Target Market, Segmentation and Evaluation

2.  A market is a group
of individuals and/or
organizations that
have a desire or
need for products in
a product class and
have the ability,
willingness, and
authority to
purchase those
products.

3.  Markets fall into one of two categories:
› Consumer markets
› Business markets

4.  Consumer Market consists of purchasers
and household members who intend to
consume or benefit from the purchased
products and do not buy products to
make a profit.
 Also known as business-to-consumer
(B2C) markets

5.  A Business Market consists of individuals
or groups that purchase a specific kind
of product for one of three purposes:
resale, direct use in producing other
products, or use in daily operations.
 Also known as business-to-business (B2B)
markets and can be sub-classified into
producer, reseller, government, and
institution markets

6.  Selecting a target market is the first of
two major components of developing a
marketing strategy.
 Marketers may employ several methods
for target market selection, generally
they follow a five-step process.

8.  A target market is a group of people or
organizations for which a business
creates and maintains a marketing mix
specifically designed to satisfy the needs
of group members.
 The marketing strategy used to select a
target market is affected by target
market characteristics.

9.  Undifferentiated Targeting Strategy
› A strategy in which an organization designs
a single marketing mix and directs it at the
entire market for a particular product
› Assumes that all customers in the target
market have similar needs, and thus the
organization can satisfy most customers with
a single marketing mix with little or no
variation.

10.  Undifferentiated Targeting Strategy
› Effective under two conditions: First a large
proportion of customers in a total market
must have similar needs for the product, a
situation termed a homogenous market
› Second, the organization must have the
resources to develop a single marketing mix
that satisfies customers’ needs in a large
portion of a total market

12.  Concentrated Targeting Strategy
through Market segmentation
› Sometimes, a market maybe comprised of
individuals or organizations with diverse
product needs is called a heterogeneous
market. For this type of market, market
segmentation is the best approach. It is the
process of dividing a total market into groups
with relatively similar product needs to
design a marketing mix that matches those
needs.

13.  Concentrated Targeting Strategy
through Market segmentation
› A market segment consist of individuals,
groups, or segments that consist of people or
organizations with relatively similar product
needs.
› The rationale for segmenting heterogeneous
markets is that a company will be most
successful in developing a satisfying
marketing mix for a portion of a total market
whose needs are similar.

14.  Concentrated Targeting Strategy
through Market segmentation
› When an organization directs its marketing
efforts towards a single market segment
using one marketing mix, it is using
concentrated targeting strategy.

16.  Differentiated Targeting Strategy through
market segmentation
› A strategy in which an organization targets
two or more segments by developing a
marketing mix for each segment.
› A benefit of a differentiated approach is
that a firm may increase sales within the total
market because its marketing mixes are
aimed at more customers.

18.  Segmentation variables are
characteristics of individuals, groups, or
organizations, used to divide a market
into segments.

19.  Demographic Variables
› Age
› Gender
› Race
› Ethnicity
› Income
› Education
› Occupation
› Family size, family life cycle
› Religion
› Social class

20.  Geographic variables
› Region
› Urban, suburban or rural
› City size
› Country size
› Market density – number of potential customers
within a unit of land area
› Climate
› Terrain
› Micromarketing – an approach to market
segmentation in which organizations focus precise
marketing efforts on very small geographic markets

21.  Psychographic variables
› Personality attributes
› Motives
› Lifestyles

22.  Behavioristic variables
› Volume usage
› End use
› Benefit expectations
› Brand loyalty
› Price sensitivity

23.  Geographic Location
 Type of organization
 Customer size
 Product use

24.  A market segment profile describes the
similarities among potential customers
within a segment and explains the
differences among people and
organizations in different segments.
 A profile may cover aspects such as
demographic characteristics,
geographic factors, product benefits
sought, lifestyles, brand preferences, and
usage rates.

25.  Marketers use market segment profiles to
assess the degree to which their
products fit potential customers’ product
needs.

26.  After analyzing the market segment
profiles, a marketer should be able to
narrow his or her focus to several
promising segments that warrant further
analysis.

27.  Sales Estimates
› Market potential – total amount of a product
that customers will purchase within a
specified period at a specific level of
industry-wide marketing activity.
› Company sales potential – maximum
percentage share of a market than an
individual firm within an industry can expect
to capture for a specific product.

28.  Sales Estimates
› Two general approaches that measure
company sales potential are breakdown
and buildup.
› Breakdown – marketing manager first
develops a general economic forecast for a
specific period
› Buildup – marketing managers begins by
estimating how much of a product a
potential buyer in a specific area will
purchase

29.  Competitive Assessment
 A market segment that initially seems attractive,
but it will also be attractive for other companies.
 Cost Estimates
› To fulfill the needs of a target segment, an
organization must develop and maintain a
marketing mix that precisely meets the wants
and needs of that segment, which can be
expensive.

30.  Selecting appropriate target markets is
important to an organization’s effective
adoption and use of the marketing
concept philosophy.
 Identifying the right target market is the
key to implementing a successful
marketing strategy.
 Failure to do so can lead to low sales,
high costs, and severe financial losses.

31.  Sales Forecast – the amount of a
product a company expects to sell
during a specific period at a specified
level of marketing activities.
› Executive judgment – forecasting method
based on the intuition of one or more
executives
› Customer forecasting survey – a survey of
customers regarding the types and
quantities of products they intend to buy
during a specific period

32.  Sales Forecast
› Sales Force forecasting survey – firm’s
salespeople estimate anticipated sales in
their territories for a specific period.
› Expert forecasting survey – hires professionals
to help prepare the sales forecast.
› Delphi method – experts create initial
forecasts, submit them to the company for
averaging, and have the results returned to
them so they can make individual refined
forecasts.

33.  Time Series Analysis
 The forecaster uses the firm’s historical
sales data to discover a pattern or
patterns in sales over time.

34.  Trend Analysis
› Focuses on aggregate sales data, such as
company’s annual sales figures, covering a
period of many years to determine whether
annual sales are generally rising, falling, or
staying about the same

35.  Cycle Analysis
› Analyzes sales figures for a three- to five-year
period to ascertain whether sales fluctuate in
a consistent, periodic manner

36.  Seasonal analysis
› Study daily, weekly, or monthly sales figures
to evaluate the degree to which seasonal
factors, such as climate and holiday
activities influence sales

37.  Random factor analysis
› Forecaster attempts to attribute erratic sales
variations to random, nonrecurring events,
such as a regional power failure, a natural
disaster, or political unrest in a foreign market

38.  Uses historical sales data.
 Seeks to find a relationship between past
sales and one or more variables, such as
population, per capita income, or gross
domestic product.

39.  Involves making a product available to
buyers in one or more test areas and
measuring purchases and consumer
responses to the product, distribution,
promotion, and price.