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INDUS UNIVERSITY
Learn Well To Live Well

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 LECTURE 6
Target Market and Market Segmentation
 Target Marketing

Targeting a specific market does not mean that

you are excluding people who do not fit your
criteria. Rather, target marketing allows you to
focus your marketing budget and brand
message on a specific market that is more
likely to buy from you than other markets. This
is a much more affordable, efficient, and
effective way to reach potential clients and
generate business.
 Target Marketing and Market Segmentation

• Target marketing involves breaking a market into segments and then concentrating your marketing efforts
on one or a few key segments consisting of the customers whose needs and desires most closely match
your product or service offerings. It can be the key to attracting new business, increasing sales, and
making your business a success.

• The beauty of target marketing is that aiming your marketing efforts at specific groups of consumers
makes the promotion, pricing, and distribution of your products and/or services easier and more cost
effective and provides a focus to all of your marketing activities.

• For instance, suppose a catering business offers catering services in the client’s home. Instead
of advertising via a newspaper insert that goes out to everyone, the caterer would first identify the target
market for its services. It could then target the desired market with a direct mail campaign, flyer delivery
in a particular residential area, or a Facebook ad aimed at customers in a specific area, thereby increasing
its return on investment in marketing and bringing in more customers.
Target Marketing Case Study:
McDonald's

• McDonald's is the largest fast-food chain in the U.S. ranked by sales. It's also one of the
most successful examples of demographic target marketing, aiming its products at
children, teenagers, and young urban-dwelling families by offering PlayPlaces & Parties,
the Arch Card (reloadable cash card), free wifi, Happy Meals that include toys such as
Marvel Studios characters, special promotions, and clever ad campaigns. Targeted
advertising and aggressive pricing have enabled McDonald's to capture over 18.5%
percent of the fast-food market share in the U.S. as of 2020.
• However, as millennials surpassed baby boomers in 2017 to become the largest
generation in the U.S. workforce, McDonald's sales have been in decline as fast-food style
menu items, such as the ubiquitous Big Mac and fries, have less appeal to millennials. In
response, McDonald's has altered its marketing strategy to target the millennial generation
by advertising fresher, healthier menu options and upscale coffee products such as
espressos.
 Target Marketing and Market Segmentation

Three of the most common types of segmentation are:

• 1. Demographic segmentation
• 2. Geographic segmentation
• 3. Psychographic segmentation
Demographic grouping is based on measurable statistics, such as:
 Gender
 Age
 Income level
 Marital status
 Education
 Race
 Religion
Geographic segmentation

Geographic segmentation involves segmenting the market based on location. Home addresses
are one example, but depending on the scope of your business, you could also use:
• Neighborhood
• Postal Code
• Area code
• City
• Province or state
• Region
• Country (if your business is international)
Psychographic segmentation divides the target market based on socioeconomic class or lifestyle preferences. The socioeconomic scale ranges from the affluent
and highly educated at the top to the uneducated and unskilled at the bottom. The UK-based National Readership Survey segregates social class into six
categories:2
The lifestyle-preferences classification involves values, beliefs, interests, and the like. Examples include people who prefer an urban lifestyle as opposed to a rural
or suburban lifestyle, people who are pet lovers, or people with a keen interest in environmental issues.
Social Grade Social Status Occupation
A Upper class Higher managerial, administrative, or professional

B Middle class Intermediate managerial, administrative, or

professional

C1 Lower middle class Supervisory, clerical, junior managerial, administrative,

or professional

C2 Skilled working class Skilled manual labor

D Working class Semi- and unskilled manual labor
E Subsistence class Unemployed, seasonal, or casual
The lifestyle-preferences classification involves values, beliefs, interests, and the like. Examples include
people who prefer an urban lifestyle as opposed to a rural or suburban lifestyle, people who are pet
lovers, or people with a keen interest in environmental issues.
Psychographic segmentation is based on the premise that the choices people make when purchasing
goods and services reflect their lifestyle preferences or socioeconomic class.