GUIDELINES FOR ‘SELECTING TARGET-MARKETS’:
Compatible with Organisational Goal & Image,
Compatible with Resources,
Profitable,
Lesser Competition.
TARGET-MARKET STRATEGY:
1) AGGREGATION STRATEGY:
Here total market is treated as a single segment, as all customers are considered to have “identical or similar demands”. This is also called as a
“Mass Marketing Strategy”.
Advantages:
Management can develop a single mix by having a shotgun approach,
Costs are minimised, Efficiency is improved, Economies of scale are obtained,
Inventory costs are Reduced, thus Promotion costs are Minimised.
The Strategy is accompanied by Product-Differentiation. - i.e –
(How does one Company manage to differentiate itself from Competing Brands, through Packaging, Colour, or Promoting a Feature or Benefit, that differentiates it from others.)
When This Strategy Should Be Adopted ?
When majority of Customers in segment in the total market are expected to respond in very similar fashion to the Marketing Mix. Appropriate, when Firms are Marketing & Undifferentiated.
2) SINGLE SEGMENT STRATEGY:
Selecting one Segment from the total market, one Marketing Mix for a Particular Segment, is also known as “ Concentration Strategy ”.
Advantages:
Penetrate Market (Specialist),
Limited Resources required.
If Segment is small, Large Firms will not enter.
R I S K S:
Demand may Decline,
Difficult to Expand into other segments, due to Strong Brand image,
3) MULTIPLE SEGMENT STRATEGY:
Two or more Different Group of Customers are identified as Target, Provided, each Segment is big enough to generate Profit. Separate Marketing Mix is developed for each Segment.
Seller will usually develop Different Versions of Basic Products for each Segment. OR
Same Product with Different Distribution-Channels, Promotional Appeals
Advantages:
Higher Sales,
Seasonal Demands can be met,
Excess Production Capacity can be utilised.
Disadvantages:
Cost of Production/Promotion,
Inventory Costs are Higher,
Distribution Costs are Higher.
