Executive Summary Dgk

Companies usually are more effective when they target their markets. Target marketing involves three activities: market segmentation, market targeting, and market positioning. Markets can be targeted at four levels: segments, niches, local areas, and individuals. Market segments are large, identifiable groups within a market, with similar wants, purchasing power, location, buying attitudes, or buying habits. A niche is a more narrowly defined group.

Many marketers localize their marketing programs for certain trading areas, neighborhoods, and even individual stores. The ultimate in segmentation is individual marketing and mass customization, a trend that is growing as more customers take the initiative in designing and buying products and brands. In addition, marketers must analyze the patterns of segmentation in a market to get a sense of their positioning alternatives and that of the competitors.

Markets are segmented in a three-step procedure of surveying, analyzing, and profiling. The major segmentation variables for consumer markets are geographic, demographic, psychographic, and behavioral, to be used singly or in combination. Business marketers can use all of these variables along with operating variables, purchasing approaches, situational factors, and personal characteristics. To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable.

Once a firm has identified its market-segment opportunities, it has to evaluate the various segments and decide how many and which ones to target. In evaluating segments, managers look at the segment's attractiveness indicators and the company's objectives and resources. In choosing which segments to target, the company can focus on a single segment, selected segments, a specific product, a specific market, or the full market; in the full market, it can use either differentiated or undifferentiated marketing. It is important for marketers to choose target markets in a socially responsible manner, by ensuring that the targeting serves the interests of the market being targeted as well as the company.

NOTES

1. Regis McKenna, "Real-Time Marketing," Harvard Business Review, July-August 1995, p. 87.

2. See James C. Anderson and James A. Narus, "Capturing the Value of Supplementary Services," Harvard Business Review, January-February 1995, pp. 75-83.

3. See Tevfik Dalgic and Maarten Leeuw, "Niche Marketing Revisited: Concept, Applications, and Some European Cases," European Journal of Marketing 28, no. 4 (1994): 39-55.

4. Hermann Simon, Hidden Champions (Boston: Harvard Business School Press, 1996).

5. Paul Davidson, "Entrepreneurs Reap Riches from Net Niches," USA Today, April 20, 1998, p. B3.

6. See Don Peppers and Martha Rogers, The One to One Future: Building Relationships One Customer at a Time (New York: Currency/Doubleday, 1993).

7. B. Joseph Pine II, Mass Customization (Boston: Harvard Business School Press, 1993); B. Joseph Pine II, Don Peppers, and Martha Rogers, "Do You Want to Keep Your Customers Forever?" Harvard Business Review, March-April 1995, pp. 103-14.

8. "Creating Greater Customer Value May Require a Lot of Changes," Organizational Dynamics, Summer 1998, p. 26.

9. Andy Wang, "CDuctive.com Kicks Off New MP3 Store," E-Commerce Times, June 2, 1999, www.ecommercetime.com; Erick Schonfeld, "The Customized, Digitized, Have-It-Your-Way Economy," Fortune, September 28, 1998, pp. 115-24; Jim Barlow, "Individualizing Mass Production," Houston Chronicle, April 13, 1997, p. e1; Sarah Schafer, "Have It Your Way," Inc., November 18, 1997, pp. 56-64.

10. Alan R. Andreasen and Russell W. Belk, "Predictors of Attendance at the Performing Arts," Journal ofConsumer Research, September 1980, pp. 112-20.

11. For a market-structure study of the hierarchy of attributes in the coffee market, see Dipak Jain, Frank M. Bass, and Yu-Min Chen, "Estimation of Latent Class Models with Heterogeneous Choice Probabilities: An Application to Market Structuring," Journal of Marketing 1Research, February 1990, pp. 94-101.

12. Kate Kane, "It's a Small World," Working Woman, October 1997, p. 22.

13. Leah Rickard, "Gerber Trots Out New Ads Backing Toddler Food Line," Advertising Age, April 11, 1994, pp. 1, 48.

14. Lisa Napoli, "A Focus on Women at iVillage.com," New York Times, August 3, 1998, p. D6; Linda Himelstein, "I Am Cyber-Woman. Hear Me Roar," Business Week, November 15, 1999, p. 40.

15. For more on generations, see Michael R. Solomon, Consumer Behavior, 3d ed. (Upper Saddle River, NJ: Prentice-Hall, 1996), ch. 14; and Frank Feather, The Future Consumer (Toronto: Warwick Publishing Co., 1994), pp. 69-75.

16. Geoffrey Meredith and Charles Schewe, "The Power of Cohorts," American Demographics, December 1994, pp. 22-29.

17. Andrew E. Serwer, "42,496 Secrets Bared," Fortune, January 24, 1994, pp. 13-14; Kenneth Labich, "Class in America," Fortune, February 7, 1994, pp. 114-26.

18. "Lifestyle Marketing," Progressive Grocer, August 1997, pp. 107-10.

19. Peter Burrows, "Can Apple Take Its Game to the Next Level?" Business Week, December 20, 1999, p. 52.

20. Tom Miller, "Global Segments from 'Strivers' to 'Creatives,' " Marketing News, July 20, 1998, p. 11.

21. Junu Bryan Kim, "Taking Comfort in Country: After Decade of '80s Excess, Marketers Tap Easy Lifestyle as Part of Ad Messages," Advertising Age, January 11, 1993, pp. S1-S4.

22. Jeff Gremillion, "Can Smaller Niches Bring Riches?" Mediaweek, October 20, 1997, pp. 50-51.

23. This classification was adapted from George H. Brown, "Brand Loyalty—Fact or Fiction?" Advertising Age, June 1952-January 1953, a series. See also Peter E. Rossi, R. McCulloch, and G. Allenby, "The Value of Purchase History Data in Target Marketing," Marketing Science 15, no. 4 (1996): 321-40.

24. Other leading suppliers of geodemographic data are ClusterPlus (by Donnelly Marketing Information Services) and C.A.C.I. International, which offers ACORN.

25. Christina Del Valle, "They Know Where You Live—and How You Buy," Business Week, February 7, 1994, p. 89.

26. See Michael J. Weiss, The Clustering of America (New York: Harper & Row, 1988).

27. Jesse Berst, "Why Small Business Is Suddenly Big Business," ZDNet AnchorDesk, November 29, 1999, www.anchordesk.com; Michele Marchetti, "Dell Computer," Sales & Marketing Management, October 1997, pp. 50-53.

28. Geoffrey Brewer, "Lou Gerstner Has His Hands Full," Sales & Marketing Management, May 1998, pp. 36-41.

29. V. Kasturi Rangan, Rowland T. Moriarty, and Gordon S. Swartz, "Segmenting Customers in Mature Industrial Markets," Journal of Marketing October 1992, pp. 72-82.

30. For another interesting approach to segmenting the business market, see John Berrigan and Carl Finkbeiner, Segmentation Marketing: New Methods for Capturing Business (New York: HarperBusiness, 1992).

31. Wendy Brandes, "Advertising: Black-Oriented Radio Tunes into Narrower Segments," Wall Street Journal, February 13, 1995, p. B5; "Emmis Reports Record Third Quarter" Emmis, PR Newswire, December 21, 1999, www.prnewswire.com.

32. Tom Davey, "Intel Reorganization Reflects Changing Market," Information Week Online, November 25, 1999, www.informationweek.com.

33. See Norton Paley, "Cut Out for Success," Sales & Marketing Management, April 1994, pp. 43-44.

34. See Bart Macchiette and Roy Abhijit, "Sensitive Groups and Social Issues," Journal of Consumer Marketing 11, no. 4 (1994): 55-64.

35. Barry Meier, "Data on Tobacco Show a Strategy Aimed at Blacks," New York Times, February 6, 1998, p. A1; Gregory Freeman, "Ads Aimed at Blacks and Children Should Exact a High Price," St. Louis Post-Dispatch, p. B1.

36. Roger O. Crockett, "They're Lining Up for Flicks in the 'Hood,'" Business Week, June 8, 1998, pp. 75-76.

37. See "Selling Sin to Blacks," Fortune, October 21, 1991, p. 100; Martha T. Moore, "Putting on a Fresh Face," USA Today, January 3, 1992, pp. B1, B2; Dorothy J. Gaiter, "Black-Owned Firms Are Catching an Afrocentric Wave," Wall Street Journal, January 8, 1992, p. B2; and Maria Mallory, "Waking Up to a Major Market," Business Week, March 23, 1992, pp. 70-73.

Continue reading here: Brand Strategy Decision

Was this article helpful?

0 0