Market targeting is essential for marketing

Target marketing streamlines your strategies by determining a product or service's ideal market and pitching that market in a way that's more likely to appeal to those customers. Targeting a specific type of customer allows your company to: Plan marketing initiatives more effectively. Allocate marketing dollars more efficiently. Hone in on and eliminate sales tactics that aren't working.

It is not necessary to choose just one customer group. You may choose to target both businesses and individual consumers if it makes sense for your company. However, modifications may need to be made for your product or service if you choose to go this route. For example, the owner of a gift basket business may target mostly individual consumers as her main source of revenue, but have a secondary revenue stream from corporate customers. For the individual consumers, she may offer many customized options to satisfy their diverse tastes, and she would probably charge a higher price to ensure a good profit margin. For her corporate customers, she would likely offer more limited product line — at quantity discounts — to allow her to mass-produce the baskets for large orders.

Selecting a target market segment for a product rather than attempting to sell to the entire market can be a more efficient use of promotion dollars, because a greater market share can be achieved by capturing most or all of a segment via a carefully directed marketing plan that reaches precisely the right people with the right message than by trying to capture market share with a generic approach. It is also a better use of production resources if they can be concentrated on a single product and/or package, thus experiencing economies of scale. For example, a factory that only makes metal bed frames can operate with less equipment, expertise, and materials than a similar size company that makes metal bed frames, sofa beds, dining room tables, and office furniture.

Finally there is a multi-segment approach. Here a marketer will target a variety of different segments with a series of differentiated products. This is typical in the motor industry. Here there are a variety of products such as diesel, four-wheel-drive, sports saloons, and so on.