The segment(s) or group(s) of people and organizations you decide to sell to is called a target market. Targeted marketing, or differentiated marketing, means that you may differentiate some aspect of the marketing mix (product, promotion, price, place) for different groups of customers selected. It is a relatively new phenomenon. Mass marketing, or undifferentiated marketing, came first. It evolved along with mass production and involves selling the same product to everybody. Mass marketing means broadcasting a message that will reach the largest number of people possible (Wikipedia, 2022).^[1]

Automaker Henry Ford was very successful at both mass production and mass marketing. Ford pioneered the modern-day assembly line early in the twentieth century, which helped him cost-effectively produce huge numbers of identical Model T automobiles. They came in only one colour: black. “Any customer can have a car painted any colour he wants, so long as it is black,” Ford used to joke. He also advertised in every major newspaper and persuaded all kinds of publications to carry stories about the new, inexpensive cars. By 1918, half of all cars on America’s roads were Model Ts (Ford, 1922).^[2] Many of the daily products you use, such as soap, shampoo, and detergent, are examples of mass products. McDonald’s is a great example of mass marketing. You see their ads everywhere: on the bus, on the train, radio, social media, TV, Spotify ads, and on billboards (Figure 5.1).

Then, Alfred P. Sloan, the head of General Motors (GM), appeared on the scene. Sloan began to segment consumers in the automobile market—to divide them up by the prices they wanted to pay and the different cars they wanted to buy. The idea was to offer a car for every target market or for every income level. His efforts were successful, and in the 1950s GM overtook Ford as the nation’s top automaker (Stein, 2005).^[3]

Benefits of Segmenting and Targeting Markets

The story of GM raises an important point, which is that segmenting and targeting markets doesn’t necessarily mean shrinking the number of your customers. In fact, it can help you enlarge your customer base by giving you information with which to successfully adjust some components of your offering—the offering itself, its price, and the way you service and market it. More specifically, the process can help you do the following:

• Avoid head-on competition with other firms trying to capture the same customers.
• Develop new offerings and expand profitable brands and product lines.
• Remarket older, less-profitable products and brands.
• Identify early adopters.
• Redistribute money and sales efforts to focus on your most profitable customers.
• Retain “at-risk” customers in danger of defecting to your competitors.

The trend today is toward more precise, targeted marketing, which involves market research (see chapter 6). A variety of tools and research techniques can be used to segment markets. Government agencies, such as Statistics Canada, offers population information and economic data that can reveal changing consumption trends. Technology is also making it easier for even small companies and entrepreneurs to gather information about potential customers. With the increased use of social media, companies are able to get information on consumers’ search behaviour. Loyalty cards that consumers scan at many grocery and drug stores provide an incredible amount of information on consumers’ buying behaviour.

Companies are now using the Internet to track people’s web browsing patterns and segment them into target groups. Even small businesses are able to do this cost-effectively because they don’t need their own software and programs—they can simply sign up online for products like Google Ads and Google Analytics programs. You can locate potential customers by looking at blog sites and discussion forums on the web. If you have a website, you can download an application onto your iPhone that will give you up-to-the-minute information and statistics on your site’s visitors.

Getting a read on potential target markets doesn’t necessarily have to involve technology. Your own personal experience and talking to potential customers is an important part of the puzzle. Go to restaurants, malls, gyms, subways, grocery stores, schools, and offices—and ask questions to find out what they do during the day, what they talk about, what products or services do you see them using, and do they seem to be having an enjoyable experience when using those products or are they frustrated?

Healthy Choice frozen dinners were conceived as a result of questioning potential customers. The food-maker ConAgra launched this line of dinners in the late 1980s after its CEO, Charlie Harper, suffered a heart attack. One day, a colleague complimented Harper on his wife’s tasty low-fat turkey stew. That’s when Harper realized there were people like him who wanted healthy convenience foods, so he began talking to them about what they wanted. Two years after the Healthy Choice line was launched, it controlled 10 percent of the frozen-dinner market by concentrating on the health-conscious segment (Birchall, 2009).^[4]