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Developing a Marketing Strategy
To implement the marketing concept, a business needs to develop
and maintain a marketing strategy, the plan of action for using the
firm’s resources and advantages to meet its objectives. A marketing
strategy consists of two major steps: selecting a target market and de-
veloping, pricing, promoting, and distributing a product to that target
market.
Selecting a Target Market
A market is a group of people who have a need, purchasing
power, and the desire and authority to spend money on goods, services,
and ideas. Anytime a specific market can be delineated, the potential
for a target market exists. A target market is a group of buyers for
whom the organization tailors a marketing strategy; it is a group of
consumers on whose needs and wants the organization wishes to focus.
IBM, for example, markets its PS/1 line of personal computers to a tar-
get market that includes families in which members bring work home
from the office. Tandy, on the other hand, targets its 1000RL computer
at computer novices who want a household appliance for developing
grocery lists, balancing checkbooks, and helping their children with
schoolwork. The 1000RL provides more programming and operating
assistance for novices than does the PS/1, which is targeted to more
computer-literate users.
When choosing a target market, a firm first evaluates its own re-
sources and unique abilities. After analyzing potential sales, costs, and
profits, it identifies an appropriate target market. Actions taken to satisfy
the needs of the target market must be consistent with the organization’s
overall objectives. Obviously, in selecting a target market, market size
and the number of competitors already serving the market are prime
considerations.
Marketing managers may define a target market as a relatively
small number of people, or they may define it as the total market. For
example, Rolls Royce aims its products at a small, very exclusive, high-
income market – people who want the ultimate in prestige in an auto-
mobile. General Motors, on the other hand, manufactures vehicles rang-
ing from Chevrolet Sprints to GMC trucks to Cadillacs in an attempt to
28
appeal to varied tastes, needs, and desires. Identifying a target market is
a very important marketing function.
In a total-market approach, a marketer tries to appeal to the en-
tire market and assumes that all buyers have similar needs and wants.
Sellers of salt, sugar, and many agricultural products use a total-market
approach because everyone is a potential consumer of these products.
Market segmentation. Market segmentation is the process of
dividing the total market into groups of people with relatively similar
product needs. A market segment is a collection of individuals, groups,
or organizations that share at least one characteristic and have rela-
tively similar product needs and desires. Companies use market seg-
mentation to zero in on specific target markets so that they can develop
a satisfactory marketing strategy. Two common approaches to segment-
ing markets are the concentration approach and the multi-segment ap-
proach.
In the concentration approach, a marketer directs one marketing
strategy toward a single market segment. The concentration approach
allows a firm to specialize, focusing all its efforts on one market seg-
ment. A firm can generate a large sales volume by penetrating a single
market segment deeply. Johnson Product, Inc., for example, targets its
hair-care products to black consumers; Goya Foods, Inc., targets its ice
cream products to Hispanics by providing flavors they desire. The con-
centration approach may be especially effective when a firm can iden-
tify and develop products for a particular segment ignored by other
companies in the industry.
In the multi-segment approach, the marketer aims its marketing
efforts at two or more segments, developing a marketing strategy for
each. Many firms use a multicultural approach that includes different
advertising messages and promotional efforts for different segments.
The Gitano Group, for example, uses one set of television and print ad-
vertisements for its blue jeans to target teenaged girls and another set –
featuring movie stars – to appeal to older women. The company also
uses different advertising to target men, boys, and families.
Companies also develop product variations to appeal to different
market segments. The manufacturer of Raleigh bicycles uses a multi-
segment approach and has designed separate marketing strategies for
Developing a Marketing Strategy appeal to varied tastes, needs, and desires. Identifying a target market is a very important marketing function. To implement the marketing concept, a business needs to develop In a total-market approach, a marketer tries to appeal to the en- and maintain a marketing strategy, the plan of action for using the tire market and assumes that all buyers have similar needs and wants. firm’s resources and advantages to meet its objectives. A marketing Sellers of salt, sugar, and many agricultural products use a total-market strategy consists of two major steps: selecting a target market and de- approach because everyone is a potential consumer of these products. veloping, pricing, promoting, and distributing a product to that target market. Market segmentation. Market segmentation is the process of dividing the total market into groups of people with relatively similar Selecting a Target Market product needs. A market segment is a collection of individuals, groups, A market is a group of people who have a need, purchasing or organizations that share at least one characteristic and have rela- power, and the desire and authority to spend money on goods, services, tively similar product needs and desires. Companies use market seg- and ideas. Anytime a specific market can be delineated, the potential mentation to zero in on specific target markets so that they can develop for a target market exists. A target market is a group of buyers for a satisfactory marketing strategy. Two common approaches to segment- whom the organization tailors a marketing strategy; it is a group of ing markets are the concentration approach and the multi-segment ap- consumers on whose needs and wants the organization wishes to focus. proach. IBM, for example, markets its PS/1 line of personal computers to a tar- In the concentration approach, a marketer directs one marketing get market that includes families in which members bring work home strategy toward a single market segment. The concentration approach from the office. Tandy, on the other hand, targets its 1000RL computer allows a firm to specialize, focusing all its efforts on one market seg- at computer novices who want a household appliance for developing ment. A firm can generate a large sales volume by penetrating a single grocery lists, balancing checkbooks, and helping their children with market segment deeply. Johnson Product, Inc., for example, targets its schoolwork. The 1000RL provides more programming and operating hair-care products to black consumers; Goya Foods, Inc., targets its ice assistance for novices than does the PS/1, which is targeted to more cream products to Hispanics by providing flavors they desire. The con- computer-literate users. centration approach may be especially effective when a firm can iden- When choosing a target market, a firm first evaluates its own re- tify and develop products for a particular segment ignored by other sources and unique abilities. After analyzing potential sales, costs, and companies in the industry. profits, it identifies an appropriate target market. Actions taken to satisfy In the multi-segment approach, the marketer aims its marketing the needs of the target market must be consistent with the organization’s efforts at two or more segments, developing a marketing strategy for overall objectives. Obviously, in selecting a target market, market size each. Many firms use a multicultural approach that includes different and the number of competitors already serving the market are prime advertising messages and promotional efforts for different segments. considerations. The Gitano Group, for example, uses one set of television and print ad- Marketing managers may define a target market as a relatively vertisements for its blue jeans to target teenaged girls and another set – small number of people, or they may define it as the total market. For featuring movie stars – to appeal to older women. The company also example, Rolls Royce aims its products at a small, very exclusive, high- uses different advertising to target men, boys, and families. income market – people who want the ultimate in prestige in an auto- Companies also develop product variations to appeal to different mobile. General Motors, on the other hand, manufactures vehicles rang- market segments. The manufacturer of Raleigh bicycles uses a multi- ing from Chevrolet Sprints to GMC trucks to Cadillacs in an attempt to segment approach and has designed separate marketing strategies for 27 28
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