Targeting/direction

1. Targeting/direction Once a market has been segmented, targeting becomes the next stage marketing planning. Targeting refers to the choice of the market segment/s the business wishes to sell and the related planning of marketing strategies. There are three broad targeting strategies: Undifferentiated marketing (mass marketing) Differentiated marketing Niche marketing

2. Undifferentiated/mass marketing Undifferentiated marketing also known as mass marketing or market aggregation, is the targeting strategy that ignores individual market segments. The business offers almost the same products to all consumers and promotes them in the same way. Examples of products that are mass marketed include Nokia, Apple and Microsoft.

3. Benefits of mass marketing The products can be sold to large number of consumers. They can also be sold in many different countries, a process known as global marketing. The result is increased profits. The business can benefit from economies of scale. A business can thus manufacture on a large scale and reduce the average costs per unit. This means that higher margin can be earned. There is no need to tailor different marketing mix for different segments. This can save the business a lot of time and resources.

4. Disadvantages Mass marketing can be quite wasteful for certain products. Specific customers are not targeted but are treated as any customer. Products which are mass marketed can face strong competition in markets where producers are effective in targeting market segments. Mass marketing is not suitable for certain products, e.g. high valued products.

5. Differentiated marketing • Differentiated marketing, also known as multi-segment marketing or selective marketing, is the targeting strategy that tailors a marketing mix for each segment in the market. • Advantages • Customers in each segment are more satisfied as there are different marketing mix for different segments. • Risks are spread by catering for several market segments. A decline in one segment can be compensated by a boom in another segment.

6. Disadvantages • Differentiated marketing is costly as a separate marketing mix has to be devised for each segment. • Marketing economies of scale cannot be fully exploited.

7. Niche marketing • Niche marketing also known as concentration marketing targets a small well defined market segment. Niche market segments usually cater for the high end luxury or speciality goods such as Cartier watches, Ferrari cars and Armani suits. It is the opposite of mass marketing. • Advantages • There is a better marketing focus as a small specific market is targeted. • There is less competition in niche markets. Businesses can charge higher prices and obtain higher margins.

8. Disadvantages Most niche markets are very small and hence limits the number of customers. Due to their small size, businesses in niche markets cannot exploit economies of scale.

9. Position maps • A position or perception map is a visual tool that shows the position of a product or brand in relation to others according to the perception of the customers. • The map plots customer perceptions using two variables for example price and quality • Examples:

12. Jack Trout 1969 • The position map was originally drawn by jack Trout in 1969 to classified different brands based on price and quality.

14. He classified • Premium brand as high price and high quality • Cowboy brands …..

15. Uses • 1. Position maps allow a business to identify any gaps in its product portfolio or in the market. For example, Mercedes introduced it’s a class cars in 1997 after finding that there was a market for small luxury cars. • 2. They can inform businesses of a need to reposition their products. For example, Singapore Airlines created Scoot a new budget airline subsidiary

16. 3. They also allow a business to assess not only its own portfolio but also of its rivals/competitors. As a result, a business can then position its products into an appropriate segment especially if the present segment is over crowded. • 4. Some businesses before deciding which product to develop, tries to analyse how the new brand will relate to other brands in the market.

17. Market positioning • Market positioning refers to how a business would rank its products according to the views of the public. It is usually done with the help of position maps.

18. USP • handout