Explain the meaning and process of market targeting.
With an objective of maximizing profits, a company targets one or more market segments. In the target market selection process, the company evaluates the market opportunity with the understanding of the customer and analyses the competition. It also checks out its ability to reach the customers in the segment and the costs involved in reaching them. The level of customers’ satisfaction with competitors’ products and services are also important.
If there are a lot of customers, who are dissatisfied, then the chances of success become brighter; as it happened in the case of Ginger Hotels. Then the barriers to entry, potential profitability and growth forecast should also be taken into consideration in target market selection. As it builds the foundation for the product or service or sometimes a company, extreme care is required in target market selection.
In the process of market targeting, a company can choose the following market patterns:
- Single Segment Concentration:
In the detergent cake and powder segment, Nirma, 555, Ghari Detergent cater to the lower segment of the customers with their cheaper products. As the company is fully dependent on that product, it involves marketing risks.
- Multi Segment Specialisation:
A company can also go for multiple segments. A media company like UTV produces and distributes Films under two entities – UTV Motion Pictures and UTV Spot Boy- Under UTV Motion Pictures, it produces main stream commercial movies with big budgets like Jodha Akbar, Delhi 6, Main Aur Mrs Khanna, Kaminey under UTV Motion Pictures and small budget movies like Aamir, Dev D and Welcome to Sajjanpur under UTV Spot Boy.
- Product Specialisation:
In product specialization, the company becomes product specific. For example – Carl Zeiss, the world’s leading lens manufacturer with its tagline ‘We make it visible’; produces lenses for cameras, binoculars, spectacles, microscopes, mobile video and industrial metrology.
- Market Specialisation:
When a company specialises in serving the same market with different needs, then the company is following market specialization. In the university laboratory market, a company can sell all the products required in a lab.
- Full Market Coverage:
Large companies generally go for full market coverage with all the products and services, the customers might need. LG, Samsung, HUL, ITC, Pepsi, Colgate, Maruti Suzuki, General Motors, Hero Honda, Bajaj Auto etc. are the companies, who look after the complete spectrum of customer needs through their different product offerings. That’s why Maruti Suzuki sells 13 different Cars – Maruti 800, Omni, Alto, Zen Estilo, A-Star, Ritz, Swift, Wagon R, Versa, Swift DZire, Gypsy, SX4 and Grand Vitara; between the price range of Rs. 2 Lacs to Rs. 16 Lacs.
Similarly, Hero Honda sells 15 different bikes – CD Dawn, CD Deluxe, Splendor+, Splendor NXG, Passion Pro, Passion Plus, Super Splendor, Glamour, Glamour PG Fi, Achiever, CBZ X-Treme, Hunk, Karizma, Karizma ZMR and Pleasure scooters between the price range of Rs. 32000/- to Rs. 91000/-. It’s not that only automobile companies are having many choices for the customers.
Even in FMCG products, a company like HUL offers 8 types of personal soaps – Breeze, Lux, Lifebuoy, Liril, Hamam, Dove, Pears, Rexona and Dove; 4 types of detergent powders – Surf Excel, Rin, Wheel and Sunlight; 4 types of skin care – Fair & Lovely, Pond’s, Vaseline and Aviance; and 2 types of toothpastes – Pepsodent and Close Up.
