ADM 2315 - chap 6

Mass marketing?

• the firm ignores segment differences and goes after the whole market with one offer

• Toothpaste, newspapers, coke

• Appropriate when no natural segment present themselves, and all consumers have roughly the same preferences.

• In mass marketing, the firm ignores segment differences and goes after the whole market with one offer. It designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers via mass distribution and mass communications.

• The argument for mass marketing is that it creates the largest potential market, which leads to the lowest costs, which in turn can lead to lower prices or higher margins. However, it becomes increasingly expensive and difficullt to reach a mass audience consistently.

Strategical vs. tactical targeting?

1. Targeting can be strategic or tactical based on the criteria a company uses to zero in on target customers.

2. Strategic and tactical targeting are not mutually exclusive; they are two integrally related components of the process of identifying target customers

Strategic targeting

• Focuses on customers whose needs the company can fulfill by ensuring that its offerings are customized to their needs

• Strategic targeting calls for a trading market size that yields a better fit between the offering’s benefits and the customers’ needs.

• Thus, rather than trying to reach the target audience with one offering that endeavors to lure a wide range of customers with diverse needs, strategic targeting is based on the deliberate choice to ignore some customers to better serve other customers with an offering that matches their specific needs.

Tactical targeting

• identifies the ways in which the company can reach these strategically important customers

• Rather than excluding any potential customers, tactical targeting strives to reach all strategically important customers in an effective and cost-efficient manner.

2 principles of strategic targeting

Target compatibility

– Can the company create superior value for target

customers?

– A reflection of the company’s ability to outdo the

competition in fulfilling the needs of target customers-

in other words, to create superior customer value.

– Essential resources:

• Business infrastructure-manufacturing, service, supply chain, management

• Access to scarce resources-unique or exclusive retail locations or natural resources

• Skilled employees-tech, operational R&D

• Technological expertise

• Strong brands

• Collaborator networks-supply chain

– Core competency:

• A source of competitive advantage and makes a

  significant contribution to perceived customer benefits

• Has applications in a wide variety of markets

• Is difficult for competitors to imitate

Target attractiveness

– Can these customers create superior value for the

company?

– The ability of a market segment to create superior

value for the company

– Target customers can create two kinds of value for a

company:

• Monetary value:

  – Revenues of a particular segment generates

  – Costs of serving customers

• Strategic value

  – Social value

  – Scale value

  – information value

Single-segment targeting

Niche marketing- company only markets to one segment.

The focus is on smaller, well defined groups of customers

that seek a distinct mix of benefits

Market targeting requires for effective market targeting?

1. identify distinct groups of buyers who differ in their needs and wants (segmentation)

2. select one or more market segments to enter (tagrgeting)

3. for each target segment, establish, communicate, and deliver the right benefits for the company’s market offering (developing a value proposition and positioning)