Part 2

Now that you have identified the various ways to segment this market, you can help CanGo devise a targeting strategy. Take care not to confuse the processes of segmentation and targeting. While segmentation involves dividing up the market into segments, targeting concerns choosing a segment(s) to reach with a strategy. In other words, through targeting, firms make the decision on which segments to go after and how.

In order to determine which targeting strategy would make the best use of the firm's resources, each segment must be evaluated in terms of its attractiveness and the amount of potential customers each segment may contain. Those that offer the best prospects will become the priority segments to which the firm will devote most of its energy. As we saw in the Introductory Video, CanGo has prioritized its key market segments primarily on the basis of age demographics - the Gen-X, Baby Boomer, and Gen-Y groups.

Firms typically choose from the following targeting strategies:

• Undifferentiated targeting, through which the firm directs the same marketing mix (same price, promotions, etc.) at all potential customers.
   
• Differentiated targeting, through which the firm offers a unique marketing mix to each distinct segment, a mix tailored to the needs and wants of consumers in those segments.
   
• Concentrated (Niche) targeting, through which the firm picks out a single segment or very limited number of similar segments on which to concentrate its efforts.
   
• Customized targeting, a more recent strategy through which the firm takes advantage of information technology to craft specific offers for each individual consumer.

In the exercises below, consider the product offerings and identify whether they would fit best with an undifferentiated, differentiated, niche, or customized marketing approach.

Product decisions:

1. Offer recommendations based on past purchases. 2. Offer New York Times Bestseller List books. 3. Offer chiefly new/classic alternative rock CDs. 4. Offer different catalogues based on 70's hits, 80's hits, and 90's hits.

a. Undifferentiated targeting b. Differentiated targeting c. Concentrated (Niche) targeting d. Customized targeting

 
 
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