As the business environment becomes more competitive, volatile, and unpredictable, companies must find a way, which allows them to remain at least functioning, if not profitable. This requires the use of proper marketing strategies, which would resonate with the company’s customers. Some marketing concepts, which can be applied in operations, include target marketing and indirect distribution. The use of target marketing and indirect distribution channels form the important marketing concepts, which, if properly managed, can yield competitive advantages and benefits to organizations.
The Meaning and Purpose of "Target Marketing"
Target marketing describes a strategy, which involves dividing a given market into different segments so that the specific needs and wants of those customers can be met through a provision of company’s products and services and further concentration on marketing efforts that would satisfy these subgroups. Target marketing can be a key to increasing company sales, attracting new businesses, and ensuring that the business succeeds. The primary aim of target marketing is enhancing the organization’s marketing efforts and activities directed to a particular defined business segment, which makes the pricing, promotion, and distribution of a company’s products and services more effective and efficient. Target marketing describes a marketing strategy, which allows marketers to divide or segment their markets into sub-segments and small units, which cater customers with similar needs and wants. The strategy enables marketers to design specific techniques and strategies, which they can use to promote their products within their target markets. The result of target marketing is a target market, which can be referred to as a group of consumers who have similar inclinations towards a particular product and who are highly influenced by similar promotion techniques. For example, Kellog Company offers a special diet called K Special, which aims at target customers who wish to lose some weight or reduce calorie intake.
The use of social media platforms such as Linked In, Twitter, and Facebook can provide sophisticated options, which can allow companies to target their customers based on particular market segment. For example, a business such as a restaurant that offers breakfast and bed can target customers who are married or those who are on a romantic holiday.
While it is true that target marketing can be accomplished through different ways, the three most common types of target marketing include demographic segmentation, geographical segmentation, and psychographic segmentation. Demographic market segmentation describes a target market, which is classified based on age, gender, religion, income, education, and race. Demographic segmentation is an important target marketing technique as it provides people with demographic information that is crucial to the success of a business. Business vendor distributing alcoholic beverages, for example, may want to use the results of the marketing research, which indicates that beer is the most preferred liquor among individuals from a certain race or age group.
Geographic segmentation is another important criterion for target marketing that describes a segmentation of customers based on their location. The most important factors considered while segmenting a market into locations include neighborhood, province or state, nation, area code, region, and postal address. The basis of geographic segmentation is that consumers from a given geographic location may have similar preferences for certain products and services. For example, a business that offers lawn care service primarily focuses on marketing efforts targeting individuals from the neighborhood with a high percentage of older citizens.
The psychographic segmentation is a crucial target marketing strategy as well. It describes a type of segmentation that divides markets into the types according to their socioeconomic classes, life preferences, and personality types. The socio-economic scale, which is frequently used, ranges from highly educated and affluent consumers at the far high-end to the unskilled and uneducated consumers at the lower end. In some countries, socioeconomic classes are represented by upper middle class, middle class, and lower class. Yet, some countries have additional segmentation criteria such as skilled working class, working class, and the lowest level of substance. Consumers can also be classified based on their lifestyle preferences. The criteria that can be used include beliefs, values, and interests. For example, a marketer can classify and segment customers based on the knowledge that some of them prefer the urban life to the rural life. In addition, the customers can be classified as those who love pets or even have a keen interest in environmental issues.
The Pros and Cons of Non-Direct Distribution
A non-direct distribution, which is also called the indirect distribution, describes a distribution channel in the form of intermediaries where products are expected to move through a given order that allows consumers to purchase products. After the manufacture, the products are expected to be moved through additional steps so that they can reach the final consumers. The distributors and wholesalers play an important role in delivering the products from the manufacturer to the consumers. Indirect distribution has several benefits but it also has some disadvantages.
Advantages of Indirect Distribution
One of the positive points of using indirect distribution channels such as wholesalers and retailers is that it makes products and services reach a wide market, through a large exposure. For example, sanitary products usually get more exposure when they are placed all together on the shelves in retail stores. When products can be exposed to a wide market base, it means that larger volumes of them can be sold. This increases sales and ensures that organizations gain economy of scale advantages. Furthermore, the indirect distributing approach enables organizations to spread their inventory costs across many companies such as retailers and wholesalers. Second, indirect distribution offers companies with an aggressive marketing and an upsell opportunity. The wholesalers and retailers can offer the customers with personal consumer assistance and services, which are necessary for ensuring that customers perform repeat purchase activities. The companies that use indirect distribution also enjoy the advantage of a data-rich environment, which can further their marketing research. A company that has much data is capable of being innovative and knowledge-based thereby getting a competitive advantage over its competitors. In some product, the use of indirect distribution channels such as cooperation with the retailers makes the customers satisfied because they are more trusted. Furthermore, it is possible for customers to engage in impulse purchases, which can serve to increase the amounts of sales and revenues. The use of indirect distribution and collaboration with the agents may provide expertise and expand the network for a company’s products.
Disadvantages of Indirect Distribution
One of the disadvantages of indirect distribution is that it does not provide for a closer interaction with the customers. Many companies that prefer using indirect distribution often do not interact enough with their customers. For example, most LG products are sold through retailers such as Wal-Mart and this means that the producer cannot directly interact with its customers. This may prevent the companies from knowing and understanding what their markets want and need. Thus, marketing requires that companies establish proper relationship and trust with their customers, and the use of indirect distribution may take a long time before a company can establish a good relationship and trust with its customers. Furthermore, it is difficult to control the loyalty of customers who do not have a direct contact with a company. When companies cannot have loyal customers, then it also means that they cannot have and retain their customers.
Second, it can be difficult to measure the performance of indirect distribution. For example, a company is able to measure the number of Twitter or Facebook followers in case it uses direct distribution, but it has but cannot measure these indices when indirect distribution takes place.
Target marketing and the use of indirect distribution channels can be a form of competitive advantage. Target marketing enables organizations to divide their markets into the groups of consumers who have similar needs and wants so that they can use appropriate pricing, promotion, and distribution strategies. It can be undertaken through geographic segmentation, psychographic, and demographic segmentation. Indirect marketing has advantages such as the wide distribution of products, distribution of inventory costs, and personal consumer assistance. However, it has several disadvantages such as lack of customer contact, measurement difficulties, and inability to retain loyal customers.
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