The document outlines a 5-step process for selecting target markets: 1) Identify targeting strategy, 2) Determine segmentation variables, 3) Develop profiles, 4) Evaluate segments, 5) Select markets. It also discusses developing sales forecasts using methods like executive judgment, surveys, time series analysis examining trends, cycles, and seasons, and regression analysis relating sales to economic indicators. Market tests are conducted to measure consumer response to new products in test areas.

1. TARGET MARKETS:
SEGMENTATION
AND EVALUATION
CMARKETING
M. Aldana
Faculty, SHTM

2. MARKETS
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
• Markets fall into one of two categories:
• Consumer markets
• Business markets

4. MARKETS
• 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. MARKETS
• 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. TARGET MARKET
SELECTION PROCESS
• 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.

7. TARGET MARKET
SELECTION PROCESS

8. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
• 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. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
• 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. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
• 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. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
 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. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
 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. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
• 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. STEP 1 IDENTIFY THE
APPROPRIATE TARGETING
STRATEGY
• 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. STEP 2: DETERMINE WHICH
SEGMENTATION VARIABLES
TO USE
• Segmentation variables are characteristics of individuals,
groups, or organizations, used to divide a market into
segments.

19. STEP 2: DETERMINE WHICH
SEGMENTATION VARIABLES
TO USE
 Demographic Variables
› Age
› Gender
› Race
› Ethnicity
› Income
› Education
› Occupation
› Family size, family life cycle
› Religion
› Social class

20. STEP 2: DETERMINE WHICH
SEGMENTATION VARIABLES
TO USE
 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. STEP 2: DETERMINE WHICH
SEGMENTATION VARIABLES
TO USE
• Psychographic variables
• Personality attributes
• Motives
• Lifestyles

22. STEP 2: DETERMINE WHICH
SEGMENTATION VARIABLES
TO USE
• Behavioristic variables
• Volume usage
• End use
• Benefit expectations
• Brand loyalty
• Price sensitivity

23. VARIABLES FOR
SEGMENTING BUSINESS
MARKETS
• Geographic Location
• Type of organization
• Customer size
• Product use

24. STEP 3 – DEVELOP MARKET
SEGMENT PROFILES
• 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. STEP 3 – DEVELOP MARKET
SEGMENT PROFILES
• Marketers use market segment profiles to assess the degree
to which their products fit potential customers’ product
needs.

26. STEP 4 – EVALUATE RELEVANT
MARKET SEGMENTS
• 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. STEP 4 – EVALUATE RELEVANT
MARKET SEGMENTS
• 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. STEP 4 – EVALUATE RELEVANT
MARKET SEGMENTS
• 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. STEP 4 – EVALUATE RELEVANT
MARKET SEGMENTS
• 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. STEP 5 – SELECT SPECIFIC
TARGET MARKETS
• 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. DEVELOPING SALES
FORECASTS
• 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. DEVELOPING SALES
FORECASTS
• 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. DEVELOPING SALES
FORECASTS
• Time Series Analysis
• The forecaster uses the firm’s historical sales data to discover
a pattern or patterns in sales over time.

34. TIME SERIES ANALYSIS
• 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. TIME SERIES ANALYSIS
• Cycle Analysis
• Analyzes sales figures for a three- to five-year period to
ascertain whether sales fluctuate in a consistent, periodic
manner

36. TIME SERIES ANALYSIS
• 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. TIME SERIES ANALYSIS
• 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. REGRESSION ANALYSIS
• 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. MARKET TESTS
• 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.