Step 1: Identification of targeting strategy
The very first step while selecting the target market is to identify the targeting strategy..The strategy which used to select a target market is affected by target market characteristics, product attributes, resources, product characteristics and organizational objectives. Sometimes an organization defines the whole market as it’s target market when they established a single marketing mix for entire market for a particular product. And it assumes that the need of all the customers are similar in nature. The marketing mix which being used here consist of one type of product with no variation, one promotional activity, one distribution channel to reach all customers. This targeting strategy is know as undifferentiated strategy where marketers assumes a market to be homogeneous market and use a single marketing mix to satisfy all customers needs.
When there is different need and want of the individual in the market it is known as heterogeneous market where not every one want the same type of product they varies in their need, wants, lifestyle, culture etc. For example one can book a hotel room with the required facilities where as some would like to stay in luxurious hotel room. Thus hotel company need to set different price, product, services, marketing mix for their various customers. In such cases differentiated targeting strategy must be use.
Step 2: Determining variable of segmentation
Segmentation variables are the characteristics of the consumers which used to segment the market such as age, location, gender, religion, culture etc. Selection of segmentation variable should be based on the needs and wants of the consumers. The segmentation is grouped into four categories i.e demographic, geographic, psychographic and behavior.
Step 3: Developing market segment profiles
A market segment profile describe that similarities of the potential customers within a segment and explain the differences among then customers and organization of different segments. A profile may consist of demographic factors, geographic factors, product benefit sought, lifestyle, brand loyalty. Marketers use market segment profiles to assess degree to which the organization’s possible product can match potential customer needs. It helps a marketers to understand how a business can use its capabilities to serve the potential customers. Use of market segment profile helps a marketer’s in many ways. It helps to determine the segment which is more effective to the organization objective, strength, weakness, accessibility. This also help marketers in making the marketing decision.
Step 4: Evaluating relevant market segment
After analyzing the different market segment profiles its time to select several relevant market segment and eliminate a few segments from consideration. The first to be consider in this step is sales estimation potential sales for segment can be measured along several dimensions, including product level, time, geographic area, level of competition for the specific product items and next thing to be consider is market potential for the product in the market. A segment market potential is affected by economic, socio cultural and other environmental forces. Sale potential is also an important factor to be consider in this step, it is about the maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product. Several factors effects company’s sales potential for market segment, the market potential places absolute limits on size of the company’s sales potential. Another term which is essential here is to estimate the cost to fulfill the needs of the target segment. An organization must develop and maintain marketing mix that precisely meets the wants and needs of customer as well as the organization of the customer.
Step 5: Choose the target market
After evaluating relevant market segment the next an the final step is selecting the target market. Information gathered in the previous steps about sales estimates, competitors and cost estimates requires careful consideration in the final step to determine long term profit opportunities. The firms management must investigate whether the organization has financial resources, managerial skills and facilities to enter and compete effectively in selected segments. Selecting appropriate market is important to an organization adoption and use of the marketing concept philosophy. Identifying the right target market is key to implement a successful target market. A careful target market analysis places an organization in a better position to both serve customers needs and achieve its objectives.
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