Answer

Introduction

            The marketing keyword that is discussed in this paper is target market and the organizations referred to are The Coca-Cola Company and The General Motors Company. The marketing term “target market” is used to refer to a group of customers or clients which a company chooses to serve in its entire market. Each company tailors its marketing efforts to reach the segment of population that is able and willing to buy the goods and/ or services it offers.  Each company must first identify the type of customers who constitute its primary market to determine its target market(HASSAN and CRAFT 2012, pp. 344-356). For example if a company manufactures luxury cars like General Motors Company, its target market is likely to be made up of people with a certain level of income per year.  Marketing is all about meeting the needs of customers and target marketing strategies assists companies to identify and meet the needs of their customers effectively and better than the competition.  The success of every company depends on its ability to meet the needs of its customers better than its competitors.  Companies that succeed in business are those that do not try to be everything to all people but instead define their primary target market carefully(HASSAN and CRAFT 2012, pp. 344-356).

A brief introduction of The Coca-Cola Company

            Founded in 1886 by John Stith Pemberton and  incorporated in 1892 by Asa Griggs Candler, The Coca-Cola Company is headquartered in Atlanta in Georgia in the United States of America and is a multinational beverage manufacturer (Banutu-gomez 2012, pp. 155-169). The multinational beverage corporation manufactures, retails, and markets nonalcoholic beverage syrups and concentrates and has identified its target market for its products.  The corporation is best known for its flagship product Coca-Cola which it markets to the mass market (JIANG 2010, BANUTU-GOMEZ and ROHRER 2013, pp. 256-268). The Coca-Cola Company has expanded to virtually all countries of the world with an exception of North Korea through franchising strategy.  

A brief introduction of General Motors

            Founded in 1908, General Motors is a multinational corporation headquartered in Detroit in United States of America. The corporation operates in well over 120 countries all over the world and manufactures a wide range of vehicles and trucks among others. The  company manufactures  vehicles and trucks in the renown brand names of GMC, Cadillac, Holden, Wuling, Isuzu, Opel, Jiefang, Buick, Baojun and Chevrolet in its over 396  facilities spread across the  world(JANOWICZ 2014). General Motors targets the global vehicle market in its marketing effort but has segmented its market accordingly. These brands are designed to meet the motoring needs of the various classes of customers in each country that the company operates in (BIGMAN 2013, p1; BOSCO and PLANTE 2013, pp. 180-191).  

Factors to consider in choosing a target market and determining its attractiveness

 An ideal target market for any company is one that can be reached without problems, one that is large enough to generate adequate revenues to meet short and long term revenue targets and one that can be measured statistically.  Companies design marketing mix elements of place, promotion, price and product to suit the selected group of customers who constitute the target market(PAUL 2009, p.15).  Companies use market segmentation strategies to segment their target market (s).  In the case of The Coca-Cola Company, its target market varies from one region to another. For example, in the United States of America, the company manufactures some products that target consumers who are struggling with weight problems or those who are conscious of their weight. Other products have target markets which are mainly made up of sport conscious youths such as Sprite and Fanta(PAUL 2009, p.15). The promotional strategies are designed to appeal to the different segments with each product.  The General Motors Company also manufactures trucks and vehicles that target different market segments. The Super Utility Vehicles (SUVs) target business executives and families while Cadillac and other luxury brands targets the rich and super rich. The promotional strategies designed for each class of customers differ from each other(BIGMAN 2013, p1; BOSCO and PLANTE 2013, pp. 180-191).

In evaluating the attractiveness of a target market, companies consider various factors. The first factor that companies consider is the size of the market segment in terms of the possible number of potential customers. Some companies sell products or services that target the mass market like Coca-Cola soft drink while other companies aim to serve a section of the population such as Cadillac which targets the rich and super rich.  The rate of growth of the target market is also very important. Since most companies have the objective of maximizing shareholder wealth, the ability of a target market to generate returns at an increasing rate is very important(PAUL 2009, p.15).

Marketers must also consider the level of competition in the market they are targeting. If a target market is characterized by many players which generates intense competitive rivalry then it is not attractive.  In such a market it would be very difficult to maximize returns and grow revenues unless a huge promotional budget is set aside.  Undercutting in pricing will be common in such a market and it would be impossible to attract and retain customers. For example, Coca-Cola spends huge sums of money to stay ahead in the soft drink business in promoting its products. The other factor that marketers consider is brand loyalty of existing customers in the market niche served by a company(PAUL 2009, p.15). If loyalty is very low then the target market is not attractive and vice versa. In selecting a target market, marketers are keen to determine whether they will be able to attain the desired market share while considering the expenditures incurred by competitors in the same market and the promotional budget set aside by their companies. If they find that they would be unable to achieve the desired market share then they choose another target market. Marketers are keen to choose a target market that will generate a market share that will not only enable a company to break even but also report profit margins that would maximize shareholder wealth(HASSAN and CRAFT 2012, pp. 344-356).

            Companies spend a lot of money in obtaining information to carry out market research and analyze their target markets. For example, in determining sales potential of target markets, marketers use buyer intentions, sales force estimates, test marketing and statistical demand analysis. In addition, marketers analyze the impact of micro and macro-environmental variables on the market they are targeting to determine their attractiveness and feasibility. Most companies try to target smaller segments of the larger target market due to competition. Companies try to identify segments of the target market that they can serve well and have a competitive advantage in doing so. However, large multinational corporations that have a strong balance sheet such as The Coca-Cola Company can target the mass market as they have patented the brand names of their flagship products. They are therefore able to design marketing mix elements of product, price place and promotion that serve a large target market which cuts across many continents and countries(PAUL 2009, p.15; BIGMAN 2013, p1; BOSCO and PLANTE 2013, pp. 180-191)).

How to identify a target market

            Identifying the needs that a product or service meets is the first step in identifying a target market for a company. Companies must first list the features and benefits that their products and services offer and then try to match those features and benefits with needs and wants of prospective customers. For example,  The Coca-Cola Company manufactures a soft drink , Coca-Cola, that has as one of its features, a formula that satisfies thirst, the need that prospective customers have and which can be met by that product is satisfying thirst in a hot day. While product or service features are valuable, it’s the needs that motivate customers to buy. In the above example the need that is met by the soft drink is solving the problem of thirst in a hot day.  After identifying the needs that a product or service meets the company then lists characteristics that are common among potential clients who then constitute the target market(PAUL 2009, p.15).

            The next step in identifying a target market is segmenting the overall market identified in step one.  The main reason why companies segment their target markets is because in many cases initial target markets identified are very large.  The cost of designing a promotional strategy for a large target market is normally too high such that it exceeds the possible returns.  Most companies use market segmentation strategies to identify a group of customers in the target market who are most likely to buy and who can be reached at minimal cost (MALHOTRA, SIVAKUMAR and ZHU 2009, pp. 651-673).  For that specific group, each company designs marketing mix elements that are focused to meet the needs and desires of the smaller target market. Companies break down large target markets into small segments with common characteristics by using market segmentation strategies.  The Coca-Cola Company and General Motors Company have each identified and broken down target markets for the various products that they manufacture(PAUL 2009, p.15). 

The last step in identifying a target market is studying each segment of the large target market selected to understand customer needs better.  Marketers attempt to come up with a profile of the prospective customers and an analysis of their needs and wants.  Customers profile could include determining their gender composition, age variances, income clusters, marital status, levels of education and occupations among others. This information is useful in designing the appropriate marketing mix elements that would maximize returns(HASSAN and CRAFT 2012, pp. 344-356).  

How to segment a target market

            Companies use various strategies to segment target markets into one or several smaller market segments that they can serve effectively and efficiently. One of the most common strategies is by use of geographical location. In this strategy, marketers segment potential customers based on regions such as state, regional or national. For example, companies selling farm inputs normally use this strategy as different places have different climatic conditions and may require different types of inputs from each other. Companies have also to choose whether they will serve a local market, a regional market, a national market or the international market. This is because each market has its fair share of challenges and opportunities (HASSAN and CRAFT 2012, pp. 344-356).  The Coca-Cola Company serves the international market with most of its products even though there are products that can only be found in certain countries and regions. This strategy has therefore enabled the corporation to identify market segments that it can serve effectively and efficiently to meet its strategic goals.  The General Motors Company on the other hand, serves the international market but some of its products can only be found in one region. In segmenting the target market the company considered the disposable incomes of the target market and also the size of the market Vis a Vis its sales potential among other attractiveness factors(BIGMAN 2013, p1; BOSCO and PLANTE 2013, pp. 180-191).

             The next strategy that companies use to segment its target market is by use of demographic information. This involves segmenting a target market based on such variables as marital status, education level, occupation, family size, income level, religion, gender, age and race among other similar variables. Marketers normally choose the characteristics of the demographic target market that relates to the interest, need and ability of the prospective customer to buy what they are selling.  The Coca-Cola Company use franchising as its preferred mode of entry into foreign markets. In choosing the franchisee investors, the company considers the number of employees, annual revenue, distribution channels and customer size among others. This enables the company to deal with franchisees that are likely to generate revenues that meet costs of the franchise agreement. The Coca- Cola Company also considers age  and income levels in segmenting its target markets. The corporation manufactures soft drinks of different sizes and prices that fit the income brackets of its potential consumers. There are soft drinks for the family packed in family packs and there are for low income consumers. This type of demographic segmentation of its target market enables the company to maximize returns(BIGMAN 2013, p1; BOSCO and PLANTE 2013, pp. 180-191).

            The General Motors also uses demographic segmentation of its target market. The company assortment of luxury vehicles are aimed at consumers who have high income levels. The luxury vehicles are also designed to provide certain types of comforts to the rich and super rich. The company also manufactures vehicles that target relatively lower income consumers.  Some of these vehicles include fuel efficient vehicles which are known for their economic utilization of fuel. These are designed to meet the needs to consumers who are keen to save on fuel cost.

            Companies also use psychographic factors to segment their target market.  This is based on attitudes, beliefs and emotions of consumers the target market. For examples, The General Motors Company manufactures Cadillac and other luxury vehicles to meet the needs of consumers who have a desire for status and enhanced appearance due to their status in society. The Coca-Cola Company manufactures certain types of drinks that meet dietary or sporting needs of consumers to meet their beliefs or attitudes. For example, someone struggling with weight would like to be seen taking dietary coke (BOHI 2010, p.10).

Lastly, the target market of a company could be segmented based on the behavior of consumers. Companies study the reasons or factors that make consumers make purchase decisions and use that information to segment their target market.  In the case of The Coca-Cola Company and General Motors Company, there are consumers who are influenced by price of the products FUHRMAN 2010, pp. 30-32, 34, 36, 38). There are consumers who normally buy the low priced drinks and vehicles because of price considerations. Both companies use this information to design marketing mix elements that target that particular group of consumers (ABARI, NILCHI, NASRI and HEKMATPANA 2012, pp. 6291-6299).

Conclusion

            Every company must determine the needs of its potential consumers of its products and services and design products that meet those needs better than the competitors. Its only by being able to meet the needs of customers better than the competition that a company can grow its market share in its target market. A company’s target market may be so large that it may not be cost effective to sell to such a market. In such a case segmenting the target market into one or more segments that the company can serve effectively and efficiently is best option to maximize shareholder wealth. The Coca- Cola Company and General Motors are classic examples of companies that have identified their target markets and segmented it effectively to achieve organizational goals and objectives.