Understanding Markets & Marketing
The principal purpose of marketing is to promote and at the same time facilitate exchange. Individuals and groups achieve what they need and want by exchanging products and services with other parties through marketing. Without these parties, exchange is unable to happen since these parties are the ones communicating about and delivering what they can offer. All parties should be able to freely accept or reject what others are offering. Therefore, marketing is different from other modes of acquiring goods such as through force, theft, begging, or self-production.
Marketing is said to be diversified, which means it does not pertain to any particular type of economy since goods should be bartered and marketed in all types of economies and societies. In addition, marketing is not limited to profit-oriented business. (Abell and Hammond, 1979, p. 78) Other institutions including hospitals, schools, and museums also make use of different forms of marketing. The consumers of today have determined themselves as having unique needs and wants. In fact, most consumers demand that businesses understand and meet those said needs.
In order to satisfy consumers, major marketers have shifted from casting a wide marketing net over a vast crowd to selling to a larger number or even millions of individual consumers. This shift often leads to targeting specific consumer segments. Target Marketing Target marketing is a process where a market is broken into segments in order for a company to focus on one or a few key segments. Most businesses obtain advantages and benefits from target marketing as it provides focus to all aspects of marketing processes.
Target marketing makes the basic marketing processes such as promotion, pricing, distribution easier and cost-effective. (Cornwell and Drenan, 2004, Journal of Macromarketing, vol. 24, no. 2, pp. 108) Say, if one plans to start a small business such as a catering business, instead of doing advertisements with a newspaper , the individual could start targeting a market with a direct mail campaign, which only goes to specific residents rather than using the newspapers that goes out to everyone. Some of the most common types of target marketing include geographic segmentation, psychographic segmentation, and demographic segmentation.
Geographic segmentation pertains to locations such as home addresses; psychographic segmentation pertains to lifestyle preferences such as pet lovers, health buffs, or urban dwellers; and demographic segmentation pertains to statistics that are measured such as income or age. Target marketing has several advantages when applied to businesses. These include the following: (Cornwell and Drenan, 2004, Journal of Macromarketing, vol. 24, no. 2, pp. 117-121) • Targeted Communication – As a business plans to apply target marketing, it is important to know how to communicate in a segment-specific way.
This is true even if the product or service being offered is identical in all market segments. Target marketing stimulates targeted communication to focus the features of a product or service that are most relevant to a particular segment. • Higher Market Shares – Target marketing allows marketing activities to be targeted at attractive market segments. Thus, this improves the competitive position of the business in terms of its relationship with channel partners, suppliers, and customers. Target marketing allows the brand fortification and ensures profitability.
Consequently, a business gains better chances to enhance or increase it market shares. • Serves Customers’ Needs and Wants Better – Target marketing allows a business to satisfy a variety of customer needs with a limited product ranges through utilizing various forms, incentives, bundles, and promotional activities. Take for example, Dell, the largest computer manufacturer today. Dell does not organize its website by product groups. Instead, its categories are by customer groups including privates, small business, large business, and public/state organizations. Dell offers the same products for each of these customer groups.
However, the company still applies product bundles and support services, which are tailored individually for the needs of each customer segment. • Opportunities for Growth – Target marketing allows a business to focus on customer segments that would possibly prefer for specialized niche players. Through target marketing, a business can establish its own niche products. As such, the business may be able to attract added customer groups. • Stimulating Innovation – Target marketing allows information to be provided to smaller unites in a total market, which share specific needs.
The identification of such needs permits a planned development of a new or improved product, which meets the needs and wants of these consumer groups. As a product is able to meet and exceeds the expectations of consumers through added superior value, the consumers would eventually be willing to purchase a product for a higher price. In effect, there would be increase in profitability and profit margins of the innovating business. • Higher Profits – Through a business’s initiation of target marketing, it is possible to establish premium consumer segments where consumers accept higher price levels.
These segments could be differentiated from mass markets through features such as exclusive points of sale, additional services, or product variations. An example of this is the higher price level in big cities, which contrasts to the usual segment-based price variation that is done by region. Understanding Consumer Segments and Behavior through Research If a business is interested in employing target marketing, the key is to do researches, which will help in defining its target market. Nowadays, firms, businesses, and organizations are relying much on market researches for the attitudinal analysis of consumers.
However, most of these firms, businesses, and organizations often overlook that that analysis of consumers’ attitudes is only one factor in trying to understand them. An explicit analysis of consumer’s attitudes requires an understanding of their actions and knows what and how they think. (Yavitz and Newman, 1994, p. 78) It is important that a business knows how consumers think in order to obtain a forecast of the behavior of consumers. Conversely, consumer behavior aids in forecasting consumer attitudes.