final examination topic selecting target markets and target market strategies

UEH UNIVERSITY INTERNATIONAL BUSINESS & MARKETINGFINAL EXAMINATION Topic: Selecting Target Markets and Target- Market Strategies Course: Principles Of Marketing Lecturer: Đinh Tiên Minh

UEH UNIVERSITY INTERNATIONAL BUSINESS & MARKETING

FINAL EXAMINATION Topic: Selecting Target Markets and Target-

Market Strategies

Course: Principles Of Marketing

Lecturer: Đinh Tiên Minh Class Code: 21C1MAR50312001 Student: Nguyễn Bá Thiên Kim Class: K47 – FTC01 Student’s ID: 31211020200

Ho Chi Minh City, 11/12/2021

1

download by : skknchat@gmail.com

TABLE OF CONTENTS

1.2 Characteristics of an ideal market which a company need to research 3

3 Producing low-cost products for developing country and then exporting to 14

download by : skknchat@gmail.com

download by : skknchat@gmail.com

SELEGTING TARGET MARKETS AND TARGET-MARKET STRATEGIES

1.1 Definition of a target market

Target market means the segment of the market consists of groups or organizations ofpeople who can potentially become the company’s clients or people who are most likely tobuy or use a company’s products and services.Choosing a target market brings manyadvantages for the company since they have the detail goals, know who they are going toconvince to become their customers When a firm has their target, they will definitely have

a better preparation in creating products and choosing the ideal strategy

Target market is the best way to perfect the products Once the Target Market is defined indetail, you can identify the specific needs and future of customers From there, developtheir products in that direction to satisfy the needs of customers, the product willconstantly develop and improve

Target market makes it much easier and more accurate for companies to meet the demand

of their customers This will bring huge benefits to traders Firstly, the firm can limit thesituation that customers have expectations with the product that are way far from reality.Secondly, the company can attract a loyal customer base This is an extremely importanttarget of businesses

Advertising efficiency can be increased by the help of the target market When a companygets information about the target market, it means they either understand customerbehaviour Understanding what they want, what are their buying habits like or what dothey care about? And most important, what is the main factor that drives them to make apurchase decision? Due to the result of target market research, companies can completelycreate an appropriate advertising message and easily leave an impression on that market.The importance of the target market is immense, it will determine the success or failure ofthat company or business So what characteristics do a company need to research beforechoosing a target market?

1.2 Characteristics of an ideal market which a company need to research

The criteria for assessing the attractiveness of a market include :

First of all, about the size an effective, attractive market segment must be large enough

to offset the company or the marketing efforts It has to be large enough to create enough

profits to pay for the employees and otherresources but still have a portion left tocontribute to the company capital If amarket is not big enough, it is a waste ofmoney, time and resources when

choosing it as a target market

For example, many companies chooseChina as their target market It isreasonable since China has the largestpopulation in the world with

1.446.122.038 people which account for18,5% of the world’s population

Source : danso.org (11/12/2021 according to the latest data from the

United Nations) Staying on top

of the population chart, China became one of the most potential markets because of its

enormous size of the market

Secondly, a market is attractive not only because of its size in the present but it also has

to be big enough for the future Therefore, an ideal market is when it has the potential of

growing in the future Enterprises should choose the market segments with growth rates

which are suitable to the potential of the business Large enterprises should target

large-scale and high-growth market segments, while small businesses choose a smaller market

but still have high growth potential in the future The market size must continue to expand

for the business to develop Choose a market with potential for growth to avoid the

situation where the market stops developing and has no customers

During the covid-19 pandemic, people can see the important of medical device which make

this become more potential than ever.

Particularly, according to data from the

Ministry of Health, the total investment

capital in the Vietnamese medical equipment

and supplies market has a strong growth rate

Total investment capital in medical

equipment in Vietnam in 2010 was estimated

at 515 million USD, in 2016 the total

investment capital was 950 million USD and

in 2017 this figure increased to 1.1 billion

USD Mr Etienne Szivo, Executive Vice

download by : skknchat@gmail.com

President of Siemens Healthcare Asia-Pacific, called Vietnam's medical equipment market a growing market with a lot of potential: Vietnam has barely produced medical equipment medical equipment as well as high-tech healthcare solutions, which now import more than 90% In addition, investment in health from public and private budgets is increasing rapidly.

Next, about the pressure of competition A market segment has a large scale and high

growth, but if the level of competition is too fierce or the bargaining power from customersand other forces is too great, it cannot be called an attractive market segment When amarket has too many competitors and products, which means company can be threatened

by substitute products The selling price and profit will be limited by the price and profit ofthe substitute product With high substitutability, prices and profits tend to decrease Acompany should only choose to target a market only when there are not many availablecompetitors or they can find a way to distinguish themselves from other companies

The market of drink,especially the milkteamarket in Vietnam, ismore competitive thanever This market

thrives in big cities like

Ho Chi Minh city, HaNoi, Hai Phong, DaNang,… TheVietnamese milk tea

market is developing

very strongly and it is anew trend of the Vietnamese beverage

industry According to

tea, the frequency

of using this beverage is very high and extremely high Milk tea shops today are locatedclose to each other, full on major roads More and more famous brands from abroad such

as Singapore and Taiwan are integrating into Vietnam, making this market more stressfuland competitive than ever We can easily name famous names such as Gong cha, KOI,Ding Tea, The Coffee House, Tocotoco, Bobapop Due to the huge growth of this market,this does not seem like a suitable market for small brands that have not yet made any mark

in this field There are many milk tea shops that have had to close before generating anyrevenue and many people have to stop this lucrative business

Instead of choosing a highly competitive market, companies can aim for a less competitivefield combined with distinct brand accents to easily reach customers For example, themarket of hotpot restaurants is not new to Viet Nam, however, not many branded hotpotrestaurant chains have been developed in Vietnam and Vietnamese people are also used to

6

download by : skknchat@gmail.com

local restaurants, so very few large hotpot restaurants have been developed Until theHaidilao hotpot restaurant chain integrated into Vietnam, the situation completely changedwhen Haidilao was extremely successful in Vietnam and expanded to many new branches

in a short time This hot pot restaurant is always fully booked and customers always have

to wait in long lines for an empty table Haidilao's special feature that attracts customers isits dedicated service and many free services or gifts like free manicure, free dessert,…forcustomers when dining at the restaurant Haidilao was very wise when choosing thismarket in Vietnam as well as choosing strategies and their brand highlights

The fourth factor that a firm needs to consider when choosing to aim for a market is

it has to be reachable and reality Usually, there are many barriers for a business before

entering a market such as political, social, geographic accessibility, legal and law,… Acompany has to research carefully about the barriers before choosing a market whetherthey have the ability to overcome it or not Moreover, the target has to be realistic andachievable, businesses should avoid aiming at a far-fetched goal

H&M is a really famous fashion brand in the world The head office of H&m is located inStockholm, Sweden When first entering the Asian market, H&M's biggest barrier isgeographic Since the head office is very far from Asia, they have decided to open manylarge production factories in some Asian countries like China At the same time, hiringworkers in developing countries is also cheap, so they can overcome geographical barriersand at the same time reduce the costs of production and labor

Company's capability and resources are also factors that businesses have to consider when deciding to target a market The attractive market segment can also be ignored if it is

beyond the company’s capacity or asks for a massive amount of resources for the business Enterprise resources including: Finance, technology, human resources, Marketing, funds

are used to exploit the market but must be considered in the state of change and the relationship with competitors A business enterprise is successful if it is able to deploy its marketing efforts to outperform its competitors Therefore, the target market selected by enterprises must be compatible with the capabilities of enterprises as well as their resources.

For example, virtual social

media and technology is a

really new market that has

never been exploited because

there are not yet any

businesses that have enough

technology and resources to

research this market

Although it's new and sounds

unrealistic, in the current

situation where social

networks and smartphones

are saturated, this is the next

future of the internet that

technology companies are

Source: International Business Times

looking for Because of the

7

download by : skknchat@gmail.com

new nature of this market, very few businesses can access it However, large corporationslike Facebook are fully capable of resources, capital and technology to conquer this newmarket Recently Facebook changed their name to Metaverse to show their ambition aboutthis market in the future According to Mr Le Manh Cuong, CEO of Mytheria, in addition

to entertainment value, metaverse also brings benefits to both users and developers Here,participants are not limited by borders, distances and pioneers will have many advantages

in the stub market It is reasonable why Facebook dares to target a new market that stillcontains many risks since it is a really big market with no competitors Facebook believedthat they have the foundation in technology as well as the social network brand they havemade throughout the decade to achieve this new market

Finally, companies should aim for a market that is consistent with the goal or the vision of the business An attractive market segment can also be ignored if it does not

align with the long-term goals or the mission of the business Enterprises may decide topursue some short-term goals when faced with business opportunities, but it must stillensure the long-term strategic goals of the business

Vingroup is one of the largest corporations in Vietnam in many fields such as real estate,shopping centers, supermarkets, hospitals, schools, hotels, amusement parks, Vingroupaims to develop into a leading Technology – Industry – Services group in the region Theirmission is “to create a better life for people” They always aim for markets with communityvalue and as well as markets that help improve people’s living standard like privateuniversities, schools or hospitals Recently, vingroup is targeting the car market in Vietnamand because there is no car brand bearing the Vietnamese brand So Vinfast, the firstVietnamese car brand, was established to provide for not only Vietnamese people but alsofor other countries the modern, safe and environmentally friendly car models Vinfast isalso known for its modern electric vehicle models to reduce the amount of smoke and fuelwaste released into the environment which help limit air pollution

In conclusion, there are six factors that a firm has to research before choosing a target

market which are : size, growth, competitors, the ability to achieve, company’s resource orcapability and the compatibility with the business mission or goal

2 SEGMENTING STRATEGIES

2.1 Overview about segmenting strategies

After selecting the target market, the business must determine the strategies to serve themarket There are 4 segmenting strategies mentioned in this section which are :Multisegment Marketing, Concentrated Marketing, Niche Marketing and Micromarketing.These 4 strategies can be called differentiated strategies This type of strategy is forenterprises that participate in many market segments and build many separate marketingprograms for each market segment, providing different products separately for each marketsegment Differentiated strategies help better meet the diverse needs and desires of themarket Moreover, this strategy can diversify products and marketing efforts which helpbusinesses penetrate deep into many market segments, increasing sales However,enterprises have to face an increase in production costs, warehousing costs, marketingcosts ie increasing business costs

8

download by : skknchat@gmail.com

- Multisegment Marketing

A marketing strategy when a company tries to gain customers from more than one type of market for similar products and uses, so that type of advertising can be expensive Also known as multisegment marketing Businesses can respond to the demographic shifts and other market trends

if they choose a multisegment marketing strategy Because these companies don't risk everything to invest in a single market, they are less likely to lose out when competing with other companies As

a result, multi-segment marketing is the process of segmenting a target market into many segments

in order to target each segment with a unique message or product Companies use segmented marketing to offer the same product to multiple segments, tailoring language and content to their individual wants and needs Multi-segment marketing is a technique used by companies who sell many products to separate their marketing tactics and efforts in order to appeal to different target audiences for each product line This strategy also helps businesses withstand economic crisis by allowing customers to change the exchange of products or services with the business (increase or decrease) Furthermore, multi-segmentation strategy helps companies solve product or brand lifecycle problems Each product / brand has a certain life cycle, when customers no longer love it,

or those products become obsolete, it will lead to bankruptcy of a business But if businesses target more than one market, build many segments for many different markets and customers, they will still have other products to compete in the market.

For example, Nike is a business operating in multiple market segments Nike has 3different segments in basketball shoes suitable for many different styles of basketball : airjordan, force and flight

Air jordan: aim for people who have the same style of playing basketball like Michael Jordan It is also aimed at young people who love fashion since Nike not only focuses on the quality of foot protection, but also invests in the appearance of the shoes.

Force: basketball shoes which are more stable and more suitable for people who have the aggressive, muscular style like David Robinson and Charles Barkley – 2 former professional American basketball players

Flight: more flexibility and lighter weight, suitable with teenager or younger basketball player

Or Nike shoes used for soccer have 4 segments : elite, pro,academy and club

Elite (Top-end) : manufactured with the highest quality materials and technology toserve professional players Professional tournaments will often use the Elite version

of Nike The highest quality materials plus the most advanced technologies make the price of the ELITE segment the most expensive

Pro (Mid-end) : Is the mid-range segment of Nike Football The Pro segment has a lot of technology, not inferior to the Elite segment The upper is made of synthetic leather and the

Flyknit upper is treated for a softer, more comfortable feel The shoe weight is also minimized to the lightest level Still keeping the form of slim shoes and hugging the feet,

suitable for attacking positions, using speed and technique, wingers 9

download by : skknchat@gmail.com

Academy (Mid-end) : use for artificial turf and natural grass 7-11 people With the

AG nail surface structure, which is designed higher than the TF nail, it will create

better grip, players can rest assured when playing on the rain field surface without

worrying about slipping The Academy segment uses simpler materials and cuts

some technology but is always popular thanks to its reasonable price

Club ( Low-end) : the entry-level segment of Nike soccer cleats The material anddesign of shoes in this segment is quite simple, but it will be suitable for many

customers who want tofind a pair of cheapgenuine shoes Use forfor 5-7 people artificialturf field

In general, all segments will

be suitable for many differentclients, from the low to upperclasses, from fastidious toeasygoing, from professional

to beginner Thanksmultisegment strategy,

Source: Business Insider industrydominates inthe the footwearespecially USA when they have income from many different market segments

- Concentrated Marketing

Using concentrated marketing means the company focuses all its efforts on a segment of

the market that it considers the most important and takes the best position in that segment

There are many advantages in using this strategy When firms focus all their efforts on one

market segment so that they can gain a strong position in that segment Example: Creating

a monopoly in a market segment, designing and supplying products with a special

reputation in that market segment Besides, enterprises can exploit the advantages of

specializing in production, distribution and sales promotion activities In case the target

market segment meets the criteria of "efficient segment", the business can achieve high

profit margins However, the segment may not exist or the general needs of customers may

suddenly change If powerful competitors enter the market, companies may have to face

high pressure competition and many disadvantages.This means, choosing concentrated

marketing, company will focus all investments on a single segment, with no other options

or market backup in case of an incident happens This strategy is only suitable for small

and medium enterprises or enterprises with the goal of "covering the market" in the initial

stage when entering the large market

To illustrate, Moonlust Jewelry store is using concentrated segmentation strategy They only

concentrate on selling silver jewelry for young girls who aiming for stylish jewelry which are

10

download by : skknchat@gmail.com