Explaining a Technical Concept or Management Issue - Case Study Example

Target Marketing Executive Summary Many of the new employees in the marketing department have no idea how target marketing works and what it entails. It is important that they realize that with the current economic situation, a clearly defined market niche is more than ever so important. Indeed it is almost impossible practically to target everyone considering the cost implications of such a move. As a small business, our organization can effectively compete with its larger contemporaries by engaging in target marketing. When asked who our target customers are, the new employees answer by stating that our target is everyone who has an interest in our products. Some of them note that our target include home owners and business owners, answers that are all too general to define our real target customers. Being an interior design company that has recently been established, it is important that our marketers exactly know who to target during market campaigns and in all marketing activities. Having been in the market for a relatively short duration, the company needs to establish a niche for itself especially if it has to succeed in the competitive household goods market. It is for this reason that I saw the need to prepare this report; to discuss what target marketing is and to recommend how we can apply it in the business. Definition of Target Marketing Target marketing, micro-marketing or niche marketing involves portioning a market into segments and concentrating marketing efforts on a few main segments or just one segment according to Kurtz (6). Target marketing does not mean that the business excludes individuals who do not fit into the established criteria from purchasing the business products. A target market comprises a group of customers that an organization has decided to concentrate its marketing efforts on and therefore its products towards. The target market can also be defined as a group of persons that possess unique and noticeable characteristics. A target market can be distinguished from the rest of the market through geographic, demographic, behavioral, psychographic, or product related segmentations as noted by Kurtz (15). Geographic segmentation involves segmenting the market based on geographical location or climatic region (Dibb & Simkin 45). Demographic segmentation on the other hand involves segmenting the market according to age, gender, education, stage in life, income or other demographic features. Psychographic segmentation on its part involves segmenting the market based on individuals’ lifestyles, values, and attitudes. While there are several other factors that can be used in segmenting a market, the aforementioned factors are most commonly considered. Target marketing is different from general marketing in which case the entire market is targeted by a business in its marketing endeavors (Cohen 27). As an example, Hewlett-Packard, the multinational company that makes electronic devices and computers targets its all-in-one (fax, scan, print) machines at segments of the home office market. The company on the other hand targets more expensive single function units at larger organizations. Importance of Target or Niche Marketing Establishing a well-defined target market is key to an organization’s marketing strategy according to Pinson and Jinnett (52). Better stated, target marketing can be key to an organization’s success. When an organization engages in target marketing, pricing, promotion, distribution of its products becomes easier and more effective in terms of cost. This it does by focusing all the marketing activities that the business engages in. When an organization markets its products or services to a general market hoping to get a bigger slice of the market, it is as good as firing 10 bullets randomly in different directions when hunting game. This is dangerous and extremely expensive. On the other hand, when target marketing is applied, the situation is analogous to aiming a single mark which is cost effective and potentially gainful. If an organization has a product that is targeted at a particular demographic group such as Asians in a given area, it becomes cheaper for the business to advertise the product on an ethnic radio station that charges cheaper than one that reaches a broader audience and so charges higher fees. By relying on the cheaper alternative, the business can enjoy greater frequency of advertising or a more exhaustive media mix. How to Establish Market Segments Target markets do not “exist” but are created by establishing the wants, needs, and demands that are being inadequately or not at all met by other organizations. Once these are identified, the business and delivers products that meet the unsatisfied needs. According to the business dictionary (par. 1), target marketing is dedicated to becoming, in a small pond, a big fish as opposed to becoming a small fish in a big pond. When establishing target markets, it is important to describe them as vividly as possible based on the knowledge one has on the service or product on offer. In order to succeed with a market niche, it is important that the business does what it needs to do to meet their specific needs. In this respect, the benefits that the business promises must be especially appealing to the target market (Ferrel & Hartline 67). This begs the question: what can be business provide that is compelling and new? By answering the question, the unique needs of the potential target are identified so that the business can tailor its products to meet these needs. It is also very important for the business to communicate positively and effectively to the new target group. Speaking the language of the target group as an understanding member as opposed to an outsider in this case is a step in the right direction. The business also needs to understand the main issues that face the target group and how they prefer to communicate with organizations. The company may need to institute a unique campaign for the target group and if need be change its slogan (Pinson & Jinnett 60). Change of slogan may be necessitated, for example, in the event that the original slogan poorly translates in a different language. If a business markets leather products and targets men who are working decides to target a new niche that comprises working women online, it will have to make certain changes to its website to remain relevant to the new market segment. Considering that working women prefer to conveniently shop online like their male counterparts and yet expect more content to evaluate the products on offer and the business behind them, the business will need to expand its content and revise the marketing content. Before targeting a specific market niche, it is always prudent to assess the direct competition that the business is bound to contend with and establish the position of the business relative to competitors. The business can always accomplish this task by reviewing the websites, brochures, and ads posted by the competitors. Based on these, the business can identify the main selling points, pricing, as well as other service characteristics of the competitors. The business needs to take caution when venturing in a new market so as to keep the risks that it may face as low and manageable as possible such as by gauging how receptive the niche is to the products on offer. Some of the questions that marketers may need to answer when defining their target markets include the following: Are the target customers female or male? What is their age? What do they do to make money? How much cash do they earn? Where do they live in terms of geographical location? Are there any other factors that matter in their lives that may be related to the business or product on offer? Based on these questions, marketers can establish the characteristics of their main customers whom they can further segment so as to appropriately target them in their campaigns and with their products. Attractiveness of the Market Segment and Target Market Strategies Several factors may be considered in evaluating the attractiveness of a market segment. Some of these include the number of customers that form the segment or the size of the segment; rate of growth of the segment; the potential of the firm to make huge sales; the profit margin expected from the segment; competition in the segment; attainable market share; and the loyalty of existing customers to the business brand (Dibb & Simkin 63). If a segment is proven to be attractive, the business can adopt any one of the following strategies to serve the target group; full market coverage, single-segment, product specialization, selective specialization, or market specialization. Application of Target Marketing in the Company’s case As earlier noted, it is important to establish the main characteristics of the group that forms the company’s target market. In addition, it is vital to consider what competitors have on offer and how they relate with their customers. In order to establish facts related to these variables, it was necessary to perform a market survey. The company produces a variety of household products including furniture for the kitchen and bathroom. The company’s products are generally considered to be qualitative and therefore attract relatively high prices. The company is located in Lousiana and markets its products in different parts of the state. After considerable evaluation of the market based on a market survey, we have noticed that most of the customers that purchase the company’s products age adults between the ages 34 and 68 living in Baton Rouge. Our survey further revealed that while the company’s products are bought by people of both gender, most of the customers earn over 100,000 USD per month. Furthermore, we established that the people most interested in the company’s products live in their own homes or at least own homes in the wider Baton Rouge area. While some of the customers are retired, others are employed or own businesses and spend a considerable amount of their time in Baton Rouge. Conclusions and Recommendations Considering the importance of target marketing to every forward thinking organization, it is important that we establish our target market and deal with the m as such to save on cost, and to improve our efficiency. While there seems to be a huge market for the products that the company has on offer, I recommend that we target homeowners in Baton Rouge, Lousiana aged between 34 and 70 and who earn over $ 100,000 per month with our products. We may narrow down our target market further to include individuals interested in bath and kitchen classical styles. The target market can be broken down into two segments; retiring baby boomers and parents on the go. Based on this target market, our company should develop new products. Works Cited Business Dictionary. Niche marketing. 2013. Web. http://www.businessdictionary.com/definition/niche-marketing.html Kurtz, Dave. Contemporary Marketing Mason. OH: South-Western. Cengage Learning. 2010. Print. Cohen Wiliam. (2005) The Marketing Plan. New York. John Wiley & Sons, Inc. Print. Pinson Linda & Jinnett Jerry. Target marketing: researching, reaching, and retaining your target market. Michigan. Upstart Pub. Co. 1996. Dibb Sally & Simkin Lyndon. The Market Segmentation Workbook: Target Marketing for Marketing Managers. London. Cengage Learning EMEA. 1996. Ferrel, Odies & Hartline Michael. Marketing Strategy. London. Cengage Learning. 2010. Print. Read More