Market Targeting Strategies 155
MARKET TARGETING STRATEGIES
Once the firm has identified its market-segment opportunities, it is ready to initiate
market targeting. Here, marketers evaluate each segment to determine how many and
which ones to target and enter.
Evaluating Market Segments
In evaluating different market segments, the firm must look at two factors: (1) the seg-
ment’s overall attractiveness, and (2) the company’s objectives and resources. First, the
firm must ask whether a potential segment has the characteristics that make it gener-
ally attractive, such as size, growth, profitability, scale economies, and low risk.
Second, the firm must consider whether investing in the segment makes sense
given the firm’s objectives and resources. Some attractive segments could be dismissed
because they do not mesh with the company’s long-run objectives; some should be dis-
missed if the company lacks one or more of the competences needed to offer superior
value.
Selecting and Entering Market Segments
Having evaluated different segments, the company can consider five patterns of target
market selection, as shown in Figure 3-7.
Single-Segment Concentration
Many companies concentrate on a single segment: Volkswagen, for example, concen-
trates on the small-car market, while Porsche concentrates on the sports car market.
Through concentrated marketing, the firm gains a thorough understanding of the
segment’s needs and achieves a strong market presence. Furthermore, the firm enjoys
operating economies by specializing its production, distribution, and promotion; if it
attains segment leadership, it can earn a high return on its investment.
However, concentrated marketing involves higher than normal risks if the seg-
ment turns sour because of changes in buying patterns or new competition. For these
reasons, many companies prefer to operate in more than one segment.
Selective Specialization
Here the firm selects a number of segments, each objectively attractive and appropri-
ate. There may be little or no synergy among the segments, but each segment
Figure 3-7 Five Patterns of Target Market Selection