Markets

We will address the following questions:

■ How and why is segmentation applied to consumer and business markets?

■ How can a company use mass customization to effectively meet the needs of individual customers?

■ What targeting strategies can a company use to select and enter the most attractive market segments?

A company cannot serve everyone in broad markets such as soft drinks (for con -sumers) and computers (for businesses), because the customers are too numerous and diverse in their buying requirements. This is why successful marketers look for specific market segments that they can serve more effectively. Instead of scattering their marketing efforts (a "shotgun" approach), they will be able to focus on the buyers whom they have the greatest chance of satisfying (a "rifle" approach).

The most targeted marketing strategies are built around meeting each customer's unique requirements. Such mass customization strategies are particularly well suited to Internet marketing, where leaders such as Dell can maintain an interactive dialogue with customers and create a unique bundle of goods and services specifically for their individual needs and wants.

Target marketing requires marketers to take three major steps: (1) Identify and profile distinct groups of buyers who might require separate products or marketing mixes (market segmentation); (2) select one or more market segments to enter (market targeting); and (3) establish and communicate the products' key distinctive benefits in the market (market positioning). This chapter focuses on the first two steps; the following chapter will discuss positioning strategy.

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