Marketing

Topic Transcript
Target Marketing: Segmentation and Targeting
Learning Objective
After completing this topic, you should be able to

recognize descriptions of market segmentation and targeting
1.
[Topic: Target Marketing: Segmentation and Targeting. The host is seated in studio with two panelists – Frances and Matt. The host addresses the viewer.] HOST: The foundation of modern marketing is often called the STP process. That stands for segmentation, targeting, and finally, positioning your offering. The first two steps, segmentation and targeting, are about working out who your most valuable customers are, and how you can meet those customers’ needs.

[Frances addresses the host.] FRANCES: In the past, my company used mass marketing. Today we’re much more focused. I mean, why pay to get your message out to vast numbers of people if you know most of them probably aren’t interested?

[The host addresses the viewer.] HOST: So how do organizations go about getting their messages to the right customers? Well, the first step is segmentation. This means dividing your market into subsets of customers with shared characteristics. The way you go about this will depend on your organization – on its nature, and on where value lies for it.

[Frances addresses the host.] FRANCES: We identified market segments based on a bunch of variables – where people live, their ages, marital status, education, income levels, even things like whether customers think of themselves as health-conscious. My company makes healthy convenience foods, so all of those things were relevant.

[Matt addresses the host.] MATT: We used market research to figure out customer needs for mobile devices. Then we group customers by need and developed a profile for each group. That gave us a good starting point to figure out which group’s needs we should focus on.

[The host addresses his panelists.] HOST: Segmentation leads to the next step, which is targeting. Targeting is focusing your marketing on specific groups based on their potential business value.

HOST: So marketers look at each market segment, assess its potential value, and then select the most valuable segments. That’s where they’ll concentrate their marketing efforts. These segments become their target markets.

[Matt responds to the host.] MATT: We ask questions about each market segment. Like, what’s the capacity for growth and profit? And how much competition is already there? Then we thought about our own direction and vision. That’s how we identified school and college learners as a key target markets for our tablets.

[The host responds to his panelists.] HOST: So effective targeting involves taking what you learn about your market segments and evaluating that information in light of your organization’s capabilities, resources, and strategic plans.

[The host addresses the viewer.] HOST: Customers may even grow to appreciate the benefits of targeting that’s based on buying behavior.

[A video clip of Lauren plays.] LAUREN: The supermarket chain I use tracks what people buy…you know, when customers swipe their loyalty cards at checkout. I used to treat their advertising as junk mail. But these days, I’m getting discount coupons only for items I actually buy a lot. So they’re worth it for me.

[The host addresses the viewer.] HOST: So these are the basic steps you follow before adopting a position in a target market and getting your marketing message across. You group customers into market segments, do your research, and determine which segment