What is Target Marketing?
Targeting is the second T in STP. Once you have segmented the market, you evaluate each segment along two axes: segment attractiveness (size, growth, margin, competitive intensity, fit with macro trends) and company fit (do our resources, brand, and channels let us win here?). The intersection — large, growing, defensible segments where we have an unfair advantage — is where you target. Targeting can be undifferentiated (same offer for everyone), differentiated (tailored offer per segment), concentrated (one segment), or micromarketed (an offer per individual).
How Target Marketing actually works
The framework breaks down into the following moving parts. Knowing what each piece is — and what it is not — is what separates a B-grade answer from an A-grade answer in a written assignment.
- Score each segment on attractiveness (size × growth × margin / competitive intensity)
- Score each segment on company fit (do our capabilities and brand permission play here?)
- Plot segments on a 2x2 of attractiveness vs fit; target the upper-right cell
- Choose a coverage strategy — undifferentiated, differentiated, concentrated, or micromarketed
- Write a one-sentence target customer description per segment you choose
A worked example: Tesla
Tesla in 2008 chose a concentrated targeting strategy: one segment (affluent enthusiast early adopters), one product (Roadster). The segment was tiny but high-margin, accessible (auto-show buyers), and tolerant of bugs in exchange for being first. Once Tesla had cash flow, it moved up the attractiveness curve to the broader luxury sedan segment (Model S), then mass-premium (Model 3). The targeting cascade — a 2008 textbook would have called it Geoffrey Moore's "bowling alley" — was the entire growth strategy.
Don't lose marks for these
- Targeting a "demographic" without proving it is a segment (men 25–34 is not a segment, it is a description)
- Choosing the largest segment by reflex when a smaller, defensible segment yields more profit
- Targeting too many segments without the resources to serve each well
- Ignoring company fit and chasing only attractiveness
How to use this on the exam
Score-maximizing moves
- Score segments on both attractiveness and fit and put it in a 2x2
- Name the coverage strategy you are using (concentrated, differentiated, etc.)
- Always link targeting decision to the resources and brand permission of the firm
When to use Target Marketing (and when not to)
Use Target Marketing when your assignment asks you to analyze, structure, or recommend — and when you have at least two data points to populate every cell of the framework. Skip it when the question is asking for a numerical answer or a single recommendation, since Target Marketing is a structuring tool, not a calculator.