Target Market

 

CEREAL BAR DUTCH LADY

Target Market

The selection of target market for a new product is one of the most important marketing decisions for many national and multinational companies (Aghdaie, M.H.; Alimardani, M. 2015). It is performed based on the evaluation results of market segmentation undertaking other important factors like profitability & risk, the number of competitors, segment size & attractiveness, and segment identification. Dutch Lady is planning to launch its new product (Brand Extension) “Cereal Bar” under its well-established brand name and brand equity. The company is already a market leader in all of its dairy products targeting the dairy needs of its Malaysian customers of all ages. Therefore, it will be easy for the company to rightly identify its segment, market attractiveness, and segment profitability in comparison with its all local and international competitors. For target marketing, the company will undertake the consumer market segmentation based on descriptive characteristics (geographic, demographics, and psychographic) as well as behavioral considerations (such as consumer responses to benefits, use occasions, or brands)

Segment Identification

The early concept of market segmentation has been explored in the 1950s by the American Professor of Marketing; Wendell. R. Smith. So, it is important to study that market segmentation is dividing the market into subgroups that are having common characteristics (Singh A. 2011) where the customers are ready to pay for the products or services that satisfy their needs (Wedel, M., and Kamakura 2002). There are many ways constructed to identify the right market segment (Wedel & Kamakura, 1998; Mazanec, 1997; Aldenderfer & Blashfield, 1984) but there are mainly two building blocks that are either based on entire information or just one piece of information. Dutch Lady already has the entire information about its existing target market for its dairy products where they are going above on customer preferences and satisfaction. The same but relatively different marketing approach will be adopted for the segment identification and targeting of the Cereal Bar market in Kuala Lumpur, Malaysia.

The main goal of Cereal Bar is to introduce the new but relevant product to the existing and new target market for larger market size, profit, and growth potential. Its target market will be the same customers who are already adding value to its existing milk products with an addition of a new product of Cereal Bar in their breakfast. This product is for all ages with the option of customization and customization. The idea behind this brand stretching is to produce the healthiest cereal bars in different flavors and versatility having the lowest calories, sufficient sugar level, high nutrients, and that will also be effective to control and lose weight. Due to the increasing popularity of cereal bars, Dutch Lady aims to place this product to let its customers experience it every single day during their breakfast.

Dutch Lady will be following the four most emerged geographic segmentation basis; geographic (region, climate, population density), demographic (age, family size, family life cycle, gender, annual income, occupation, education, religion, race, nationality, social class, etc.), psychographic (lifestyles and culture orientation), and behavioral segmentation (user status, benefits sought, purchase occasion, usage rate, loyalty status, readiness stage and attitude towards product) (Kamakura, W.A and Wedel, M. (2002);  Kotler, Armstrong, Saunders, & Wong (2002). The segmentation bases are chosen to subdivide a the market will depend on many factors such as “the type of product, the nature of demand, the method of distribution, the media available for market communication, and the motivation of the buyers” (Chisnall 1985). As the company has already occupied the whole market of Kuala Lumpur, therefore, it will be easy to successfully target the market with its new product category under the same brand name.

The main target market will be Kuala Lumpur (high diversity of population) and its neighbor cities in Malaysia. The location is having a huge potential market for mass marketing because it is having customers with similar preferences (needs and wants) that will ultimately result in a higher profit margin with low production costs. This new product is mainly for households, families, and children who belong to any occupation, religion, race, and social class. Further, this will be for the lower middle and middle class at affordable rates for every gender. The company is focusing on flexible market offerings through a naked solution where there will be greater value return from each segment member. This new product offering will be according to the homogeneous and clustered preferences of the local customers with no or little attention to diffused preferences.

Segment Attractiveness

Segmentation allows marketers to identify distinct groups of customers whose behaviors significantly differ from others. This allows firms to adjust their marketing mix, to cater to the particular needs of different market segments. Dutch Lady is analyzing the needs of its customers and the relative segment attractiveness before target market selection (McDonald and Dunbar, 2004). The company is carefully assessing the discriminating criteria including certain steps to find the best segments one by one (Weinstein, 2004 and Kotler, 2011). These discriminating criteria include consumer’s preferences (Homogeneous, Diffused, and Clustered), compatibility, defensibility, competitiveness, and durability for Cereal Bar to enhance the market segmentation effectiveness and attractiveness. There is a further need to incorporate the risk and profitability measures to see if the targeted segment is comprehensive and quantifiable (Jang et al. 2002). Hence, the target market segment will be having attractive and will return a high volume of sales.

Segment Profitability

Dutch lady has also undertaken other factors like the rising demand of cereal bar, distribution methods, effective marketing communication that can motivate its buyers better than others to increase its profitability (Weinstein, A. 2006). It is to be expected that the selected target market for Cereal Bar enables Dutch Lady to increase its profitability, market size, and market growth (Simkin and Dibb 1998). Because the company has segmented its market after careful selection of the target market as it is easily measurable, accessible, sustainable, differentiable as well as actionable for its customers (Kotler and Armstrong 2003). We have also considered three other criteria for the evaluation of market attractiveness that is variability, profitability, and accessibility (McQueen and Miller 1985). Thus, we are following the systematic approach for market segmentation evaluation and profitability (Loker and Perdue 1992).

 

References

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