of their stores for women, including shorter wait times for prescriptions, wider and better-lit shopping aisles, and more beauty products.
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.
- 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.
- 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 multisegment marketing. Each segment is targeted uniquely as the company provides unique benefits to different segments.
- Concentrated marketing - Concentrated marketing is a strategy that targets very defined and specific segments of the consumer population.
- 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.
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