In this article we will discuss about the top five types of market segments that can be targeted by a company. The segments are:- 1. Single Segment 2. Selective Specialization 3. Product Specialization 4. Market Specialization 5. Full Market Coverage.
Target markets are those markets to which the company intends to offers its marketing programme and serve them effectively. According to Kotler, target marketing can be defined as “the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.”
After the segments have been evaluated, the next step is to select the market segment which the company should target. The stages for deciding the target market involves evaluation of the market segments, selection of the appropriate segments, and preparing strategies to satisfy the needs of the particular segments.
Prior to evaluation and selection of its target market, the firm must first introspect its own strengths and weaknesses in order to know its competitive advantage; the type of market it can satisfy with the resources available with it; type of market, and size of market it can serve effectively.
The segment to be served is evaluated on the basis of the resources available with the market; relevance of target market to the firm; accessibility; size and volume of the business; and structural attractiveness.
While selecting the target market, the marketer should go for segments whose tastes and preferences are aligned with the company’s long-term and short term objectives. Due to target marketing both the customer and the company are mutually benefitted since the former obtains maximum satisfaction and the letter’s business objectives are achieved in terms of good market image and profitability.
The last step in target market is strategizing. Target market strategies are ways in which organizations can decide and finalize a prospective target audience for their product or service. There are five types of market segment which the company can target based on their capabilities.
Following are the types of market segments that can be targeted:
1. Single Segment
2. Selective Specialization
3. Product Specialization
4. Market Specialization
5. Full Market Coverage
1. Single Segment:
Single segment strategy is also known as concentrated strategy. It is applied to single product for a single market segment i.e. company targets a single market segment with a particular product. It is usually preferred by small firms having limited financial resources. It enable the marketers to gain maximum profits through better sales due to proper focus on the taste and preferences of the customers of that segment.
Though it is a very profitable strategy it is a risky proposition since within some time if the customers stop liking the product due to boredom or gets attracted towards other products due to up-gradation in technology, then the company may face severe losses due to its heavy dependency on that segment and product. In order to avoid such risk, companies try to diversify its segments as well as its products. Eg. Rolex watches.
2. Selective Specialization:
Selective specialization is also known as differentiated marketing. In this, similar or different products are targeted, towards different market segments through different value propositions or distribution channels.
Company concentrates on a number of segments in order to minimize the risk since even if one segment becomes unattractive, the company has other segments to fall upon and thereby ensure that the company’s profit is not harmed. Eg. Manufacturer of motorcycles provide different motorcycles catering to needs of the different segment.
3. Product Specialization:
This strategy is adopted by companies which have unique product and targets it across various segments i.e. company specializes in a particular product and sells the product to different segments of customers. Thus, the same product is sold across different segment. Eg. Manufacturer of fire extinguisher will supply the same product to government offices, hospitals, societies, corporate, education institutes, etc.
This strategy is adopted by those manufacturers who are considered as best in that product category and therefore has a strong customer base. However, the marketer will have to bear huge losses if the technology becomes obsolete.
4. Market Specialization:
If a company has a command over a market segment, then it creates different products to serve this segment i.e. company targets a particular customer group and caters to different needs of the same group. Eg. Manufacturer of baby products like shampoo, powder, oil, soap, etc. will supply all these products to a household having an infant or small child. However, in this case, the company will have to bear losses if that market segment is affected by any environmental factor (internal or external).
5. Full Market Coverage:
Under this, huge companies target all segments of market and try to cater too many of the needs of these segments i.e. the company provides multiple products for all the segments. This type of targeting is preferred only by very large companies which have huge resources that are required to cater the needs of all the segments. Eg. A company like ITC has various segments for different products.
Criteria for Target Market Selection:
Following are 5 criteria that are essential while selecting a target market:
i. Size of the Market:
Company should consider the market size it can cater its offering too and also should consider whether that market is worth pursuing.
ii. Expected Growth:
Company should consider whether the market is profitable and shows indications of growth in future, irrespective of its market size.
iii. Competitive Position:
Company should consider the level of competition in the market since low competition means an attractive market.
iv. Cost to Reach:
Company should consider the cost of accessibility to the market. Markets’ needing high cost for reaching the customers is not a feasible one.
v. Compatibility:
Company should consider whether the needs of the segment market are aligned with the company’s objectives.