CHOOSING A TARGET MARKET
Market target simply means choosing oneâ€™s target market. It needs to be clarified at the outset that market targeting is not synonymous with market segmentation. Segmentation is actually the prelude to target market selection. One has to carry out several tasks besides segmentation before choosing the target market.
Through, segmentation, a firm divides the market into many segments. But all these segments need not form its target market. Target market signifies only those segments that it wants to adopt as its market. A selection is thus involved in it.
In choosing the target market, a firm basically carries out an evaluation of the various segments and selects those segments that are most appropriate to it. In the previous paragraph, we mentioned that to be of practical use, the segments must be relevant, accessible, sizable and profitable. The evaluation of the different segments has to be actually based on these criteria and only on the basis of such an evaluation should the target segments be selected. The firm must assess the sales and profit potential of each; examine the worth of each segment from its viewpointâ€”whether the segment is relevant to the firm, whether it is sizable, accessible, attractive and profitable. It must examine alternative possibilitiesâ€”whether the whole market has to be chosen for tapping, or only a few segments have to be chosen, and if so, which ones. It may look for segments that are relatively less satisfied by the current offers in the market from competing brands. It must look at each segment as a distinct marketing opportunity. It must also evaluate its resources and choose the segments that match its resources.
The points below explain the process of choosing the target market.
Ã˜ Choosing the target market is related to, but not synonymous with, market segmentation.
Ã˜ Segmentation is the means or the tool; choosing the target market is the purpose.
Ã˜ Segmentation can also be viewed as the prelude to target market selection.
Ã˜ Choosing the target market usually follows multi-level segmentation using different bases.
Ã˜ Choosing the target market involves several other tasks in addition to segmentation.
Ã˜ Looking at each segment as a distinct marketing opportunity.
Ã˜ Evaluating the worth of each segment (sales/profit potential).
-Evaluating whether the segment is:
-Compatible with the firmâ€™s
Ã˜ Examining whether it is better to choose the whole market, or only a few segments, and deciding which ones should be chosen.
Ã˜ Looking for segments, which are relatively less satisfied by the current offers in the market from competing brands
Ã˜ Checking out if the firm has the differential advantage/distinctive capability for serving the selected segments
Ã˜ Evaluating the firmâ€™s resources and checking whether it is possible to put in the marketing programs required for capturing the spotted segments with those resources.
Ã˜ Finally selecting those segments that are most appropriate for the firm.
Choosing Target Marketâ€“A case of Titan Watches
Titan had identified three distinct market segments among watch buyers, using demographic and buyer behavior factors as bases. When the time came for choosing the target market, after the segmentation job was over, Titan decided that it should target the first two segments only and leave out the third. Much later when the circumstances warranted Titan incorporated their segment as well in its target market.
Choosing Target Marketâ€”Case of Bath Soaps
Let us take the Indian bath soap market as an example and understand how a firm trying to enter it should choose its target market.
From a quick analysis of the bath soap market, the firm can understand that the market already stands segmented into two broad components the premium segment and the popular segment.
The firm has to first decide which segment it will enter. Of course, it could decide to enter both. For reaching either of these decisions, the firm has to evaluate the two segments in detail.