Analysis Targeting about CBS Broadcasting Inc
A target market can be defined as a consumer segment, which a business organization has decided to aim with marketing efforts and eventually its products and services. Market targeting is a critical component of a company’s overall marketing strategy. This is primarily because; is largely drives the company’s market share and the level of its sales revenue. Moreover, some researches reveal that targeting a wrong market segment may be costly to a business enterprise, especially through high promotion costs aimed at elevating the company’s sales revenue and profitability. This paper presents a critical analysis of the targeting strategies that may be applicable to CBS Broadcasting Inc.
Analysis of the target market segments
Research postulates that successful marketing commences with the identification or definition of an organization’s specific target market segment. By definition, a target market refers to group of consumers or customers that a business organization may wish to aim its marketing efforts towards (Longenecker 151). Principally, a target market can only be identified through the application of relevant marketing segmentation approach. In this context, market segmentation refers to the process of describing and partitioning a huge homogeneous market into precisely identifiable segments with similar wants, needs, or demand characteristics (Cant 103). The key objective of market segmentation is to structure a marketing mix that clearly reflects customers’ expectations in the targeted segment. Therefore, in order to provide personalized media services to its target market, CBS Broadcasting Inc must partition or segment its target market according to a particular criterion.
Generally, CBS Broadcasting Inc’s target market can be segmented using six key strategies: demographic segmentation, behavioral segmentation, geographic segmentation and psychographic segmentation, geodemographic segmentation and benefits segmentation (Klever 14). Despite the many segmentation strategies, the segmentation of CBS Broadcasting Inc’s target market will be restricted to demographic segmentation. Demographic segmentation entails dividing up the company’s target market population according to demographic variables such as age, income, occupation, family size, religion, race, marital status, gender and nationality (Gitman and Carl 299). The rationale for using demographic segmentation strategy is essentially because it is easily identifiable than other strategies such as psychographic segmentation.
Ideally, CBS Broadcasting Inc’s target market-which is the total population in the Unites States-can be divided according to one key demographic variable age. Research reveals that the needs and wants of most consumers tend to significantly vary with their age (Blythe 187). For instance, consideration the products and services offered by CBS Broadcasting Inc (such as CBS news, CBS home entailment, CBS films and CBS consumer products, among others) it can be argued that there is a significant difference in consumption of say GBS news and GBS films between the target consumers of age less than 15 years and those of age between 25-40 years. Though the basic functionality of the company’s products and services is the same for all consumers, there wants are different. Using age as the main demographic segmentation variable, CBS Broadcasting Inc’s target market will generally consist of three key segments, which include children, adults and the old population. In this case, it is assumed children consist of all populations of age below 20 years. Moreover, the United States population of age between 20-64years will be considered as adults while those 65 years and over will be categorized as adults.
According to the U.S Census statistics 2010, the total population of individuals of age below 20 years (children) amounted to approximately 83.2 million. The total population of all adults and old people was174.9 million and 50.6 million respectively (Meyer and Howden 4). The above statistics implies that adults occupy the largest proportion of the company’s market target segment, being about 57 % of the country’s total population during the census year. Ideally, the CBS Broadcasting Inc’s target market segments can be illustrated in chart 1.
In selecting the best target market segment, among three segments above, a number on critical factors will be considered. Ideally, for the segment to be selected, it needs to be identifiable, reachable or accessible, responsive, substantial and profitable. Comparing the three segments using the criteria of identifiable, it can be argued that that is relatively easy to identify a member from each of the three market segments by largely focusing on their physical fitness or appearance. However, it terms of accessibility, it can generally be argued that it is easier to access an adult population segment compared to the other two segments, particularly due to their restrictions to movements. For example, as opposed to who can be reached in offices, on bus stations, at home or in streets, most children’s are not available due to the restrictions on movement imposed on them by their parents and even by school authorities.
In addition, research reveals that adults (especially of middle age) are more responsive to change than the two age groups. Since most old people are conservatisms, there level of responsiveness can be said to be lower than those of children and adults. In addition, based on U.S Census 2010, the adult population segment is more substantial than the other two segments, followed by children and old people respectively. Based on the four factors of segment attractiveness discussed above, it is appropriate for CBS Broadcasting Inc to target the adult population more, followed by children. The old population should be targeted least. The rationale for the above argument is largely based on their size. By targeting adults, whose total population is more than half of the company’s target population; CBS Broadcasting Inc is likely to benefit from high sales than if the company were to target the old population whose size is less than one-fifth of the population. Besides being many in number, this segments is coupled with highest (combined) income distribution for all percentiles (see chart 2).
Chart 2: Income distribution by age
Analysis of the profitability of the market segments/year
All the three target market segments, to a large extent, meet all the four factors of segments attractiveness. Since the key objective of CBS Broadcasting Inc is to maximize the wealth of its shareholders through profit maximization, the company directs its marketing efforts largely to the segment with the highest profitability (Porter 257). The profitability of the three market segments can be computed using the formula: SP= [SZ*SAR*PB*PM]-FC, where SP= segment profitability, SZ=size of the target segment, SAR=the adoption rate of the market segment, PB=purchase behavior attributed to the market segment, PM=company’s profit margin and FC=company fixed costs. Given the above formula the profitability of the three segments is given in table 1 below.
Assumptions:
- The company’s FC and PM are $ 200 million and 60% respectively.
- A constant segments’ size of 83.2 million, 174.9 million and 50.6 million of children, adults and old people respectively from the year 2012.
- The company’s selling per unit of product/service is $ 10.
- Adoption behavior declines from adults (30%) via children (20%) to old people (10%); basing our arguments on the previous discussion on responsive.
- Customers of all segments of will buy 100 units of product/service per year.
Based on the segment profitability, CBS Broadcasting Inc should still target adults, since this segment given the company the highest profit per annum of $ 31282 million compared to the other two segments. The old population is the least profitable segment with a total profitability of $ 2836 million per annum, largely because of it smaller size and lowest adoption rate compared to the first two segments.
Analysis of market targeting strategies
In general, four market targeting strategies are available to CBS Broadcasting Inc. These include mass marketing (undifferentiated), segmented marketing (differentiated), niche marketing (concentrated) and one-to-one marketing (micromarketing) (Rogers 48). Given than majority (over 57%) of the company’s target customers belongs one segment, the company is likely to adopt a concentrated or niche market targeting strategies (Loole and Robin 147). In this case, CBS Broadcasting Inc will go after a significant share of the one segment (adults). This strategy is more beneficial than other strategies such as mass marketing, since it gives a company a chance to analyze the needs and wants of one market segment and then contrite all its efforts on the segment to extra maximum utility (Havaldar 104).
Works cited
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