What is target market analysis?
Target market analysis involves the study of a company’s potential clients. It helps in creating better target marketing strategies through which businesses can arrive at a decision on whom to direct their marketing and sales efforts to. In most cases, before formulating the target marketing strategies, research is done to determine which group of people or businesses will be most likely to benefit from the product or service offered. Once this is done, the four Ps of marketing – product, price, place, and promotion are used to better market the products. An effective target market analysis can also help companies maximize their ROI.
Types of target marketing strategies
The main purpose of target market analysis is to arrive at a decision on the market segments that the company wants to enter. Here are four generic target marketing strategies that are commonly used by top companies in the market:
In cases where a market segmentation study reveals several potential target segments that the can be served profitably by a company, specific marketing mixes can be developed to appeal to all or some of the segments. Multi-segment targeting is one of the most profitable target marketing strategies, which exploits the differences between marketing segments by designing a specific marketing mix for each segment. A company following that knows that such a strategy serves two or more well- defined segments and develops a distinct marketing mix for each one of them.
While undertaking target market analysis, a company may identify several segments, but the company may not be able to serve all of them well. Some of the segments identified might even prove to be unattractive or out of line with the company’s business strengths. In this case, the company can opt to target just one segment with a single marketing mix. This will help understand the needs, and motives of the segment’s customers and design a specialized marketing mix accordingly.
Target market analysis helps companies identify the differences in customer characteristics. In some cases, there might be no strong differences that occur. Also, the cost of developing a separate marketing mix for separate segments may outweigh the potential gains of meeting customer needs more accurately. Under such circumstances, the company decides to roll out a single type of target marketing strategies for the whole market. This practice might also be undertaken by companies that do not lay much emphasis on target market analysis and lack customer knowledge. This is one of the oldest techniques used, and most of the modern companies have moved out of this approach.
When it comes to certain markets (especially for the luxury market and other high-end products), target marketing analysis reveals individual customers that display unique purchasing power and tendencies. It is viable for companies targeting such customers to design a separate marketing mix for each customer. Several service providers such as advertising and marketing research firms vary their offerings on a customer to customer basis. Discussions are carried out with each customer regarding their requirements and then the products or services are tailored accordingly. Customized marketing is also common within organizational markets due to the high value of orders and special needs of customers.