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Targeting the market

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Target market selection


Presentation and Discussion
Charles Blankson, Ph.D.

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Segmenting & targeting markets


What is Market Segmentation ?
Dividing the market (consumers/buyers) into parts, portions, sections, segments etc.

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Operationalization of market segmentation


Identify bases to segment (to divide into parts). Develop profiles of the segments look for profit of emerging segments etc.

Targeting
Develop measures having decided on the strategy e.g. single or multi segments or sole or multi product. Select target segments
Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Major segmentation variables for consumer markets


Geographic: Region, county size, borough, city, population density, climate. Demographic: Age, gender/sex, family size, family life cycle, income, occupation, education, religion, race, ethnic background, nationality. Psychographic: Social class, life style, personality. Behavioral: Occasions, benefits, user status, usage rate, loyalty status, readiness state, attitude toward the offering.
Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Major segmentation variables for industrial/business markets



Demographic: Industry, company size, location Operating variables: Technology, user/non-user status, customer capabilities Purchasing approaches: Purchasing structure, nature of existing relationships, general purchase policy, purchasing criteria. Situation factors: Urgency, specific application, size order Personal characteristics: Buyer-seller similarity, attitude toward risk/risk aversion, loyalty.

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Prioritizing target markets


Segment Identification: Involves the process of aggregating customers into segments in order to satisfy a particular problem. Segment Qualification: The process whereby the operational relevance of the segments identified is assessed. This relates to how easily the segments can be characterized, measured, targeted and served.
Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Prioritizing target markets


Segment Attractiveness: This concerns deciding which segments to serve and which to ignore. This involves a range of market attractiveness criteria such as: (a) market growth, (b) future potential, level and structure of competition, (d) company assets (resources), (e) nature of customer needs and (f) entry barriers.
Charles Blankson, Ph.D., Dept. of Marketing & Logistics

High School students in Philadelphia, PA

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Market Attractiveness Criteria


Literature area Kotler (1994, 2000)


Webster (1991)

Hutt and Speh (1989)

Porter (1980)

Attractiveness criteria Measurability, accessibility, substantiality, actionability. Measurable, relevance to major customer group, operational relevance for market strategy. As Webster, plus segment compatibility with current marketing and business strengths.

Competitive rivalry, Threat of substitutes, Supplier power, Buyer power, Threat of new entrants.

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Criteria for selecting target markets



Profitability Market growth Market size Likely customer satisfaction Sales volume Likelihood of sustainable differential advantage Ease of access of business Opportunities in the industry Product differentiation

Competitive rivalry Market share Relative strengths in key functions Customers price sensitivity Customer image of company Technological factors Fit with business strategy Stability of market Environmental factors Threat of substitutes Barriers to entry Negotiating powers of buyer Ease of profiling customers Supplier power.

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Diversity of criteria and approaches


Life is simple How many customers Where located Profit levels Sales levels Short but effective Brand loyalty Contributions ($) Market growth rates Competitive intensity

Forward thinking Customer fit Future potential sales volumes Customers needs Likely differential advantage Financial value to the business.
Analytical Weight Variable 3 Market size 3 Margin 3 Market share 3 Differential advantage/business strengths

Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Three alternative market selection strategies


Undifferentiated marketing: typically mass marketing Differentiated marketing: Company pursues one segment at a time with a specific marketing mix tactic Concentrated: Company uses all efforts to pursue one identified segment at a time. Other profitable segments may be pursued later on and when appropriate.
Lecture based on: Simkin, L. and Dibb, S. (1998), Prioritizing Target Markets, Marketing Intelligence & Planning, Vol.16, No. 6 & 7, pp.407-417. Others: Webster F.E. (1991), Industrial Marketing Strategy, John Wiley, New York, N.Y. Hutt, M.D. and Speh, T.W. (1989), Business Marketing Management, The Dryden Press, Chicago, IL. Porter, M.E. (1980), Competitive Strategy, Free Press, New York, N.Y. Charles Blankson, Ph.D., Dept. of Marketing & Logistics

Reading for next week


Read Chapters 1, 2, 3 and 4 by next week.

Charles Blankson, Ph.D., Dept. of Marketing & Logistics