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Applied Marketing Strategies

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Target Market Strategies

Now that you’ve learned how companies segment markets, you might ask yourself: How many market segments should a company target? That depends. Companies must consider their profit, the competition, and a host of other factors when selecting markets to target.

Selecting Target Markets

After you segment buyers and develop a measure of consumer insight about them, you can begin to see those that have more potential. Now you are hunting with a rifle instead of a shotgun. The question is, do you want to spend all day hunting squirrels or ten-point bucks? An attractive market has the following characteristics:

• It is large enough to be profitable given your operating cost. Only a tiny fraction of the consumers in China can afford to buy cars. However, because the country’s population is so large (more than 1.4 billion people), more cars are sold in China than in Europe or the United States.23

• It is growing. The middle class of India is growing rapidly, making it a very attractive market for consumer products companies. People under thirty make up the majority of the Indian population, fueling the demand for “Bollywood” (Indian-made) films.

• It is not already swamped by competitors, or you have found a way to stand out in a crowd. IBM used to make PCs. However, after the marketplace became crowded with competitors, IBM sold the product line to a Chinese company called Lenovo.

• Either it is accessible or you can find a way to reach it. Accessibility, or the lack of it, could include geographic accessibility, political and legal barriers, technological barriers, or social barriers. For example, to overcome geographic barriers, the consumer products company Unilever hires women in developing countries to distribute the company’s products to rural consumers who lack access to stores.

• The company has the resources to compete in it. You might have a great idea to compete in the wind-power market. However, it is a business that is capital intensive. What this means is that you will either need a lot of money or must be able to raise it. You might also have to compete with the likes of T. Boone Pickens, an oil tycoon who is attempting to develop and profit from the wind-power market. Does your organization have the resources to do this?

• It “fits in” with your company’s mission and objectives. TerraCycle has made its mark by selling organic products in recycled packages. Fertilizer made from worm excrement and sold in discarded plastic beverage bottles is just one of the company’s products. So, it probably wouldn’t be a good idea for TerraCycle to open up a polluting, coal-fired power plant, no matter how profitable the market for the service might be.

MULTIPLE-CHOICE QUESTION

NOTIFICATIONS

An employee of Serena’s Vegan Meal Kits suggests that the company add a barbecued pork

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Targeting Specific Demographics

Have you ever noticed that yogurt ads almost always feature women and ads for trucks almost always feature men? Masculine and feminine stereotypes abound in marketing targeted by gender.

Are women an attractive target market for yogurt sellers? The maker of this humorous YouTube video thinks so. (She seems to imply they are the only market.)

sandwich to its menu. Why is this not a good idea for the company?

Correct. Serena’s Vegan Meal Kits targets vegan customers, so selling a pork sandwich would

contradict the company’s mission and confuse or alienate customers.

Saved moments ago.

The company would not have any of the necessary resources to sell the product.

It would be inconsistent with the company’s mission.

The market for pork sandwiches is not large enough to be profitable.

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Have you ever noticed some products are marketed to women more than men? And vice versa? Marketing targeted by gender is full of stereotypes, as shown in this video poking fun at how yogurt has traditionally been targeted at women.

YouTube video. https://youtu.be/qMRDLCR8vAE. Uploaded June 2, 2008, by Giussepe Balsamo. For a text transcript, follow the link below.

Read Text Transcript

MULTIPLE-CHOICE QUESTION

In the video, comedian Sarah Haskins makes fun of the way TV commercials for yogurt stereotype women. But she also says that Activia yogurt is very popular with women. This suggests which of the following?

Marketing that plays to stereotypes can still be very effective.

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Target Market Strategies: Choosing the Number of Markets to Target

Henry Ford proved that mass marketing can work—at least for a while. Mass marketing is also efficient because you don’t have to tailor any part of the offering for different groups of consumers, which is more work and costs more money. The problem is that buyers are not all alike. If a competitor comes along and offers these groups a product (or products) that better meet their needs, you will lose business.

Multisegment Marketing

Most companies tailor their offerings in one way or another to meet the needs of different segments of customers. Because these organizations don’t have all their eggs in one basket, they are less vulnerable to competition. Marriott International is an example of a company that operates in multiple market segments. The company has different types of facilities designed to meet the needs of different market segments. Marriott has invested in unique brands so consumers don’t confuse the brand and so the brand does not become diluted. Some of the Marriott brands and their target markets are:

• Marriott Courtyard. Targeted at over-the-road travelers. • Ritz-Carlton Hotels. Targeted at luxury travelers. • Marriott Conference Centers. Targeted at businesses hosting small to midsize meetings. • Marriott ExecuStay. Targeted at executives needing month-long accommodations. • Marriott Vacation Clubs. Targeted at travelers seeking to buy timeshares.

A multisegment marketing strategy can allow businesses to respond to demographic changes and other trends in markets. For example, the growing number of people who are too old to travel have the option of moving into one of Marriott’s “Senior Living Services” facilities, which cater to retirees who need certain types of care. A multisegment strategy can also help companies adjust to changing economic conditions by allowing customers to trade up or down among brands and products. Suppose you take a pay cut and can’t afford to stay at Marriott’s Ritz-Carlton hotels anymore. A room at a JW Marriott—the most luxurious of the Marriott-brand hotels but cheaper than the Ritz—is available to you. A multisegment strategy can also help companies deal with product life cycle issues. If one brand or product is “dying out,” the company has others to compete.

MULTIPLE-CHOICE QUESTION

Correct. Haskins says Activia is so popular that other yogurt makers have copied it. This

suggests that its marketing must be working, even though it is playing to stereotypes.

Saved moments ago.

Marketing that plays to stereotypes only works with women.

Marketing that plays to stereotypes should focus on food.

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23 Angelo Young (July 7, 2014), “China Extends Lead As World’s Largest Car Market By Sales; GM, Ford China Deliveries Up By Double Digits,” International Business Times, http://ibtimes.com

close

Why does Marriott International participate in multisegment marketing?

Correct. Targeting multiple groups of consumers allows Marriott to reach a wider customer

base.

Saved moments ago.

Multisegment marketing allows Marriott to use a single brand for all its business

concepts.

Multisegment marketing allows Marriott to target multiple groups of consumers.

Multisegment marketing allows Marriott to compete against itself.

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