The marketer develops a complete profile of the various segments found in the market, one or more is selected for a concerned marketing effort. This is known as market targeting.
How to select potential Target Markets
For effective targeting of market segments, segments must conform to the following criteria.
- Identification: Markets segments should be of such a nature that it is easily identifiable. Segmentation variables based on geographic or demographic information is easily identifiable, where psychographic information like lifestyle, activities and opinion is not that easy to identify. Potential market must be worthwhile to marketers and therefore be big enough and sufficient. Marketers can use demographic and geographic information to determine how large and profitable the target market is.
- Stability: Marketers prefer target consumer segments that are relatively stable in terms of demographic and psychographic factors with customer needs that increase over time. If this is not possible, the markets must at least be of such a nature that there will be early indicators of changes in the segment so that the marketing strategy can be adopted accordingly.
- Accessibility: It is the final criteria in target market selection. This implies that the target market must be economically accessible. Therefore, marketers must be able to reach the targeted market effectively at an affordable cost with the correct application of media such as radio, television, newspaper and magazines.
But before a target market is selected there are certain other criteria which must also be observed.
- Size and Growth of the Target market: A target market need not necessarily be large. A small one can be more profitable than one in which a large sales volume can be realized. Marketing management must be convinced that there are further growth possibilities and that investing in the target market under consideration does not have only a short-term dimension.
- Attractiveness and potential profitability: The attractiveness of a target market lies not only in its size and growth possibilities but also in the promise of long-term profitability. Attractive segments attract competitors and intense competition can have a detrimental effect on future profits. Serious threats to attractive segments are aggressive competitors who can launch price wars or intense advertising campaigns or even develop new substitute products.
- Resources and Skills of the organization: Promising segment opportunities that do not fit in with the long-term objectives set by management cannot be utilized. The same applies when resources and skills to exploit the opportunity are lacking. A segment can only be chosen as a target market if marketing management is fully committed to serving this target market better than any other competitor can.
- Compatibility with the organization’s objectives: Apart from the resources and skills of the organization, the choice of a target market must also take into account compatibility with the objectives of the organization. If it is found that the objectives of the organization cannot be fulfilled by the choice of a particular market segment, it should be disregarded.
- Cost of reaching the target market: When a potential target market is inaccessible to an organization’s marketing strategies or the cost to reach it is too high, it should not be considered.
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