Describe the marketing processes that are necessary before an organisation can properly target the most lucrative part of a market

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Targeting is the process of selecting the most lucrative part of the market for a product and leads to the development of a marketing 'mix' in order to position the organisation to appeal to that target. The key processes that are necessary before an organisation can properly target the most lucrative part of the market are market research and market segmentation. Organisations should also be aware of the activities of their competitors in the market.

Market research

Market research involved finding out about the market. There are two main forms of research that could be undertaken:

(a) Primary research involves generating new information about the market. This can take a number of forms but popularly includes questionnaires and telephone surveys. Specialist research companies can be employed to carry out such work using sometimes sophisticated methods such as focus group surveys and the use of observational equipment and specialist software. Due to the costs associated with data collection, primary research is normally only undertaken if secondary research is lacking or not readily available

(b) Secondary research involves accessing data that already exists and here web- based searches might produce a wealth of potentially relevant detail (some produced by government departments and trade associations). Many universities also typically have effective databases allowing for research and analysis of customer behaviour.
From the information gathered, market forecasts of demand for products and services might be made including total market potential, geographical potential, total industry sales and relative market share between main competitors, etc.

Market segmentation

Market segmentation is the process of dividing the market into similar groups with common characteristics. This thinking recognises that every market consists of 
potential buyers with different needs and different buying behaviour. Market segmentation may therefore involve subdividing a market into distinct sub- groups of customers, where any sub-group can be selected as a target market to be met with a distinct marketing mix. Although, within the total market, widely different groups of consumers may exist, each group consists of consumers with common or similar needs and preferences who will perhaps react to a particular market mix in a similar way.  

Competitor analysis

Before an organisation can properly target the most lucrative part of the market some competitor analysis is also advisable. This will ensure that the organisation is aware of the competitors in relevant market segments and the strategies and marketing mix that they are adopting. The viability of each segment and the approach to adopt should become clearer as a result.

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