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2.3.1 Targeting Markets

Process of Targeting

  1. Segment Identification: Identify segments using criteria such as demographics, psychographics, geography, etc.
  2. Segment Evaluation: Evaluate each segment based on relevance, characteristics, and alignment with organizational goals.
  3. Segment Selection: Choose the segment(s) that align best with organizational resources and objectives.
  4. Positioning Strategy:
  5. Define the desired position of the product or service in the minds of the target market.
  6. Base the positioning on:
    • Product characteristics or usage.
    • Emotional aspects (e.g., societal or cultural relevance).
    • Environmental or other specific factors.
  7. Develop messaging that resonates with the chosen positioning.

Criteria for Selecting a Target Segment

There are three major parameters or blocks of criteria for selecting a target market:

1. Segment Size and Growth

  • Size:
    • What is the current size of the market?
    • A larger market size is typically preferred for profitability.
  • Growth:
    • Consider the future potential of the market.
    • Avoid markets with limited or short-term growth prospects.

2. Market Attractiveness

  • Assess how attractive the market is based on its structure:
    • Competitive Landscape: Is there too much competition? Highly competitive markets may be less attractive despite their size.
    • Barriers to Entry: Are there barriers that can limit your ability to operate or grow in the segment?

3. Organizational Objectives and Resources

  • Objectives:
    • What is the organization aiming for? Examples include:
    • Growth
    • Market share
    • Revenue
    • Profit
    • Customer satisfaction
  • Resources:
    • Does the organization have the necessary resources to achieve its objectives in the chosen segment? Examples include:
    • Manpower
    • Financial power
    • Technology solutions
  • Alignment: Even if a market is large and attractive, it is not viable if the organization's resources are insufficient to capture and serve the market effectively.
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