TARGET MARKET

The entrepreneur should exert efforts to know the market he wants to exploit because knowing
the market will increase chances of understanding customer wants and needs.

MARKET SEGMENTATION

Customers with similar needs and wants and similar willingness and ability to pay can be group
into one customer segment. Within the customer segment, we can have finer cuts. We can have
different customer sub-segment. Within these sub-segments we can even have finer and finer cuts.
Therefore, we can produce products and services that are highly specialized for any type of consumer
segment.

1. POTENTIAL MARKET SIZE ESTIMATION

Market size is the size of the arena where the entrepreneur will pay. It is the approximation of the
number of buyers and sellers in a particular market. First, the entrepreneur should estimate the
approximate number of customers that will buy the product or avail the service. This is also called
market space or market universe. Second, eliminate the customers who are unlikely to buy the product
or avail the service.

2. TARGET MARKET CHARACTERISTICS

It is essential to define the target market characteristics in order to understand their needs further.
Target market characteristics are defined according to:

• Demographic Segmentation – Also known as socioeconomic segmentation which is the process

of grouping customers according to relevant socioeconomic information such as:

o Income Range and Social Class – represents the purchasing power of the market or the ability to
buy the entrepreneur’s product and service.

o Occupation – source of income of target market so that the products and services can be better
positioned.

o Gender and Age Group – life cycle and gender influence buying habits

o Religion and Ethnicity – these also affects the way products and services are purchased such as
food choices, event and holidays, traditions and beliefs, spending habits and conservativeness

• PSYCHOLOGICAL SEGMENTATION – is a process of grouping customers according to their

perceptions, way of life, motivations and inclinations. Perception is how an individual receives external
stimuli though his five senses. The customer’s way of life will give an idea of what products and services
can best suit the daily problems that he encounters.
• TECHNOGRAPGHICS SEGMENTATION – classifies people according to their level of expertise in
using a product or service. Also in techno graphics, products and services can range from general
purpose items to highly specialized, customized and technologized goods.