Marketing Strategies: Finding Your Perfect Customer (Target Markets)

Hey everyone! Welcome to your study notes on a super important part of marketing: Target Markets. Ever wonder why some ads seem to be speaking directly to you, while others feel completely irrelevant? It's not magic, it's marketing strategy!

In this chapter, we're going to learn how businesses stop shouting to everyone and start having meaningful conversations with the right people. Think of it like this: trying to sell a new video game to your grandparents might not be very successful. But selling it to a teenager who loves gaming? Much better! This is the core idea of finding a target market.

Understanding this will help you see how your favourite brands work and is a key concept for your BAFS exam. Let's get started!


The STP Framework: Your Secret Marketing Map

In the old days, some companies tried "mass marketing" – selling one product to everyone. But today, smart businesses know that's not efficient. Instead, they use a powerful three-step process called STP Marketing. This is the foundation for everything we'll learn in this chapter.

S - Segmentation: Divide the big, messy market into smaller, neat groups.
T - Targeting: Choose the best group (or groups) to focus on.
P - Positioning: Create a clear and unique image of your product in the minds of your chosen group.

Don't worry if this seems a bit abstract now. We're going to break down each step, one by one.

Step 1: Market Segmentation (Slicing the Cake)

Imagine the entire market of potential customers is one giant birthday cake. It's too big to eat all at once! Market segmentation is the process of cutting that cake into smaller, more manageable slices. Each slice contains people who share similar characteristics, needs, or behaviours.

Why do this? Because it's much easier to create a product and a marketing message for a specific group of people than for the entire world.

Methods of Market Segmentation

Businesses use four main "knives" to slice the market cake. You need to know all four!

1. Geographic Segmentation

This is about dividing the market based on where people live. Simple, right?

  • What it is: Grouping customers by region, city size, climate, or country.
  • Real-World Example: McDonald's in Hong Kong sells the McSpicy chicken burger, which is a local favourite, but you won't find it in many European countries. Similarly, clothing stores like Uniqlo sell more Heattech thermal wear in places with cold winters.
2. Demographic Segmentation

This is the most common method. It's about dividing the market based on objective, measurable population characteristics.

  • What it is: Grouping customers by age, gender, income, occupation, family size, education, etc.
  • Real-World Example: Toy companies like LEGO create different sets for different age groups. Skincare brands often have separate product lines for men and women (gender). Luxury car brands like Mercedes-Benz target high-income professionals.
3. Psychographic Segmentation

This one is a bit deeper. It's not just about who people are, but how they think and live.

  • What it is: Grouping customers by their lifestyle, personality, values, and interests.
  • Real-World Example: A yoga studio targets people who value health, wellness, and mindfulness (values/lifestyle). A brand like The North Face targets people with an adventurous spirit and a love for the outdoors (personality/interests).
4. Behavioural Segmentation

This method focuses on how customers act in relation to a product or service.

  • What it is: Grouping customers by their knowledge of, attitude towards, use of, or response to a product. Common variables include:
  • Benefits Sought: A toothpaste brand might offer different versions: one for "whitening", one for "sensitive teeth", and one for "fresh breath". Each targets a group seeking a different benefit.
  • Usage Rate: Coffee shops like Starbucks have reward programs to encourage "heavy users" to keep coming back.
  • Loyalty Status: Airlines offer frequent flyer programs (like Asia Miles) to reward their most loyal customers.
Quick Review: The 4 Bases

Here's a simple way to remember the four types of segmentation:
Geographic = Where are they?
Demographic = Who are they?
Psychographic = How do they think?
Behavioural = How do they act?

Memory Aid: Think "Go Do Psycho Behaviour!" It's silly, but it might help you remember the four letters in an exam!

Key Takeaway: Segmentation is about dividing a broad market into smaller groups of consumers with similar characteristics, so a company can market to them more effectively.

Step 2: Targeting (Choosing Your Slice of Cake)

Okay, so you've sliced the cake. Now what? You can't eat it all! Targeting is the process of evaluating the different segments and deciding which one(s) to serve. The group you choose is your target market.

Factors Affecting the Choice of Target Market

How does a company choose its target market? It's not a random guess! They consider several factors:

  • Company's Resources: A small startup with a limited budget can't afford to target millions of people. It might focus on a smaller, very specific group. A huge company like Coca-Cola has the resources to target multiple segments at once.
  • Product's Nature: A highly specialized product naturally has a specific target market. For example, the target market for professional accounting software is... accountants!
  • Market Attractiveness: Is the segment large enough to be profitable? Is it growing? You don't want to target a tiny, shrinking market.
  • Competitors' Strategies: If a segment is already full of strong competitors (like the smartphone market), a new company might decide to target a different, less crowded segment to have a better chance of success.

What is a Market Niche?

Sometimes, a company decides to target a very specific, small, and often overlooked segment. This is called a market niche.

  • Analogy: If segmentation is cutting the cake into slices, a niche is like targeting a single, specific cherry on top of one slice that no one else has noticed.
  • What it is: A narrowly defined group of customers with a distinct set of needs.
  • Why it's useful: Niche markets usually have less competition. By focusing on a niche, a smaller company can become a big fish in a small pond. Customers in a niche are often very loyal because the company perfectly meets their specific needs.
  • Real-World Example: A pet food company that only makes organic, grain-free food for cats with allergies. Or a travel agency that only organises hiking trips in South America. These are not for everyone, but they are perfect for a small, specific group.

Key Takeaway: Targeting involves selecting the most suitable market segment(s) to enter. This decision is based on a careful analysis of the company, the market, and the competition. A niche is a super-focused target market.

Step 3: Positioning (Creating a Mental Picture)

This is the final and most creative step! Once you've chosen your target market, you need to make them see your product in a specific way. Positioning is the art of creating a clear, distinctive, and desirable place for your brand in the minds of your target consumers, relative to competing products.

  • Analogy: Think of your customer's mind as a crowded cabinet. Positioning is about making sure your product has its own special, easy-to-find shelf in that cabinet.
  • The Goal: When your target customer thinks of a need, your brand should be the first one that comes to mind. Thirsty? → Coca-Cola. Need a cheap meal? → McDonald's. Need quality groceries? → City'super. All these are examples of successful positioning.

Common Positioning Strategies

Businesses use different strategies to create this mental picture:

  1. Positioning on Price and Quality: A company can position itself as offering the best value for money (like Fairwood), or as a premium, high-quality option (like a five-star hotel's restaurant).
  2. Positioning on Product Attributes: This means focusing on a specific feature. Volvo has long positioned itself as the "safest" car. A smartphone brand might position its new model based on having the "best camera".
  3. Positioning against a Competitor: This involves directly comparing your brand to a rival. A famous historical example is the car rental company Avis, whose slogan was "We're number 2, so we try harder," directly referencing the market leader, Hertz.
  4. Positioning by Use or Application: This involves associating the product with a specific use. Vitasoy was originally promoted as a nutritious "poor man's milk," but was later repositioned as a popular, everyday refreshing drink.
Did you know?

Sometimes a company needs to reposition its product. This means changing the image of the brand in the consumer's mind. This can be risky but is sometimes necessary if the old image is no longer popular or if the company wants to target a new market segment.

Key Takeaway: Positioning is the final step where you build a specific identity for your brand in the minds of your chosen customers. It's the reason you choose one brand over another, even if the products are very similar.


Chapter Summary: The STP Journey

You've made it! Let's quickly recap the entire process.

A smart company doesn't try to be everything to everyone. Instead, it goes on a journey:

  1. It starts with Segmentation, using geographic, demographic, psychographic, and behavioural bases to slice the market "cake".
  2. Then comes Targeting, where it carefully chooses the most attractive slice(s) to focus on, sometimes finding a special niche.
  3. Finally, it uses Positioning to create a powerful and memorable image in the minds of its chosen customers.

Mastering these concepts will give you a huge advantage in understanding the world of business and marketing. Well done!