Target Marketing
Target Marketing ~ Choosing Which Segment to Serve
Not every product fits everyone ~ and not every company can serve everyone. Choosing the right audience is what turns marketing from noise into precision.
🎯 Undifferentiated • 🎨 Differentiated • 💎 Focused • 💰 Evaluation
From segmentation to strategy
In the previous lesson, we learned that markets are made up of different groups ~ people with distinct needs, lifestyles, and aspirations.
Now comes the practical question:
Should a company try to serve everyone, or focus on someone?
That’s what target marketing is all about.
Three main approaches to market targeting
Marketers have three strategic choices for how to address segmentation.
1. 🌐 Undifferentiated Marketing ~ “One product for all”
Some companies choose not to focus on any single segment.
They assume everyone wants roughly the same thing, so they offer one version for the entire market.
This works best when the product itself can’t really be customized ~ like sugar, salt, or flour.
Everyone uses them the same way, so segmenting the audience wouldn’t make much sense.
Undifferentiated marketing is like using a floodlight ~ broad, bright, but imprecise.
Pros: Simple, cost-efficient.
Cons: Little differentiation or brand loyalty.
2. 🎯 Concentrated (Niche) Marketing ~ “One segment, one focus”
Here, a company selects a single segment and tailors everything to it ~ the product, the price, the message.
It’s a high-risk, high-reward strategy:
all resources go toward one group, but if that group disappears or changes, the business could collapse.
Example:
The Italian luxury menswear brand Brioni makes made-to-measure suits that cost over $4,000.
Its customers are high-income men, typically over 35, who see the brand as a status symbol.
Brioni cannot simply launch a cheaper line ~ doing so would dilute its prestige.
Concentrated marketing is like a laser beam ~ precise, powerful, but fragile.
Pros: Strong identity, deep loyalty.
Cons: Risky if the segment changes.
3. 🎨 Differentiated Marketing ~ “Many segments, tailored versions”
Most companies follow this middle path ~ serving multiple segments with customized products or messages for each.
Think of Coca-Cola:
Classic Coke for traditional drinkers, Coke Zero and Diet Coke for health-conscious consumers, and energy drinks for those who want a boost.
This approach is flexible and resilient ~ if one segment slows down, another can keep the company stable.
Differentiated marketing is like a prism ~ one brand, many colors.
Pros: Broader reach, lower risk.
Cons: More expensive and complex to manage.
Whatever targeting strategy a company chooses must align with its mission, vision, and core strengths. A luxury brand shouldn’t chase volume. A cost leader shouldn’t over-customize. The strategy must fit the company’s nature.
How companies decide which segment to pursue
After identifying possible segments, marketers go through a structured evaluation process.
It usually happens in four steps.
Step 1. 🧭 Identify segmentation variables
First, decide how to slice the market:
- Demographic: age, income, gender, education.
- Geographic: region, city size, climate.
- Behavioral: usage, loyalty, habits.
- Psychographic: values, aspirations, lifestyle.
Choose variables that make segments distinct, accessible, large enough, and stable over time.
Avoid temporary fads unless your product is designed for them.
Step 2. 🧩 Profile each segment
Now, describe each group as if it were a real person.
What do they value?
What problems do they face?
What differentiates them from others?
This helps the company visualize its audience ~ not as numbers, but as people.
You can’t hit a target you can’t see.
Step 3. 💰 Evaluate each segment
Here’s where the math begins.
We ask:
- How big is the segment?
- How fast is it growing?
- What’s the potential revenue and profit?
- Who are the competitors?
- What will it cost to enter and serve this segment?
There are two ways to estimate this:
🔽 Bottom-up (micro approach)
Start from the ground level:
- Number of units you can sell × average price = potential revenue.
Example (for a hotel):
- Count how many rooms are available.
- Estimate occupancy by season.
- Multiply by room rate → projected revenue.
🔼 Top-down (macro approach)
Start from broad indicators:
- Total market size × expected market share = forecast.
Example:
If 10,000 tourists visit a town and you capture 20% at $100 per night → $200,000 projected revenue.
Both methods help validate whether a market segment is worth pursuing.
Step 4. 🧮 Assess competition and costs
Even if a segment looks attractive, competition can change the equation.
Fighting well-established players requires more marketing effort, more investment, and more time.
At the same time, cost analysis is essential:
- What will it take to design and produce the product?
- How much must we spend on promotion and distribution?
- Is the expected profit margin enough to justify the effort?
A great opportunity isn’t great if it’s too expensive to win.
Target marketing is experimentation at scale. You form hypotheses about which groups you can serve best, test them, and refine your focus based on evidence ~ not assumptions.
Summary Table
| Targeting Strategy | Description | Example | Risk Level |
|---|---|---|---|
| Undifferentiated | One product for all | Table sugar | Low differentiation |
| Concentrated (Niche) | Focus on one segment | Brioni luxury suits | High risk, high reward |
| Differentiated | Custom versions for multiple segments | Coca-Cola product line | Moderate risk, broad reach |
Target marketing is about focus ~ choosing where your company’s strengths meet real customer needs, and saying “no” to everything else.
What’s next
In the next chapter, we’ll explore Positioning ~ how companies shape customer perception and communicate their value clearly within their chosen market segment.