How Companies Identify Attractive Market Segments and Choose a Target Marketing Strategy.

1741 Words Nov 7th, 2008 7 Pages
Assignment: Explain and discuss how companies identify attractive market segments and choose a target marketing strategy.

Marketing can be defined as a way of identifying and satisfying consumer needs in such a way as to achieve the organisations objectives for profitability, survival or growth. When looking to develop a new marketing strategy for a certain segment there are a number of stages that are important, if the campaign is to be a success. Initially companies will analyse the current internal and external situation. In the macro environment companies will study the political-legal, economic, socio-cultural and technological environment (abbreviated as PEST) to ensure there are no issues that might affect marketing and performance.
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This discards the fact that customers have differences in characteristics and behaviour. It can be considered irrelevant since market segmentation would have taken place. With differentiated marketing you target more than one segment and formulate a separate marketing mix for each one. With this strategy the customers benefit since their specific needs are being addressed and the volume of customers being served is greater. The satisfaction customers feel is transformed into brand loyalty, which can be vital to a company if it wants to sustain growth in the long run. Concentrated marketing involves taking the companies resources and creating one marketing mix for only one segment of the market. The point of this strategy is to compete more effectively and efficiently in just one segment, rather than spreading resources across multiple segments. By concentrating all efforts on a single area you are more likely to understand your consumer base and therefore more prone to satisfy their needs. Only concentrating on one segment will not necessarily reduce profits however there is always the possibility that new firms will enter (increasing competition) or customer needs will change making this strategy risky in the long term. Therfore it is crucial to stay in touch with the consumer and always ensure their wants are satisfied. Finally, customised marketing is…