Final examination topic selecting target markets and target marketstrategies

Untitled UEH UNIVERSITY INTERNATIONAL BUSINESS & MARKETING FINAL EXAMINATION Topic Selecting Target Markets and Target Market Strategies Course Principles Of Marketing Lecturer Đinh Tiên Minh Class Co[.]

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

TABLE OF CONTENTS

1 Examine before deciding to target a market 3

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

2.2 The broadest and the narrowest segmenting strategy 12

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

SELEGTING TARGET MARKETS AND TARGET-MARKET STRATEGIES

1 EXAMINE BEFORE DECIDING TO TARGET A MARKET

1.1 Definition of a target market

Target market means the segment of the market consists of groups or organizations of peoplewho can potentially become the company’s clients or people who are most likely to buy oruse a company’s products and services.Choosing a target market brings many advantages forthe company since they have the detail goals, know who they are going to convince tobecome their customers When a firm has their target, they will definitely have a betterpreparation 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, develop theirproducts in that direction to satisfy the needs of customers, the product will constantlydevelop and improve

Target market makes it much easier and more accurate for companies to meet the demand oftheir 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 customer behaviour.Understanding what they want, what are their buying habits like or what do they care about?And most important, what is the main factor that drives them to make a purchase decision?Due to the result of target market research, companies can completely create an appropriateadvertising 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 whenchoosing it as a target market

For example, many companies chooseChina as their target market It isreasonable since China has the largestpopulation in the world with1.446.122.038 people which account for18,5% of the world’s population(11/12/2021 according to the latest datafrom 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

5

Source : danso.org

Vietnam's medical equipment market remains

President of Siemens Healthcare Asia-Pacific, called Vietnam's medical equipment market agrowing 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 than90% 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 a markethas too many competitors and products, which means company can be threatened bysubstitute products The selling price and profit will be limited by the price and profit of thesubstitute product With high substitutability, prices and profits tend to decrease A companyshould only choose to target a market only when there are not many available competitors orthey can find a way to distinguish themselves from other companies

The market of drink,especially the milkteamarket in Vietnam, ismore competitive thanever This marketthrives in big cities like

Ho Chi Minh city, HaNoi, Hai Phong, DaNang,… TheVietnamese milk teamarket is developingvery strongly and it is anew trend of theVietnamese beverageindustry According tomarket research onmilk 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 asSingapore and Taiwan are integrating into Vietnam, making this market more stressful andcompetitive 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 notseem 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 any revenue andmany 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

Source: 24h Q&me

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 towait in long lines for an empty table Haidilao's special feature that attracts customers is itsdedicated service and many free services or gifts like free manicure, free dessert,…forcustomers when dining at the restaurant Haidilao was very wise when choosing this market

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 whether theyhave the ability to overcome it or not Moreover, the target has to be realistic and achievable,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 therelationship with competitors A business enterprise is successful if it is able to deploy itsmarketing efforts to outperform its competitors Therefore, the target market selected byenterprises 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

looking for Because of the Source: International Business Times

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 toentertainment value, metaverse also brings benefits to both users and developers Here,participants are not limited by borders, distances and pioneers will have many advantages inthe stub market It is reasonable why Facebook dares to target a new market that still containsmany risks since it is a really big market with no competitors Facebook believed that theyhave the foundation in technology as well as the social network brand they have madethroughout 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 to pursue some term goals when faced with business opportunities, but it must still ensure the long-termstrategic goals of the business

short-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 also forother countries the modern, safe and environmentally friendly car models Vinfast is alsoknown for its modern electric vehicle models to reduce the amount of smoke and fuel wastereleased 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

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 : MultisegmentMarketing, Concentrated Marketing, Niche Marketing and Micromarketing These 4strategies can be called differentiated strategies This type of strategy is for enterprises thatparticipate in many market segments and build many separate marketing programs for eachmarket segment, providing different products separately for each market segment.Differentiated strategies help better meet the diverse needs and desires of the market.Moreover, this strategy can diversify products and marketing efforts which help businessespenetrate deep into many market segments, increasing sales However, enterprises have toface an increase in production costs, warehousing costs, marketing costs ie increasingbusiness costs

- Multisegment Marketing

A marketing strategy when a company tries to gain customers from more than one type ofmarket for similar products and uses, so that type of advertising can be expensive Alsoknown as multisegment marketing Businesses can respond to the demographic shifts andother market trends if they choose a multisegment marketing strategy Because thesecompanies don't risk everything to invest in a single market, they are less likely to lose outwhen 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 aunique message or product Companies use segmented marketing to offer the same product tomultiple 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 separatetheir marketing tactics and efforts in order to appeal to different target audiences for eachproduct line This strategy also helps businesses withstand economic crisis by allowingcustomers to change the exchange of products or services with the business (increase ordecrease) Furthermore, multi-segmentation strategy helps companies solve product or brandlifecycle problems Each product / brand has a certain life cycle, when customers no longerlove it, or those products become obsolete, it will lead to bankruptcy of a business But ifbusinesses target more than one market, build many segments for many different markets andcustomers, they will still have other products to compete in the market

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

 Air jordan: aim for people who have the same style of playing basketball like MichaelJordan 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 havethe aggressive, muscular style like David Robinson and Charles Barkley – 2 formerprofessional American basketball players

 Flight: more flexibility and lighter weight, suitable with teenager or youngerbasketball 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 theprice 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 syntheticleather and the Flyknit upper is treated for a softer, more comfortable feel The shoeweight is also minimized to the lightest level Still keeping the form of slim shoes andhugging the feet, suitable for attacking positions, using speed and technique, wingers

 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 createbetter grip, players can rest assured when playing on the rain field surface withoutworrying about slipping The Academy segment uses simpler materials and cuts sometechnology 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 Thanks tomultisegment strategy, Nikedominates the footwearindustry in the worldespecially USA when they have income from many different market segments

Using concentrated marketing means the company focuses all its efforts on a segment of themarket that it considers the most important and takes the best position in that segment Thereare many advantages in using this strategy When firms focus all their efforts on one marketsegment so that they can gain a strong position in that segment Example: Creating amonopoly in a market segment, designing and supplying products with a special reputation inthat market segment Besides, enterprises can exploit the advantages of specializing inproduction, distribution and sales promotion activities In case the target market segmentmeets 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 pressurecompetition and many disadvantages.This means, choosing concentrated marketing,company will focus all investments on a single segment, with no other options or marketbackup in case of an incident happens This strategy is only suitable for small and mediumenterprises or enterprises with the goal of "covering the market" in the initial stage whenentering the large market

To illustrate, Moonlust Jewelry store is using concentrated segmentation strategy They onlyconcentrate on selling silver jewelry for young girls who aiming for stylish jewelry which are

Source: Business Insider

durable but still affordable and worth the money Instead of making silver products withtraditional form or attach with expensive stone, Moonlust chooses to create products that arestylish and fashionable but using colorful stone to not only make it more attractive but alsoreduce the price of the jewelry Due to the concentrated marketing strategy, Moonlust hasmore time to research what type of jewelry would attract teenagers Until now, Moonlust isone of the most popular jewelry brands for girls, especially among students At first, theymainly sold jewelry on web sites like Instagram or Facebook, but thanks to their success,they are now opening their own store base in district 1, in the center of Ho Chi Minh City.

Niche market is understood as a very small market segment compared to the entire market.This is a place formed by the neglect of the major investors in the market for a need for aproduct or service, which they consider too small to fulfill To illustrate, fashion is a largemarket that includes many smaller markets The smaller markets when segmented out includewomen's fashion, men's fashion The smaller segment is fashion for girls, students, middle-aged people, office people Then continue the segment to have a small niche like vintagefashion for office people This is the niche of the fashion market

Niche marketing concentrated on niche markets, which means the company focuses on morespecific target clients instead of advertising to anyone who might be interested in the product

or service When approaching a niche market, businesses hope to attract a large number ofcustomers in a small and fixed market instead of attracting a small number of customers in alarge market By identifying a unique group of people, brands can connect on a deeper levelthan with broad marketing strategies Niche marketing can differentiate your brand from yourcompetitors and build brand equity Using a niche marketing strategy will help smallbusinesses avoid having to compete with large businesses The niche market does not bringtoo much profit, it is not worth much compared to the large market out there The morespecific a user's needs are, the lower the number of businesses that can satisfy them So thiscan be an extremely suitable market for small businesses, start-ups with limited potential andweak competitiveness Serving a small audience means marketers have more time tounderstand their customers' habits, preferences, behaviors, and desires Understandingcustomers is the basis for businesses to improve the quality of products and services, makingcustomers' love for the brand increase Moreover, when dealing in specific products, withfew competitors, businesses have more freedom in price decisions without being influenced

by external factors Consumers in the niche themselves are also willing to pay a higher feefor companies that meet their needs Finally, niche marketing can take advantage of word ofmouth marketing Word of mouth marketing is often more popular in niche markets whencustomers often have to rely on each other to make purchasing decisions in the face ofscarcity of information about products, services, suppliers, etc

Many local brands in Vietnam use the niche marketing strategy, especially those local brandswhich focus on fashion Usually, local brand owners do not have a big amount of funds toinvest in many segments Sometimes, local brand owners are people who are first launchingtheir start-up, they don’t have enough experience and knowledge to go for a huge target, sothey should choose a niche market to make sure that they can handle that business That iswhy a niche marketing strategy is suitable with them Local brands aim at teenagers or young