The market of customers to which a company aims to sell its products and services is called a target market. All of the companies marketing effort should be directed towards the target market.
According to Philip Kotler, a target market involves assessing each market segment’s attractiveness and selecting any one or more segments to enter.
Types of Target Market
1. Single Segment
In single-segment concentration, the organisation focuses only on one segment of the market. The aim of the company is to capture a larger market share.In this manner, the company gains complete knowledge of the entire segments’ needs.
This way the company focuses its entire attention on one single market. This targeting of the segment leads to a better understanding of customers which in turn helps with greater customer satisfaction.
There is a possibility of the competition being less intense within the market.
- The denim company Levi Strauss & Co
- Bacardi Rum [White Rum]
- Ray-Ban [Wayfarer and Aviator styles of sunglasses].
- Energy drink company Red Bull.
2. Selective specialisation
Companies select a number of segments that are objectively appropriate and lucrative, as per their resources and objectives in the selective specialisation.
Every segment divides the company’s risk and promises to be profiteering.
- Facebook has various product offerings for different types of markets:
- Facebook [Social Networking Website]
- WhatsApp [Mobile messenger service]
- Instagram [Photo and video-sharing app]
- Oculus VR [Virtual reality technology company]
- Apple has many product offerings for different markets:
- iPhone [Smartphone]
- MacBook [Laptop]
- Apple Watch [Smart Watch]
- iPad [Tablet]
- AirPods [Wireless Handsfree]
3. Product Specialisation
Product specialisation is a marketing firms concentration on making a particular type of product that it can sell to various segments.
Product specialisation guarantees strong market recognition of customers within the company’s product areas.
Example – Uber [Product – Vehicle for hire]
Vehicle hire for several segments:
- Uber X
- Uber XL
- Uber Select
- Uber Pool
- Uber Express Pool
- Uber Comfort
- Uber Black
- Uber Black SUV
4. Market Specialisation
Picking up a particular market segment and satisfying a range of needs for that particular segment is called market specialisation. This way the company earns a powerful reputation of serving groups of consumers of that particular market segment.
Example – Johnson & Johnson produces and markets its wide product range specifically for babies under the name ‘Johnson’s Baby. Nike’s target market is the sports section and thus it produces products like sports footwear, sports apparels, sports accessories.
5. Full-Market Coverage
A company produces and markets all the products that a customer could potentially need and this way they attempt to serve all customer groups in the market.
The ability to follow a full market coverage strategy lies only in the hands of very large firms.
These can be implemented in the following ways:
1. Undifferentiated marketing or convergence
A company targets the entire market with a single market offer while ignoring the differences in different segments of the market.
Instead of focusing on the very specific and varying needs of the buyers, the company focuses its efforts on a basic buyer.
2. Differentiated marketing or divergence
The company designs different programmes for each segment while operating in several market segments at the same time.
More total sales are generated in divergence as compare to convergence but its costs are higher.
LG offers different consumer electronics products like TVs, washing machines, refrigerators, microwave ovens, smartphones and air conditioners across all market segments.
Coca-Cola India offers Coca-Cola, Diet Coke, Coke Zero, Thums Up, Sprite, Sprite Zero, Fanta, Limca, Maaza, Minute Maid, Kinley Water and Soda, Schweppes, Georgia Gold and VIO to the entire market.
Examples for each target Market
Single Segment Concentration – Ray-Ban, Bacardi White Rum
Selective Segment Specialisation – Apple, Facebook
Product Specialisation – Uber
Market Specialisation – Nike, Johnson & Johnson, Decathlon
Full Market Coverage – Coca Cola