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Once you have segmented your market based on different characteristics, the next task is to choose one or more target market segments. Developing different marketing strategies for different customer groups is very important as no one particular strategy would satisfy all customer groups with different characteristics, lifestyles, backgrounds and income levels.

There are three general strategies for selecting your target markets:

Undifferentiated targeting

This approach views the market as one big market with no individual segments and therefore uses one single marketing strategy. This strategy may be useful for a business with little competition where you may not need to tailor strategies for different preferences.

An example of when undifferentiated targeting can succeed is if your business is the only one of its kind in a small isolated town where you would consider all people living in the town as your target market. However this strategy may not be effective if there are three or four competitors also in town.

Concentrated targeting

This approach focuses on selecting a particular market niche for targeting the marketing efforts. Because your firm is focusing on a single segment you can concentrate on understanding the needs and wants of that particular market intimately. Small firms often benefit from this strategy as focusing on one segment enables them to compete effectively against larger firms. Porsche for example, targets an upscale automobile market through "Class appeal, rather than mass appeal".

Multi- segment targeting

This approach could be selected if you wish to focus on two or more, well defined market segments and want to develop different strategies for them. Multi segment targeting offers many benefits to firms including greater sales volume, higher profits and large market share. However this method can be costly as it involves greater input from management, increased market research, and increased promotional strategies etc.

Prior to selecting a particular targeting strategy, you should perform a cost benefit analysis between all available strategies.