Comparative Analysis of Target Market Strategies and Segmentation

This report provides a comprehensive analysis of target market strategies, focusing on undifferentiated and concentrated targeting approaches. It begins by defining undifferentiated targeting, also known as mass marketing, where the entire market is viewed as a homogeneous aggregate. The report highlights the benefits, such as a wide audience and lower costs, and provides examples like toothpaste. It then contrasts this with concentrated targeting, where marketing efforts are focused on a specific segment, offering advantages for smaller companies with limited resources, and illustrates this with examples. The report also covers market segmentation, emphasizing the importance of measuring segments based on geographic, demographic, psychographic, and behavioral factors. The report then details the process of measuring the success of segmentation efforts using the criteria of measurability, accessibility, sustainability, and actionability to determine the profitability of a given segment. The report concludes by stressing the need for continuous evaluation and refinement of segmentation strategies for effective marketing.

Identification of Target Markets
Undifferentiated Targeting
Viewing the market as a homogeneous aggregate leads to undifferentiated
targeting and mass marketing.
Learning Objectives
Evaluate the benefits and drawbacks of undifferentiated targeting in
consumer marketing
Key Takeaways
Key Points
 Undifferentiated targeting occurs when the marketer ignores the
apparent segment differences that exist within the market and uses a
marketing strategy that is intended to appeal to as many people as
possible.
 For certain types of widely consumed items (e.g., gasoline, soft drinks,
white bread), the undifferentiated market approach makes the most
sense.
 The benefits to undifferentiated targeting include a wide audience,
lower (relatively) research and marketing costs, and a higher potential
for sales volume.
Key Terms
 Mass Marketing:A market coverage strategy in which a firm decides
to ignore market segment differences and appeal to the whole market
with one offer or one strategy.
Undifferentiated targeting occurs when the marketer ignores the apparent
segment differences that exist within the market and uses a marketing
strategy that is intended to appeal to as many people as possible. In
essence, the market is viewed as a homogeneous aggregate. Traditionally,
undifferentiated marketing (also known as ” mass marketing “) has focused
on radio, television, and newspapers as the medium used to reach this broad
audience. By reaching the largest audience possible, exposure to the product
is maximized. In theory, this would directly correlate with a larger number of
sales or buy in to the product. It is the technique of trying to spread our
marketing message to anyone and everyone who are willing to listen. A
truckload of general advertising is done to the mass market in the hope that

some of them will hit a target. It enables us to reach a wide range of services
to take any job that comes on our way.
Products
For certain types of widely consumed items (e.g., gasoline, soft drinks, white
bread), the undifferentiated market approach makes the most sense. For
example, toothpaste (such as the brand Crest ) isn’t made specially for one
consumer, and it is sold in huge quantities. A company or individual who
manufactures toothpaste wishes to get more people to buy their particular
brand over another. The goal is that when a consumer has the option to
select a tube of toothpaste, he would remember the product that was
marketed. Often, this type of general appeal is supported by positive,
emotional settings, and a great many reinforcers at the point of purchase.
Walk through any supermarket, and you will observe hundreds of food
products that are perceived as nearly identical by the consumer and are
treated as such by the producer, especially generic items. Many mass
marketed items are considered staple items. These are items people are
accustomed to buying new when their old ones wear out (or are used up).
Crest Toothpaste: Toothpaste is a widely consumed product. Toothpaste isn’t marketed to a
particular market segment.

Identifying products that have a universal appeal is only one of many criteria
to be met if an undifferentiated approach is to work. The number of
consumers exhibiting a need for the identified product must be large enough
to generate satisfactory profits. A product, such as milk, would probably
have universal appeal and a large market, something like a set of dentures
might not. However, adequate market size is not an absolute amount and
must be evaluated for each product. Two other considerations are important:
the per unit profit margin and the amount of competition. Bread has a very
low profit margin and many competitors, thus requiring a very large
customer base. A product such as men’s jockey shorts delivers a high profit
but has few competitors. Success with an undifferentiated market approach
is also contingent on the abilities of the marketer to correctly identify
potential customers and design an effective and competitive strategy. Since
the values, attitudes, and behaviors of people are constantly changing, it is
crucial to monitor these changes.
Benefits
 Wide audience: Since the target audience is broad, the number of
successful hits is high despite of the low probability of a single person
turning up.
 Less risky: If all the efforts in one particular area goes in vain, still the
eventual loss is less compared to a loss in the narrowly focused area.
 Production cost per unit are low on account of having one production
run for homogeneous product.
 Marketing research cost and advertising cost are relatively low.
 Higher potentials of sales volume and efficiency of scale in a much
larger market.
Concentrated Targeting
Concentrated marketing is a strategy which targets very defined and specific
segments of the consumer population.
Learning Objectives
Evaluate the advantages and disadvantages of adopting concentration
strategies in consumer marketing

Key Takeaways
Key Points
 An organization that adopts a concentration strategy gains an
advantage by being able to analyze the needs and wants of only one
segment and then focusing all its efforts on that segment.
 Concentrated targeting is particularly effective for small companies with
limited resources as it does not require the use of mass production,
mass distribution, and mass advertising.
 Since the company has focused all their efforts on one market
(essentially putting all their eggs in one basket), the firm is at risk for
failing if demand decreases.
Key Terms
 market segment:Market segmentation is a marketing strategy that
involves dividing a broad target market into subsets of consumers who
have common needs and desires as well as common applications for the
relevant goods and services.
An organization that adopts a concentration strategy chooses to focus its
marketing efforts on only one very defined and specific market segment.
Accordingly, only one marketing mix is developed. For example, the
manufacturer of Rolex watches has chosen to concentrate on the luxury
segment of the watch market.
An organization that adopts a concentration strategy gains an advantage by
being able to analyze the needs and wants of only one segment and then
focusing all its efforts on that segment. They can focus all of their efforts to
satisfying the needs of one group and do it well. This can provide a
differential advantage over other organizations that market to this segment
but do not concentrate all their efforts on it. Concentrated targeting is
particularly effective for small companies with limited resources as it does
not require the use of mass production, mass distribution, and mass
advertising. However, there is no increase in the total profits of the sales as
it targets just one segment of the market.

CVS : As a concentration strategy, CVS targets women because they make up 80% of the chain’s
customer base.
The primary disadvantage of concentration strategy is related to the demand
of the segment. As long as demand is strong, the organization’s financial
position will be strong. If demand declines, the organization’s financial
position will also decline. Since the company has focused all their efforts on
one market (essentially putting all their eggs in one basket), the firm is at
risk for failing. Moreover, if a firm has yet to establish its loyalty among
customers, a small hit in population or consumer taste can greatly affect
their position.
Measuring a Successful Segmentation
Segmentation is a central aspect of a marketing strategy, and must be
constantly assessed, measured, validated, and refined through financial and
statistical methods.
Learning Objectives
Recognize the variables involved in segmentation, and how different
segments can be measured for profitability

Key Takeaways
Key Points
 Selling to the entire market is often less efficient than identifying,
filtering, and measuring the performance of various segments to find a
preferred market segment, or target market.
 Geographic, demographic, psychographic and behavioral factors are all
valid and commonly used starting points for the division of a broader
market into segments.
 Once a segment is identified, organizations should consider the
measurability, accessibility, sustainability, and actionability of that
particular segment. This helps determine if the firm can maintain a
strong position within the segment.
 It is also useful to run iterative tests across other potential target
markets as a benchmark, justifying (or not!) the decision to pursue a
given segment.
 From a practical point of view, all of this should allow the firm to
determine if a given segment is profitable in the long term and optimal
compared to other ways to segment the market.
Key Terms
 segmentation:The process of identifying different consumer groups
within a broader market, focusing on identifying the ideal segments for
a marketing plan.
Segmentation
Strategically speaking, trying to sell to the entire market is often less
efficient than identifying, filtering, and measuring the performance of various
segments to find a preferred market segment, or target market. When
pursuing the ideal target market(s), a key success factor is the ability to
measure successful and unsuccessful segmentation attempts.
Measuring Market Segments
When measuring different market segments, there are countless variables
organizations can consider when developing a marketing plan. Geographic,
demographic, psychographic, and behavioral factors are all valid and
common starting points for the division of a broader market into segments,
based on variables like age, gender, buying behavior, culture, location,

values, climate, spending power, marital status, profession, education, and
religion.
Demographic Segmentation: When measuring market segments, variables can be utilized visually
to identify specific target segments within a population.
By dividing the population based upon segments such as these,
organizations can begin to consider how each variable impacts the likelihood
of an initial purchase and/or repeat purchases over a given period of time.
This allows the qualitative variables above to begin accumulating
quantitative data points, which helps organizations look at trends in the past
to predict or forecast future outcomes.
For example, a shoe manufacturer finds that the likelihood of turning an
advertisement online into an online purchase is 50% higher with females
between the ages of 18-30 than with males in the same age bracket.
Similarly, the shoe manufacturer notices that specific cities with relatively
mild climates convert 25% more often than cities with extreme climates. As
a result, a segment is developed for young females in those cities. Instead of
paying for advertising across an entire market, the organization can spend
significantly less capital and procure a much better success rate on
marketing efforts.

Determining Successful Segmentation
Once segments are identified, the organization should be investing enough
into each segment to procure meaningful data on performance. As each
segment is a small piece of a broader market, it’s useful to carefully consider
if the organization is focusing on the ideal consumer group. There are four
useful characteristics to consider when measuring segmentation:
1. Measurability—First and foremost, the segment itself should be easily
measured. This means that information is available on the overall
market potential (size of the market), as well as the competitive
position of the companies competing for market share.
2. Accessibility—Firms must also be able to communicate directly with key
consumers in order to understand their core segment and tell the brand
story.
3. Sustainability—Overall profitability must be proven in a given segment
in order to successfully do business. Long-term potential sustainability
can be measured based on past consumer behavior coupled with the
organizational ability to produce products at the right price.
4. Actionability—Finally, the firm should be able to produce a competitive
advantage within this particular segment. There should be actionable
opportunities for the organization to build a strong and differentiated
position within the segment.
If each of these attributes are measurable, the firm can look at a few key
statistics of the marketing plan to determine if a given segment is
sustainable. Most notably, the organization should be able to generate a
strong position within the segment, where the overall remaining profit after a
sale exceeds the cost of production alongside the cost of the marketing
expenses required to get the product in front of the target market.
The organization should also run careful, iterative tests across other
potential target markets as a benchmark. This allows the organization to
directly see the value of working with a given segment (compared to other
potential segments).

Marketing Strategy and Segmentation: A business plan integrates with the marketing strategy.
The above table shows relevant metrics and considerations when identifying key segments.
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