Target marketing aims to identify the most promising market segments for the company. It must be carried out before the launch of a new product/service. It requires dividing the market into targets or segments according to customer needs. The marketing strategy (in the form of a marketing mix) will depend on the targeting. Target marketing implies realizing one or more prior research to understand current and future needs.
Finally, it should be noted that target marketing can take place at different times in the life of a company:
- during the creation and launch of a new product or service
- within the framework of operational marketing activities
- What is the purpose of target marketing?
- When to carry out target marketing?
- The place of targeting in the marketing cycle
- The 3 types of marketing strategies that result from targeting
- Hyper-personalization, the ultimate result of target marketing?
- How to prepare your target marketing?
- How to use your target marketing?
- Tools and techniques for implementing target marketing
- Case studies
What is the purpose of target marketing?
The objective of target marketing is to focus the company’s resources on the specific market segment(s) with the most potential:
- segment(s) most likely to buy your product or service.
- segment(s) that bring(s) the most profit to the company
There are, therefore, two components to take into account when conducting target marketing:
- the size of the segment
- the profitability of the segment
By defining your target market in advance, you can tailor your products and ensure that your investments (in advertising, for example) will be concentrated on the people you have a chance of selling. Target marketing will therefore impact the implementation of your marketing mix (see our complete guide on the subject here).
When to carry out target marketing?
It would be wrong to think you should only carry out target marketing at the company’s launch. It should be done at every product launch and even after the launch.
If you need to meet your sales and growth goals, it’s a good time to check if you’re selling and marketing your products or services to the right people in the right way. You may also find that your current customers differ from those you are trying to target. If you can effectively cover both niches with the same message, you may have gone too far in your market (see example #4).
The place of targeting in the marketing cycle
You must place target marketing in a broader context to understand its meaning fully. It is only one step in the marketing cycle. The term “cycle” is important because it implies that the process is continuous. Too many companies think of these activities as an end in themselves. Remember that needs change, competition evolves, and customer behavior adapts. No matter how good your product or service is, it would help if you asked yourself essential questions regularly.Target marketing EN.pptx
Now let’s turn to the marketing cycle and targeting. As we explained above, target marketing consists of choosing the most promising customer segments. This implies that you have:
- understood the needs
- aggregated these needs into segments
- collected data on these segments.
Logically, the marketing cycle will start with market research, where qualitative techniques will be particularly useful. These techniques are indeed adapted to get to the bottom of current needs and anticipate future ones. To learn more, we refer you to our guide.
Once the needs have been analyzed, you can confirm the importance of the needs in the eyes of the respondents in a quantitative manner (panel survey). Thanks to control variables (socio-demographic, for example), you can open the doors to an initial segmentation.
|Tools and techniques
|Understand the needs
|Analysis and segmentation
|Analyze and aggregate needs into
|Choose the most attractive segment(s)
|Porter’s 5 forces
|Adapt your strategy according to the characteristics of the different segments chosen
|Activating segments (operational marketing)
The 3 types of marketing strategies that result from targeting
It is commonly accepted that 3 types of target marketing are possible. They give rise to 3 types of marketing strategies:
- mass marketing when there is no targeting
- segmented marketing is when the company targets several segments with its range of products or services
- differentiated marketing when the company targets only one segment
Mass marketing aims to reach all types of customers through maximum product exposure. Mass marketing is not necessarily the prerogative of a low-end positioning. Apple is clearly on mass marketing with its iPhone, yet it is a high-end product.
Examples of mass marketing: Aldi and Lidl, Google Analytics, social networks, linear TV channels.
Segmented marketing means that the company proposes products for several consumer segments. These companies, therefore, have a range of products/services that can attract different types of customers.
Examples of segmented marketing: car manufacturers, Disney.
Differentiated marketing is typical of a strategy that targets only one customer segment. This type of targeting is much more common than you think, especially in B2B.
Luxury brands inherently adopt differentiated marketing. They only target consumers with high purchasing power. The segmentation is done by belonging to the upper socio-professional categories.
However, some nuances are necessary. Some companies in the luxury sector have introduced less expensive products into their ranges precisely to attract less affluent buyers who aspire to own luxury items.
Examples of differentiated marketing: Louis Vuitton, Ferrari, Parlor (social network of the ultra-right in the United States), daily newspapers generally have a political “color” that makes them address a segment of readers.
We often talk about a 4th type of marketing: hyper-personalization. The principle is to propose different marketing for each customer. There is no longer a segment as such. Marketing is adapted to the level of the individual and no longer to the level of the group.
Hyper-personalization ultimately raises the question of a paradigm shift from deterministic to individualized marketing.
Artificial intelligence has long been seen as the key to achieving this goal. However, the reality has proven to be different from the theory:
- the data was not available in sufficient quantity to predict customer needs
- the quality of the data was insufficient to correctly model behavior
- it was technically impossible to produce individualized algorithmic recommendations
Even the most powerful algorithms (such as Netflix’s) produce recommendations at the level of groups of individuals. Hyper-personalized target marketing will therefore remain a dream for many years to come.
How to prepare your target marketing?
We distinguish 2 steps prior to target marketing:
- Analysis of the interests and needs of potential customers
- Segmentation of the market according to these interests and needs
Analysis of needs
To understand current and future needs, we recommend using qualitative methods. Individual interviews and focus groups are the most important techniques. See this article for an overview of each method’s advantages and disadvantages.
If you opt for individual interviews, one of the problems you will face is determining the number of interviews needed. To do this, go to this page, where you will find an interactive calculator that will give you an immediate answer.
Segments allow you to divide your customer base into homogeneous units, that is, units with the same “profile.”
There are many ways to segment a market:
- socio-demographic segmentation: this is the best-known segmentation. It assumes that the socio-demographic profile determines customers’ desires, needs, and purchases, which may be true to some extent. Segmentation can be based on age, gender, location, income, socio-professional category, or several factors.
- segmentation based on needs: this type of segmentation is much finer. However, it requires an in-depth analysis of needs and the ability to aggregate them. You will need to conduct qualitative research to achieve this type of segmentation.
The segmentation exercise sometimes ends with the creation of personas. Personas are imaginary figures that represent an example of a customer within each segment.
How to use your target marketing?
Target marketing is not an end in itself. It must serve a purpose. That something is to conquer the market. To achieve this, you will need to:
- define a positioning for each segment
- activate the chosen segments
Define a positioning
For each targeted segment, you may have to adapt your positioning. For the same product/service, motivations may vary from one segment to another. The competitive landscape is also potentially different. Some competitors may only be present in one segment.
The positioning will vary from one segment to another and influence your marketing mix. To know everything about the marketing mix.
Activate the chosen segments
Finally, you will need to activate the segments. There are 2 main approaches:
You should choose the most appropriate approach according to the segment’s characteristics.
Tools and techniques for implementing target marketing
Target marketing can be complicated if you offer a mass product or service or if you have a very diverse customer base. Target markets can also be influenced by factors such as buying cycles, product shelf life, and other factors that may not be considered by those interested in what you are selling.
Targeting a particular market doesn’t mean excluding people who don’t fit your criteria. For example, if you are in B2B marketing, consider segmenting based on the size of your target customers.
To choose the right segment(s), the table below outlines the key criteria, the questions to ask, and the tools to use.
|Questions to ask
|Tools/techniques to use
|Is the segment size sufficient to meet the company’s profitability goals?
|Who are the other players positioned in this segment? Are they numerous?
|Are there enough competing suppliers to take advantage of relatively low production costs?
|Ease of entry into the market
|What are the barriers to entry in this segment? Should we expect actions from competitors to prevent entry? Is a large initial investment required?
The contents proposed by Netflix are supposed to meet the expectations of the greatest number of people. The target market is, therefore, as large as possible. The contents are not segmenting, and we can say that Netflix is a company that aims at the “mass market.”
To increase customer loyalty, Netflix’s target marketing is expressed on the platform, thanks to recommendation algorithms. The algorithms allow users to be targeted almost individually by recommending content adapted to their tastes. Each subscriber, therefore, has the impression that the recommended content is only for him.
Target marketing is expressed in several ways in a supermarket. There is no targeting in the physical store since a supermarket is aimed at everyone.
Everything changes when it comes to attracting customers to the store. Retailers deploy techniques that allow them to segment customers before stimulating them through different channels. One example is personalized promotions, one of the most complicated targets marketing operations can realize. You need to:
- segment your customer base
- use an algorithm to recommend the right products to the right micro-segment
- print the promotional coupons
- send them
And all this in a very short time and at regular intervals to build customer loyalty.
The Walt Disney Company is associated with creating content for young children in the collective imagination. This was indeed its original specialty, but it has since expanded greatly. It has moved from differentiated marketing (children) to segmented marketing. Indeed, The Walt Disney Company is a group in which several production studios are integrated. Pixar was acquired in 2006, Marvel in 2009, and Lucasfilm in October 2012.
Pixar’s animated films are aimed at a wider audience than just children, as is the Marvel franchise. Lucasfilm productions also attract a largely adult audience since most Star Wars fans are between 18 and 44 years old.
Cognac is a very interesting case study in terms of segmentation and targeting. Originally a niche product reserved for an aging customer (differentiated marketing), it has become, under the impetus of American rappers, a product aimed at a wider target (segmented marketing).
In the early 2000s, Busta Rhymes made cognac an ultra-popular product in the United States with his video “Pass the Courvoisier” (Courvoisier is a famous cognac brand). In 2016-2017, the United States represented 78.7% of the cognac market.
Targeting is an important step in the marketing cycle. It marks the beginning of concrete actions to introduce the product/service to one or several precise market segments. The marketing mix will depend on this targeting, as will the operational marketing actions.
Choosing the right segments to focus on is ultimately a key success factor for the company.
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