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Targeting

The document outlines the process of targeting customer segments in marketing, emphasizing the importance of selecting segments that align with a company's goals and capabilities for increased profitability and competitive advantage. It discusses factors to consider when choosing a segment, including profitability, strategic fit, and competitive comparison, while also highlighting the need for ethical targeting practices. Additionally, it provides a method for estimating market potential and revenue through population data and customer behavior metrics.

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Angelica Loreto
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4 views13 pages

Targeting

The document outlines the process of targeting customer segments in marketing, emphasizing the importance of selecting segments that align with a company's goals and capabilities for increased profitability and competitive advantage. It discusses factors to consider when choosing a segment, including profitability, strategic fit, and competitive comparison, while also highlighting the need for ethical targeting practices. Additionally, it provides a method for estimating market potential and revenue through population data and customer behavior metrics.

Uploaded by

Angelica Loreto
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

The crucial second step where a

business evaluates the customer


segments created in the first step and
selects the most attractive ones to
focus its marketing efforts on.

“Targeting: the selection of ideal customer segment(s).”


It is impossible to be everything to everyone in marketing.

Segments that align with the company’s goal


and abilities are chosen as the focus of its
efforts for greater opportunities.
Higher profitability
Customer loyalty
Time and cost-effective
Competitive advantage
HOW DO WE CHOOSE A SEGMENT TO TARGET?

Profitability: how financially


attractive the market segment
is, based on its size, growth
potential, and the possibility
that customers will generate
sustainable profit.
HOW DO WE CHOOSE A SEGMENT TO TARGET?

Strategic Fit: whether the


company is capable and Strengths Weaknesses
well-suited to serve the
segment based on its
strengths, resources, and Opportunities Threats
brand identity.
Market is Market doesn’t
attractive look so hot

Corporate
strengths Go for it! Hmm...

Less Capable Hmm... Avoid


HOW DO WE CHOOSE A SEGMENT TO TARGET?

Competitive Comparison: It is a
High Competitor 2
process of evaluating how a Competitor 3
Competitor 1
company’s strengths and
weaknesses measure up Quality Us

against its competitors to see Competitor 4


how customers perceive brands Low
in relation to each other. Low High
Price
Size Growth Competitors Fit Priority?

Segment 1 $1 mm 5% Few Yes ★


Segment 2 $2 mm 3% 1 big OK ?

Segment 3 $1 mm 3% Few, Weak OK ?

Segment 4 $4 mm 1% Few, Weak No Ø


sugary cereals and junk food to kids

Rotten form of cigarettes and alcohol to ethnic


minorities
targeting that
unethical marketers confusing and exploitative financial
have used: instruments to the elderly

marked-up goods and services to


socioeconomically disadvantaged
groups
Example:
Sta Mesa population: 22,000
The total number of potential
customers to determine the demand Market potential:
and the total possible revenue that 22,000 × 60% (16-60 age relevant)
can be generated. = 13,200
× 80% (busy individuals)
Estimation Process: = 10,560
[Link] all the data × 40% (uses laundry services)
[Link] your assumptions clear = 4,224
[Link] hard about segment
differences 4,224 × 20% (loyal customers)
= 1,056 potential loyal customers
Example:
Population Sta Mesa population: 22,000

Awareness
22,000 × 60% aware
Trial = 13,200
Repeat × 80% trial
= 10,560
Frequency
× 40% repeat
= 4,224
Population x %aware

Population x %aware x %trial x %repeat 4,224 × 4,160 per annum (P80 x 52wks)
= 17,571,840 potential revenue
(population x %aware x %trial x %repeat) x
Per annum purchase
Targeting is important but not difficult.

Choose market segments based on corporate fit and potential


profitability.

SWOT analysis helps marketers to clarify corporate fit for the company
and the industry.

Segment sizing is relatively straightforward; use secondary data and


customer surveys to estimate and refine the estimation.

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