Target Marketing Strategies

A target market is a group of people for which an organization designs, implements, and maintains a marketing mix for.  The organization plans to make the marketing mix meet the needs of that specific group of people, which results in mutually satisfying exchanges.

There are three strategies used in target marketing.  The first is an undifferentiated strategy.  In an undifferentiated strategy there is one marketing mix for everyone.  It is also known as mass marketing, and it satisfies most customers with just one marketing mix.  The second strategy is a concentrated strategy.  In a concentrated strategy an organization targets their marketing mix on one market segmentation.  It is also known as niche marketing and it satisfies a specific group of people.  Finally, the third strategy is known as a differentiated target strategy.  In a differentiated target strategy an organization focuses their marketing mix on  several market segments.  There is a distinct marketing scheme for each of these segments.

A product that can be marketed with an undifferentiated strategy is milk.  Almost everyone drinks milk so it can be marketed to everyone with a single marketing strategy.  On the other hand, baby food is pretty much only consumed by babies, so it would be appropriate to use a concentrated strategy focusing in on a target market of parents.

What are some other products that you can think of that can use an undifferentiated strategy to market their products?

In response to Kaley DeBoer

However, what I question is whether or not one of the market segmentations is more beneficial is establishing a target market or does it depend on the product? Or do all of the above segmentations need to be considered at once when a market is determined?

I believe that all of the segmentations (geographic, demographic, psychographic, benefit, and usuage-range)  play a crucial role in determining a target market.  If marketers were to just focus on one segmentation because they felt it was more important than another, they could miss out on a key factor that is important in establishing a target market, and they could possibly lose out on customers.  For instance, if a company were to focus solely on geographic segmentation (segmenting the market by region or country, market size, market density, or climate) they might miss out on a key factor about the demographics in that area that are key to creating a target market like age, gender, income, ethnic background, family life cycle, etc.  An example would be if a target market was created for a high cost product in an area because it had an appropriate climate, but the income of the people of that area was very low, so the people in that area really would not be able to afford that product.  Therefore, it would be more valuable to consider all the factors when determining a target market.  I also believe that the product also plays a key role in who the target market is.

Are there any examples you can think of when a company focuses too much on one segmentation and eliminated a key segmentation which ended poorly for the company? 

One-to-One Marketing

One-to-one marketing is defined as "an individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer" by our textbook.  The goal of one-to-one marketing is to reduce costs and increase revenue.  It is a huge commitment. but can be an advantage to those companies who practice it.

Although most businesses use a mass-marketing approach, it is more efficient for some businesses to use one-to-one marketing to increase share of customer. The difference between mass marketing and one-to-one marketing is that mass marketing increases your odds of getting customers with a less specific focus on a specific people where as one-to-one marketing focuses on specific communication opportunities with each individual customer.

There are four trends that lead to continuing growth of one-to-one marketing.  Those four trends are personalization, time savings, loyalty, and technology.  Personalization focuses on each consumers specific wants and needs.  Time savings involves consumers saving time because they now longer need to shop around and making purchasing decisions.  When loyalty is earned consumers with continually buy from the same company.  And finally, new technology offers one-to-one marketers a more cost effective way to reach out to their consumers.

Can you think of any companies who practice the one-to-one marketing approach instead of the mass-marketing approach?  Has it been beneficial to that company?  Why or why not?

In response to Jonathan Tomachick

Do you find yourself doing the same when you shop? Have you ever had to cut another shopping trip short because of splurging for sale items the week prior?

Just like many other consumers, I get caught up in sales.  I work in a grocery store and I constantly find myself leaving work with items that I didn't intend to buy because I noticed during my shift that they were on sale.  The funny part is that the majority of the time I don't even end up using what I bought so I ended up actually wasting money instead of saving it.  

I have never found myself having to cut shopping trips short because of prior weeks sales, but rather I find myself having to cut shopping trips short because of the current weeks sales.  

One thing that working in a grocery store has made me wonder is how much is enough when it comes to sales.  I have watched a lot of people come in and buy a ridiculous amount of sale items, or items that they have coupons for, that I know they will never be able to use.  Just because an item is on sale does not mean that the item is necessary.  

I definitely believe that here in America we buy items just because they are on sale, and not necessarily because we need them.   Can you think of other countries where this is true?  Can you think of other countries in which their culture prevents them from buying lots of items that they don't need just because they're on sale?

Perception

Psychological factors influence consumers' buying decisions.  These psychological factors include perception, motivation, learning, and beliefs and attitudes.  Consumers use these factors in interact with their world.  Psychological factors are the only influence of consumer behavior that can be affected by the person's environment.

One psychological factor that I would like to specifically focus on is perception.  Perception is defined as "the process by which people select, organize, and interpret stimuli into a meaningful and coherent picture."  Basically, perception is used by consumers to produce meaning; it's how they see the world and how they discover that they need help in making a purchasing decision.

There are three parts to perception - selective exposure, selective distortion, and selective retention.

Selective exposure is what consumers use to decide which stimuli they are going to pay attention to and which ones they are going to ignore.  Selective distortion happens when information conflicts with a consumer's beliefs or feelings so the consumer changes or distorts the information.  Finally, selective retention is when a consumer only remembers the information that supports their personal beliefs and feelings.

Perception plays a huge role in marking because marketeers have to pick up on consumers' perceptions of products and play on them to help sell a product.  For instance, if consumers feel a specific way about how the packaging of a product should look, if marketeers pick up on this and change the product's packaging to match what the consumer perceives as something they want to buy, a product will be more successful.  Pricing and quality of a product can be dictated by consumers' perceptions of what they should be as well as quality and reliability.

When naming, packaging, advertising products, etc. companies should keep perception in mind.  You don't want to create a great product but have it flop because the name was associated with something that people perceive as bad, or the consumers' perceptions of the packaging were negative.

Can you think of any products in which consumer perception caused them to flop?

Response to Melissa Moriwaki

If logos had always been more simple, without hidden messages or clever abstract symbols, what effect do you think it would have on brand recognition today?

As I looked through the logos on the website that Melissa shared, I kept thinking how simple,yet clever these logos were.  I also thought about how these clever logos actually made me want to utilize the product or service that these companies were providing, even though I hadn't even heard of a lot of them.  With their hidden messages and clever abstract symbols I found that these logos were extremely memorable.

I believe that without hidden messages or clever abstract symbols brand recognition would not be the same today.  Of course we will remember the logos of really large, popular companies such as the McDonald's Golden Arches, but for brand recognition smaller companies need to get whatever competitive edge they can.  If these companies didn't use hidden messages and clever abstract symbols they would be easily forgettable.  Had the logos on the website not have been so clever I wouldn't have thought twice about them.  But, because these companies took the time to make clever logos they have made themselves memorable.  People take an extra second to look at the logo and understand it.  If it's funny sometimes they show others.  The logo then becomes recognizable to them because it made an impression.   Without the clever logos small companies may not be remembered.

What is a company that has made a lasting impression on you with a hidden message or clever abstract symbol in their logo?  Even if that company produces a product or service that wasn't quite as good as the competition, were they more memorable to you because of their logo?

Hyundai Assurance Buy-Back Program

In class this week we discussed how Hyndai had successfully created the Hyundai Assurance Program.  The program went on for 26 months and helped increase auto-sales for New Hyundais during the recession.  It helped assure people that it was okay to buy a new car because if they lost their job they would be covered. Although this program only lasted for 26 months in 2011 Hyundai started a new assurance program.

Hyundai's latest assurance program is the Hyundai Assurance Buy-Back Program.  Where before Hyundai guaranteed that they would take your car back if you lost your job, they are now assuring the price of your car for a trade in 2-4 years from now.  They give you a projected residual value for a later date when you go in to buy your new car.  When you actually go to trade in your Hyundai they view the actual residual value and the one that they projected when you bought the car and you get the higher of the two.  The only catch? You must keep your car maintained at the Hyundai authorized dealer.

These programs that Hyundai has created has increased their sales above the market's increased sales.  Other factors that have also increased Hyundai's sales are better designs, better reliability, and better mileage than before.

I found an article from CNBC describing the program called Hyundai's Latest Assurance Program Could Be Trouble for Competitors.  The following link can bring you to it to read more if you are interested,
http://www.cnbc.com/id/42748675/Hyundai039s_Latest_Assurance_Program_Could_Be_Trouble_for_Competitors.

What other companies have taken on programs like this?  Were they successful?  Why or why not?