Target marketing involves the identification of the most profitable market segments. Therefore, businesses may decide to focus on just one or a few of these segments. They may develop products or services to satisfy each selected segment.
Such a target marketing strategy differs from mass marketing (where a company may decide to produce and distribute one product to all consumers) or product differentiation (where a company offers a variety of products to a large market).
Marketers have been moving away from mass marketing as they increasingly target smaller segments with customized marketing programs. It clarifies how businesses could select the most profitable segments by employing market coverage and positioning strategies to attract them.
Target Marketing: Meaning, Process, Benefits
Meaning of Target Marketing
Market targeting decides which market segment(s) presents a greater opportunity.
Also, positioning represents each chosen market, developing market offering- the offering is market positioning in the minds of customers.
Market targeting means the process of evaluating the attractiveness of each market segment and selecting one or more segments to enter.
After a firm has identified its market-segment opportunities, it has to decide how many and which ones to target.
A target market is a homogeneous (similar) group of customers to whom a company wishes to appeal. It is a picture of what a firm will do in some market. In target marketing, the marketing mix is tailored to fit some specific target customers.
Positioning is the act of designing the- company’s offering and image to occupy a distinctive place in the mind of the target market. The result of positioning is successful.
So we understand that;
- A market is a set of all actual and potential buyers.
- A target market is a group of people toward whom a firm markets its goods, services, or ideas with a strategy designed to satisfy its specific needs and preferences.
- Any marketing strategy must include a detailed (specific) description of this.
What is A Target Market?
At the core of the marketing program is the target market, the group of customers whom the organization wishes to attract.
In developing a marketing strategy, the target market is within an organization’s control as a function of the effectiveness of the marketing mix developed by the healthcare providers.
The notion of controlling the target market, however, is an idea that is often lost on healthcare providers.
Whom a health system attracts to its facilities and whom it targets may be two different populations. Too often in the past, healthcare organizations have defined their market by simply identifying who walked into their facility or used the emergency room.
Healthcare organizations developed patient profiles and strategies based on the users.
Yet the central issue of marketing strategy is to decide those users you want to attract and then determine what this group’s needs are.
The organization that defines a target market, such as “all consumers with incomes above $75,000 who have private insurance and live in a particular area,” can then focus its market research on the identification of an appropriate strategy to meet the needs of the targeted group.
To better understand how healthcare organizations develop a target market strategy, consider the approach followed by the Hospital CIMA in Monterrey, Mexico.
Hospital CIMA has developed a corporate program targeting companies in the United States specifically because of the ever-rising healthcare costs experienced by U.S. companies and their employees.
Hospital CIMA, which is owned by Medical Tourism, Inc., promotes savings of up to 90% over U.S. medical rates.
The hospital’s homepage highlights its in-hospital infection rate of only 0.002%. Determining the target market resulted in several strategies to attract this consumer population.
The subtle nature of the target market definition must be underscored when talking about health care. This aspect of marketing is not meant to imply that the organization will deny care to anyone.
However, defining and going after a particular group of customers from a strategic marketing perspective is different from having a business strategy that is unfocused.
In health care, it would be immoral to deny care to a patient who appears at a facility in crisis and need, but a marketing strategy should have a defined group of individuals that it is trying to reach, appeal to, or attract.
It is this group of individuals, be it an underserved population for an acquired immune deficiency syndrome (AIDS) awareness clinic, an upscale group of white-collar professionals for a boutique medicine practice, or a medium-to-large business for a managed care plan that might all represent a target market.
In selecting target markets, the ultimate question for any organization is which one is better or more desirable than another.
Multiple criteria may well be brought into this evaluation. The less intense the competition, the more attractive the target market.
However, growth potential and environmental factors must also be considered. In health care, reimbursement must obviously be a major consideration in the selection of the target market.
There must be a match between the organization’s mission and the resources required to meet the target market requirements.
Target Marketing Process – 3 Steps of Segmentation, Targeting, and Positioning (STP) Model
The target marketing process provides the foundation for selecting the target market – a chosen market segment that an organization wishes to serve. It consists of the 3 step process of (1) segmentation, (2) targeting, and (3) positioning.
Market Segmentation
The first step is market segmentation, which involves dividing a market into a distinct group of buyers with different needs, characteristics, or behavior who might require separate products or marketing mixes.
Market Targeting
The second step is market targeting. Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
Marketing Positioning
The third step is market positioning. Marketing positioning involves arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers, which is accomplished through formulating competitive positioning for a product and a detailed marketing mix.
The Target Marketing Process also is known as STP Model(Segmentation, Targeting, and Positioning).
Benefits and Importance of Target Marketing
Benefits of the Target Marketing Process are;
- Understanding customers’ needs.
- Suitable marketing mix.
- Differentiation.
Understanding customers’ needs
The target marketing process provides a basis for understanding customers’ needs by grouping customers with similar characteristics and selecting the target market. Segmentation allows marketers to define customer needs and expectations more.
Marketers improve their understanding of how, why, and what influences customer buying. Being in touch with customers increases their responsiveness to changing needs and allows better marketing programs.
Suitable marketing mix
This process allows marketers to understand customers’ requirements of a target market and design a suitable marketing mix that meets their needs. Hence providing effective and efficient matching of organizational resources to targeted segments and promising greater return on marketing investment.
Differentiation
Breaking a market into different segments allows marketers to decide which segment is more appropriate to differentiate their offerings from the competitors.
Market segments need to be protected from competitors. Otherwise, there is a threat that new entrants will establish a foothold and grow market share in a neglected, poorly served segment of a market.
Final Words
In target marketing, the seller divides the market into segments, chooses one or more of them, and develops products and marketing mixes most appropriate for each selected segment. For example, Colgate now produces toothpaste for the middle-aged buyers segment, which claims to prevent tooth decay.
It is impossible to appeal to all market customers who are widely dispersed with varied needs. Organizations that want to succeed must identify their customers and develop marketing mixes to satisfy their needs.
We looked at steps in the target marketing process, including how to divide markets into meaningful customer segments, evaluate each segment, decide which segment(s) to target, and design market offerings to be positioned in the minds of the selected target market.
