Identifying Markets

When employing a target marketing strategy, the marketer identifies the specific needs of groups of people (or segments), selects one or more of these segments as a target, and develops marketing programs directed to each. This approach has found increased applicability in marketing for a number of reasons, including changes in the market (consumers are becoming much more diverse in their needs, attitudes, and lifestyles); increased use of segmentation by competitors; and the fact that more managers are trained in segmentation and realize the advantages associated with this strategy. Perhaps the best explanation, however, comes back to the basic premise that you must understand as much as possible about consumers to design marketing programs that meet their needs most effectively.

Target market identification isolates consumers with similar lifestyles, needs, and the like, and increases our knowledge of their specific requirements. The more marketers can establish this common ground with consumers, the more effective they will be in addressing these requirements in their communications programs and informing and/or persuading potential consumers that the product or service offering will meet their needs.

Let's use the beer industry as an example. Years ago, beer was just beer, with little differentiation, many local distributors, and few truly national brands. The industry began consolidating; many brands were assumed by the larger brewers or ceased to exist. As the number of competitors decreased, competition among the major brewers increased. To compete more effectively, brewers began to look at different tastes, lifestyles, and so on, of beer drinkers and used this information in their marketing strategies. This process resulted in the identification of many market segments, each of which corresponds to different customers' needs, lifestyles, and other characteristics.

As you can see in Figure 2-3, the beer market has become quite segmented, offering superpremiums, premiums, populars (low price), imports, lights (low calorie), and

Figure 2-3 Market breakdown by product in the beer industry

Figure 2-3 Market breakdown by product in the beer industry

Exhibit 2-4 Grupo Modelo offers a variety of products to market malts. Low-alcohol and nonalcoholic brands have also been introduced, as has draft beer in bottles and cans. And there are now imported lights, superpremium drafts, dry beers, and on and on. As you can see in Exhibit 2-4, to market to these various segments, Grupo Modelo pursues a strategy whereby it offers a variety of products from which consumers can choose, varying the marketing mix for each. Each appeals to a different set of needs. Taste is certainly one; others include image, cost, and the size of one's waistline. A variety of other reasons for purchasing are also operating, including the consumer's social class, lifestyle, and economic status.

Marketers competing in nearly all product and service categories are constantly searching for ways to segment their markets in an attempt to better satisfy customers' needs. Diversity Perspective 2-1 discusses the increasing emphasis being placed on marketing to ethnic groups. The remainder of this section discusses ways to approach this task.

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