How Companies Identify Attractive Market Segments And How They Choose A Target Marketing Strategy?
There are various ways through which the companies can identify the attractive market segments but the most popular approach is that the company evaluates each segment on the basis of some factors. For examples, all segments are evaluated on the basis of their size(number of customers). The growth rate of each segment is explored and the competition which the company has to face in each segment in determined. The company also determines the brand loyalty of each segment and attainable market shares are calculated. The organization then determines the required market shares at break even point and matches the profit margins of each segment. The segements which are more profitable for the company are then selected as target market. On the basis of the needs and demands, affordability of the targeted segment, their geographical access and their exposure to different medias, the company selects the marketing strategy for the target segments.
Well! In the market segmentation process, the companies make various segments on the basis of some factors which company think are the most important for them like a toy manufacturing company can make segments on the basis of the age group of the kids, however, a clothing brand can make segments on the basis of income groups etc.
Companies can also use various factors to make segments in the market. Anyways, the attractive marketing segment for the company is the one which is the most profitable and it can happen that the company finds all of the segments profitable or sometimes even a small niche. An attractive segment should be large enough to fulfill the objectives of the company a nd competition in the market. It should be a growing segment and attainable as well. The segment should also show the characteristics which are matchable with the objectives of the company like Rado watches will target sophisticated segment not lower class group. Now, when once the attractive segment is selected then the next step is to design a strategy for the target market. The target marketing strategy is based on the mix of the product, price, place and promotion. These factors are determines according to the needs of the target market.