Failure to Target Markets

Once I was teaching a course in which students worked in teams to develop marketing strategies for luxury products. One team had the assignment of

Targeting the VIP Segment

VIP customers—guests who are accustomed to preferential treatment at the finest resorts around the globe—require extra care. According to one hospitality industry executive,, "It's not the suites or the gifts that matter most to these customers, it is the personal attention and recognition. We retain their business because of exemplary service." For example, [we] employ highly trained butlers dedicated to taking care of the most elite guests. "We know what specific linens they prefer on their beds, the brand of imported tea to serve with their breakfast. We know what flowers to place in the suite upon their arrival, and more importantly, what flowers they may be allergic to."

Sometimes, the butlers even know the customers better than they know themselves. A butler at one resort noticed that a guest he knew very well looked particularly pale. The butler insisted that the woman seek medical attention, and she eventually agreed. When she was examined, a serious medical condition was diagnosed and treated. And now she's doing fine.

"We do understand how important it is to make our guests smile," the executive explained. "In some cases, it may be a promotion in the middle of the winter where we give our guests portable snow shovels. For the higher level of customer, we even may give them a snow blower. But the difference is that, for a VIP customer, we also know when to hire a crew, send them to the VIP customer's house, and plow their entire driveway."

assembling a launch strategy for very expensive stationery. Halfway through the semester, a member from each team gave an oral report on their progress. One member of the stationery team said their target market was composed of men and women between the ages of 18 and 80!

That market choice was unacceptable. The student was saying that their team believed that an 18-year-old man and an 80-year-old woman looked at writing paper the same way. That is difficult to believe. Their strategy had no target market.

Does this happen often in business? Unfortunately, yes.

Half the marketing plans from well-known companies that are submitted to me for review and feedback lack clearly stated target markets and positioning. Why does that happen? Here are my theories:

• Concept too simple: Market segmentation is not difficult to understand. Conceptually, it is simple. Because it is simple, managers may skip over market segmentation, not realizing how important it is.

• Hard work: Although simple to understand, market segmentation can be hard to do. Developing a market segmentation scheme is not easy. It may require several weeks, a lot of thought, and hopefully, a lot of information about customers.

• Belief that everyone is their customer and there is no need to target customers: It may be a laudable goal to want every customer (although that may strain the resources of any organization). However, even if you want every customer, you still need to think of them as individuals with different needs, and you need to group them into target markets of similar customers.

• No information: Some segmentation efforts falter because no data have been collected on which to base segmentation decisions. Segmentation questions are among the most important to include in surveys of customers.

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