Marketers who want to practice target marketing segmentation effectively are required to take three steps. The first step is market segmentation, the second step is market targeting, and the third step is market positioning.
Therefore, target marketing is also known as STP marketing i.e. segmenting, targeting, and positioning.
Market Segmentation: As buyers of a product exhibit different needs and wants, and therefore, each group with similar needs may be treated as a separate market.
Customer-oriented companies take these differences into consideration, but they usually cannot afford to tailor-made a different product and marketing mix for every consumer. Consequently, most marketers operate between the extremes of one marketing mix for all (mass marketing) and a different one for each consumer.
Therefore, companies go for market segmentation. We define market segmentation as the process of dividing the total market for a product or service into several smaller groups, such that the members of each group are similar with respect to the factors that influence demand.
Therefore, companies through market segmentation divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs
Market Targeting: A target market is defined as a set of buyers sharing common needs or characteristics that the compa decides to serve.
It is very important to select the target market to which the company decides to serve because knowledge about how the consumers decide, what are the criteria of buying products, the characteristics and life-style of the targeted customers can help the marketers to develop a suitable marketing strategy.
Every marketing strategy involves marketing expenditure and the return on market program can only be identified if we are able to know the target market for which the marketing program is targeted. It is observed from research that a majority of the marketing expenditure is actually wastage of company resources as they are spent on non buyers.
So an understanding of the nature and characteristics of the target market will help the marketer to derive higher returns on a marketing program. Knowledge on the target market and its growth and changes in attitude will help the marketer to modify and design new marketing programs for the success of the enterprise as a whole.
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