Target marketing is a set of promotional events aimed at promoting a particular product to one of the market segments. A similar strategy was developed at the end of the twentieth century and is now being applied almost universally. It is suitable for use by both large entrepreneurial companies and small producers. The very appearance of such a strategy perfectly characterizes the market trends of the modern world.
Reasons for the appearance
Target marketing began to develop in Western countries in the early nineties. This is due to new solutions in the field of logistics and production. In many countries, purchasing power has increased. However, it was disproportionate to increased consumption around the world. Many sociologists attribute this to an increase in people's desire for conspicuous consumption, that is, demonstration of their social status through brands and services. With increasing levels of consumption, consumer choices for goods also increased. This led to the formation of preference categories for different social groups.
With the development of marketing campaigns, market segmentation has been facilitated. This is primarily due to the spread of the Internet. Also important was the opening of markets in Eastern Europe. After the collapse of socialist regimes, these countries became a convenient outlet for many monopolists.
Market breakdown
Target marketing involves a set of measures, of which only the final stage is assigned to the formation of the advertising campaign itself. The first step is to choose a market. For example, an entrepreneur is manufacturing sneakers. It is necessary to analyze the basic requirements of consumers for the product.
Based on this data, groups are formed. That is, if it was possible to determine that young people aged eighteen to twenty-five want to wear high-soled sneakers, then they are identified in one group. Sneakers and heavy music fans are attracted to sneakers. They also form a group. These groups are consumer segments.
Analysis
Then comes the study of consumer groups. The distinguishing features and markers of each of them are determined. Consumers of the entire segment are differentiated with respect to their preferences. Then they distinguish race, social status, sphere of interests, religious views and other parameters that can separate them from other consumers. The following is the selection of the most profitable segment.
Target marketing involves exploring production opportunities at an early stage. Based on these studies, the segment in which the strategy will work is selected. For example, a thorough analysis of the means of production showed that the production of high-sole sneakers would be the least expensive, while the production of sneakers would be twenty percent more expensive. At the next stage, marketing target groups and their willingness to purchase goods will be studied.
After obtaining data on the purchasing power of each of the priority groups, there is a correlation with studies of production costs in order to obtain a complete picture. Large companies also pay attention to the brand image and its possible consequences from the launch of a new product line. Small entrepreneurs are not bothered by this option.
Detailed assessment
The last stage of the research phase is the assessment of the competitive ability of the product.It is necessary to examine all the goods and services that apply to the selected market niche. Any methods are suitable at these stages. It's no secret that large companies are engaged in industrial espionage before approving the launch of a new production. It is very important to highlight the disadvantages of competitors' products in order to monopolize the niche before the response from the “opponents”. For example, one of the companies produces sneakers that your target consumer likes.
However, shoes are made from animal materials, which is not like the adherents of vegan culture. It follows from this that it is necessary to exclude all materials of animal origin in order to have advantages over competitor goods.
Target Marketing Development
Already at the stage of assessing the competitive ability of a product, you can start a study using focus groups. These are random people from the environment of target consumers. You need to select the most dissimilar people (for example, of different ages, but within the limits indicated in the early stages of research) from the entire segment and invite them to test your product or service. All customer observations and comments must be carefully studied. As practice shows, studies of even a small sample of consumers allow us to provide a complete vision of the situation. There are many ways to test a product. Hidden polls are pretty common. For example, people are given the opportunity to participate in some kind of social program and, as if by chance, they offer to evaluate a product. Such correctly constructed tests will give the most accurate picture.
Specific example
The target group itself can be divided into various subgroups. For example, the well-known company "Aks", which produces personal hygiene products, conducted large-scale research before launching a new line of "seductive deodorants." A target group was selected and a concept was developed for it. However, during the focus group survey, the segment was divided into three more categories. After that, one of these three groups was chosen, on which the marketing strategy was oriented. The result was the overwhelming success of the product.
Risk assessment
The concept of targeted marketing involves a detailed study of all the possible consequences even before the start of production. Small entrepreneurs should pay special attention to state rules and standards for goods in the segment. The costs of all certificates and licenses should be included in the estimate.
It also evaluates the possible reactions of competitors. If other enterprises do not pay attention to the segment you have chosen, then most likely they will not do this until you make a big profit. However, the market is designed in such a way that any niche is always at least partially, but busy. If your consumer wants to buy sneakers that you are going to produce, this does not mean that until this time he goes barefoot.
Target Marketing Activities
The main point in developing an advertising strategy is the positioning of goods on the market. There are two most common options.
The choice of a specific positioning is influenced by many factors. The first option involves placing your product “horizontally” with the goods of one of the competitors. That is, you set a goal to gain only your market share, and not the entire segment. Such a strategy is suitable if:
- Consumer demand for this product category is greater than market supply. In this case, you simply fill the empty space and do not cause aggressive actions from the competitor.
- Your company has the capabilities and means to produce goods in such a way that its price is below the market average.
- The selected production concept allows you to realize the benefits of your company (the availability of equipment, technology, lengthy scientific research in this area and so on).
A new word in the market
The next option for positioning involves the development of an absolutely innovative product that is not yet on the market. This is a pretty risky way. Innovation in the market can bring both overwhelming success and a bitter defeat.
First, you need to make sure that your innovation has capabilities that other products cannot offer. If successful, one should be prepared for aggressive expansion, and targeted marketing should be aimed at this. Monopolistic organizations can simply steal your idea. Implementing it will be much easier for them at the expense of their resources. So, the conditions necessary for introducing innovations in the market:
- A detailed assessment of the technical capabilities of production. New products may require equipment upgrades or changes to the logistics system.
- Comparison of economic opportunities with peers closest to the product. Low price plays a rather important role at the initial stage of introduction.
- Estimation of the possible number of consumers. Even if the product is completely innovative, it can attract only a small number of buyers.
So, the target marketing program focuses on a specific segment of consumers with similar preferences for a product or service. The strategy focuses only on this group and sets itself the task of satisfying all the requirements of the chosen “goal” (consumer group). This will quickly occupy a market niche and provide long-term passive income. Elements of targeted marketing are designed to minimize risks already at the stage of concept development and to ensure quick market capture.