Page 150 - Foundations of Marketing

Target Markets: Segmentation and Evaluation | Chapter 5 117

A business market consists of individuals or groups that purchase a specifi c kind of prod-
uct for one of three purposes: resale, direct use in producing other products, or use in general
daily operations. For instance, a producer that buys electrical wire to use in the production of
lamps is part of a business market for electrical wire. Some products can be part of the business
or consumer market, depending on their end use. For instance, if you purchase a chair for your
home, that chair is part of the consumer market. However, if an offi ce manager purchases the
same chair for use in a business’s offi ce, it is part of the business market. Business markets may
be called business-to-business (B2B), industrial, or organizational markets and can be subclas-
sifi ed into producer, reseller, government, and institutional markets, as we shall see in Chapter 7 .
Compare the two advertisements for Dockers and Xerox. Although you may like to wear
khakis to work, Dockers targets the consumer market as it would be unlikely that a business
would require khaki pants for use in producing other products or in business operations. Xerox,
however, targets businesses in this advertisement. While consumers can purchase Xerox-brand
products for home use, business customers tend to make much larger and more frequent pur-
chases, making them a profi table target market. In this ad, Xerox is pointing out that it performs
other services in addition to producing copy machines, such as automating global invoices for
Marriot Hotels.

TARGET MARKET SELECTION PROCESS LO 2 . Grasp an overview of the
five steps of the target market
selection process.
As indicated earlier, the first of two major components of developing a marketing strategy is
selecting a target market. Although marketers may employ several methods for target market
selection, they generally follow a five-step process. This process is shown in Figure 5.1 , and
we discuss it in the following sections.

STEP 1: IDENTIFY THE APPROPRIATE LO 3 . Understand the
differences among general
TARGETING STRATEGY targeting strategies.

A target market is a group of people or organizations for which a business creates and main-
business market Individuals or
tains a marketing mix specifically designed to satisfy the needs of group members. The
groups that purchase a specific
strategy used to select a target market is affected by target market characteristics, product
kind of product for resale, direct
attributes, and the organization’s objectives and resources. Figure 5.2 illustrates the three basic
use in producing other products,
targeting strategies: undifferentiated, concentrated, and differentiated. or use in general daily operations
undifferentiated targeting
Undifferentiated Targeting Strategy strategy A strategy in which an
organization designs a single
An organization sometimes defines an entire market for a product as its target market. marketing mix and directs it at
When a company designs a single marketing mix and directs it at the entire market for a the entire market for a particular
particular product, it is using an undifferentiated targeting strategy . As Figure 5.2 shows, product

Figure 5.1 Target Market Selection Process

Determine
Identify the which Develop Evaluate Select
1 appropriate 2 segmentation 3 market 4 relevant 5 specific
targeting segment market target
strategy variables profiles segments markets
to use

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