Targeting Strategy

After segmentation, a company has many possible groups such as students, families, professionals, or senior citizens. Targeting means deciding which of these groups will get priority. The firm then adjusts product features, pricing, distribution, and communication for those selected groups so that they feel the offer is designed specially for them.

• Starts only after the market has been segmented into distinct groups.
• Involves comparison of segments on size, growth, and profitability.
• Chooses segments that match the company’s strengths and resources.
• Decides the breadth of coverage: broad, selective, or narrow.
• Guides how many product versions and marketing programmes are needed.
• Acts as a bridge between customer analysis and positioning decisions.
• Can be changed over time when market conditions or goals change.

• Helps firms avoid spreading limited resources over too many segments.
• Allows deeper understanding of chosen customers and their priorities.
• Improves effectiveness of advertising and sales promotions.
• Makes it easier to design unique offerings against competitors.
• Supports long-term relationship building with key customer groups.
• Helps management set clear objectives and performance standards.

5.1 Undifferentiated (Mass) Targeting

The firm views the market as one large group and offers a single product and message to everyone. It stresses common needs, standard packaging, and low cost. For example, a basic household cleaning liquid sold under one variety for all users.

5.2 Differentiated Targeting

The firm decides to serve several segments and develops different products or messages for each. This increases sales by catering to varied needs but requires higher marketing budgets. For example, a stationery company selling separate product lines for school children, college students, and office users.

5.3 Concentrated (Niche) Targeting

The firm focuses on one well-defined segment or a small group of segments and becomes a specialist in that area. This allows strong positioning in a narrow field. For example, a travel agency that focuses only on educational tours for school and college groups.

5.4 Micromarketing / Local / Individual Targeting

The firm tailors its offerings to very small local areas or even individual customers. Local stores offering area-specific products or online platforms recommending personal product bundles are examples of micromarketing.

• Segment size: The segment should be neither too small nor too tiny to cover costs.
• Growth potential: The number of buyers and their spending power should show future growth.
• Competitive situation: The level of rivalry and substitute products should be acceptable.
• Fit with company: The segment should suit the firm’s mission, skills, and image.
• Operational feasibility: The firm must be able to reach, serve, and support customers in that segment.

1. Prepare a segment list: Collect all segments identified during market segmentation.
2. Analyse segment data: Study size, income level, usage, and purchase frequency of each segment.
3. Evaluate attractiveness: Judge growth, competition, price sensitivity, and risk for each segment.
4. Match with resources: Check which segments can be served well with existing capabilities.
5. Select coverage approach: Decide on mass, selective, niche, or micromarketing coverage.
6. Choose final target segment(s): Select the segment or combination of segments to focus on.
7. Describe target customer: Prepare a clear profile of the typical customer in each target segment.
8. Align marketing mix: Adjust product features, price levels, distribution, and promotion tools.

Example: Stationery Shop Choosing Target Segments

A neighbourhood stationery shop serves school children, college students, home-based freelancers, and small offices. After analysing sales, the owner sees that college students and freelancers buy higher-value items like files, markers, and notebooks regularly. The shop chooses a differentiated targeting approach, focusing on these two segments. It introduces exam bundles for students and office supply packs for freelancers and promotes each offer separately near colleges and through online groups.

Goal: You run a small online store and want to focus on customers who give stable, long-term business instead of chasing every visitor.

Step 1 – Start with simple segmentation

Divide your customers broadly into groups such as students, working professionals, parents, and retired people, based on past orders and enquiry data.

Step 2 – Note key behaviour of each group

For each group, write how often they order, average order value, preferred products, and how they found your store (social media, search, or referrals).

Step 3 – Identify high-value segments

Check which segments give higher repeat orders and better margins. A smaller but stable segment may be more attractive than a large irregular one.

Step 4 – Study cost of serving each group

Some segments may require more customer support, returns handling, or special packaging. Include these costs while comparing segments.

Step 5 – Compare with your strengths

Decide where you perform better—fast delivery, customised packaging, expert advice, or low price. Match these strengths with segments that value them most.

Step 6 – Choose primary and secondary targets

Select one primary target segment for maximum focus and one or two secondary segments that can be served without heavy extra cost.

Step 7 – Create segment-wise offers

Design special bundles, discounts, or loyalty points for each chosen segment. Change language, visuals, and timing of promotions to match the habits of each group.

Step 8 – Adjust channels and communication

Choose the right channels: students may respond more on social media, while working professionals may respond to email or search ads. Send reminders, tips, and offers in a tone that fits each segment.

Step 9 – Track results and refine targets

Monitor order frequency, average order value, and feedback from each targeted segment. If one group does not respond as expected, refine your offer or shift focus to more responsive segments.

Example: Organic Food E-Store Using Targeting

Step 1: The e-store segments its buyers into fitness enthusiasts, young parents, senior citizens, and impulse buyers.

Step 2: It notes that fitness enthusiasts and young parents place planned, regular orders.

Step 3: These two segments show stable monthly purchases and higher basket values.

Step 4: Serving them requires simple packaging and standard courier services.

Step 5: The store’s strength is reliable quality and transparent sourcing—both valued by these segments.

Step 6: It chooses a concentrated targeting approach on fitness enthusiasts and young parents.

Step 7: It creates subscription boxes for breakfast items for fitness users and baby-friendly organic packs for parents.

Step 8: Social media ads highlight workout-friendly snacks, while parenting forums receive content about safe baby foods.

Step 9: The store tracks renewals and referrals and gradually adds new variants for its targeted segments.

• Directs marketing money to customers most likely to respond.
• Helps create customised offerings that stand out from competitors.
• Improves customer satisfaction and loyalty within chosen segments.
• Makes planning and performance measurement more focused.
• Allows firms to occupy a clear space in the minds of target customers.
• Encourages innovation around the specific needs of priority segments.

• Wrong choice of target market can cause heavy financial losses.
• Differentiated and micromarketing approaches increase complexity and cost.
• Over-dependence on one niche makes the firm vulnerable to changes in that segment.
• Too much focus on current segments may ignore emerging opportunities.
• Requires continuous research to keep track of changing customer preferences.

Example 1: Mobile Phone Retailer Focusing on Students

A city mobile store sells smartphones to many kinds of customers. After reviewing sales, it finds strong demand from college students for mid-range phones with good cameras and battery life. The store chooses this group as its main target. It introduces student exchange offers, EMIs with low down payment, and bundle packs with earphones and cases. Advertising is placed near colleges and on youth-oriented social media pages. Other customers can still buy, but most campaigns and stock planning revolve around student needs.

Example 2: Travel Agency Targeting Weekend Breaks for Young Professionals

A travel agency notices that young office workers often search for short weekend trips rather than long holidays. It adopts a concentrated targeting strategy on “weekend city escapes for professionals.” It designs fixed 2-day packages, late-departure options for Friday evenings, and quick online booking. Promotions highlight stress relief and quick breaks after a busy week. This focused targeting gives the agency a clear position in the local travel market.

Example 3: EdTech Platform Targeting Competitive Exam Aspirants

An online learning platform has users from school classes, college courses, and competitive exams. Data shows that competitive exam aspirants spend more time on the app and are willing to pay for mock tests. The platform adopts a differentiated targeting approach, with a specialised product line for this segment. It adds timed tests, performance dashboards, and doubt-clearing sessions. Marketing messages focus on rank improvement and exam deadlines, attracting more serious learners from this target group.

Example 4: Local Restaurant Targeting Office Lunch Crowd

A restaurant is located near a cluster of office buildings but previously served a general crowd. It studies peak hours and finds heavy demand during weekday afternoons from office employees. The owner decides to treat them as the primary target segment. The restaurant creates fixed lunch combos, fast billing counters, and a weekly rotating menu. It also starts corporate delivery to nearby offices. Targeting office workers stabilises weekday sales and improves table usage.

Example 5: Fintech App Targeting First-Time Credit Users

A fintech app offers small personal loans. Instead of approaching all income groups, it targets first-time credit users with stable jobs but no formal credit history. The app simplifies documentation, uses salary slips and bank statements, and educates users about responsible borrowing. Messages focus on building credit scores and handling emergencies. This targeted approach reduces default risk and builds a loyal base of new-to-credit customers.

Targeting is the second stage in the STP framework – Segmentation, Targeting, Positioning.

• Segmentation: Breaks the market into groups with similar characteristics or needs.
• Targeting: Chooses the segment(s) that the firm will serve with priority.
• Positioning: Designs the product and message so that target customers see it in a desired way.

Without targeting, segmentation remains only a descriptive exercise, and positioning becomes unclear because the “who” part of the strategy is not fixed.

1. Targeting mainly involves:
   a) Dividing the market into similar groups
   b) Selecting segments to focus on
   c) Setting the final price
   d) Choosing advertising media
   Answer: b
2. Which targeting strategy concentrates on a single segment?
   a) Undifferentiated
   b) Differentiated
   c) Concentrated
   d) Micromarketing
   Answer: c
3. In the STP sequence, targeting comes:
   a) Before segmentation
   b) After segmentation and before positioning
   c) After positioning
   d) Independent of segmentation
   Answer: b

• Targeting strategy selects specific segments that the company will serve with priority.
• It is based on segment size, growth, competition, and fit with company resources.
• Major targeting patterns are undifferentiated, differentiated, concentrated, and micromarketing.
• Good targeting helps design a focused marketing mix for chosen customers.
• It is the second step of the STP model and guides positioning decisions.

1. Define targeting strategy. How is it different from market segmentation?
2. Explain the various types of targeting strategies with suitable examples.
3. What factors should a firm consider while selecting a target market? Discuss in brief.
4. Write short notes on: (a) Undifferentiated targeting (b) Niche or concentrated targeting.
5. Explain the role of targeting in the STP model. Why is it called the “choice” stage?

Students can convert the above points and examples into long or short answers as required in exams.