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Opportunity analysis, Market

Segmentation &Targeting
Opportunity analysis
Market segmentation
Market targeting
Estimating market and sales potential
Opportunity analysis
• Three interrelated activities
i. Opportunity identification
ii. Opportunity- organization matching
iii. Opportunity evaluation
opportunity arise from identifying
a. New type of buyers
b. Unsatisfied needs
c. Creating new ways for satisfying buyer needs
shoes--custom running –buyer performance orient need
i.e. tennis, basketball, golf, track and field.
( Web-based technology innovation-customization )
Opportunity analysis
• Opportunity- organization matching
whether identified opportunity is consistent with org. distinctive
competencies and strength & weaknesses. i.e. fresh brewed
gourmet coffee vs. artificially flavored coffee
 Opportunity evaluation
i. Mkt. criterion--buyer type, buyer need, means for
satisfying buyer needs
ii. competitive activity
iii. Buyer requirements
iv. Demand/supply
v. Environmental forces
vi. Organizational capabilities
Market segmentation
• What is a market
a. Definition focus on buyers not on product or service
b. Buyer’s willingness and ability to buy (concept of effective
demand which depends on marketing mix activities of the
organization)
c. Using term offering rather than product or service
 market structure– composed of mini markets
 Market share- sales of co. compared to sales of the total
market expressed as percentage.
 Segmentation- is a compromise between the
ineffectiveness of treating all customers alike and the
inefficiency of treating each one differently
(customization)
Market segmentation
• Benefits.
i. identifies opportunities for new product
development
ii. Helps the design of mktg. programs that are
most effective for reaching homogenous group
of buyers/ consumers
iii. Improve the allocation of marketing resources
 Bases for segmentation-socio-economic
characteristics of consumers, geographic, and
behavioral characteristics.
Market segmentation
• Common market segmentation terms/bases
I. Geographic- segmenting customers by regions,
countries, states, districts, zip codes
II. Demographic- into groups based on age, sex, race,
religion, education ,marital status, income, household
size ,etc
III. Psychographic- lifestyle, behavior, beliefs and values,
attitude
IV. Geo-demographic- people who live in the same area
tend to have similar backgrounds and consuming
patterns. Also called cluster marketing-combing all.
Market segmentation
• Requirements for effective segmentation
i. Measureable- size and buying power
quantifiable
ii. Differentiable- distinguishable from other
segments
iii. Accessible- effectively and economically
reached and served
iv. Substantial- large enough in terms of sales
volume and profits
Market targeting
• Where to compete- which mkt. segment
• How to compete-how many segments to serve & how.
a. Differentiated Marketing- market offering to several
different segments with a different market strategy
for each one.
b. Un-differentiated marketing (mass marketing)-several
different mkt. segments with a unique mktg. strategy
c. Concentrated marketing- single market offering to a
single market segment.
• When to compete—timing (first to mkt. or wait & see)
Market sales potential & profitability
• Market sales potential- is the maximum level of sales that
might be available to all organizations serving a defined
market in a specific time period in a given marketing-mix
activities and efforts of all organizations and under a same
set of environmental conditions
• It is not a fixed amount as it is a function of no. of factors,
some of which are controllable and others are
uncontrollable by the organizations.
• Three variables are commonly considered while estimating
sales potential=BxQxP
B=no. of prospective buyers willing and able to buy
Q= qty. purchased by an average buyer in a specific time
P=price of an average unit of offering
Sales and profit forecasting
• A sales forecast is the level of sales a single org. expects
to achieve based on a chosen market strategy and an
assumed competitive environment.
• Example=
Suppose an org. target market represents one-fourth of
one million prospective buyers for a particular offering.
The marketing channel chosen provides access to
about 3/4th of these buyers and the communication
program (advertising) reaches the same buyers. The
average purchase rate is 20 units of offering per year
and the average unit price is Rs 10/. Calculate
forecasted sales ?
Forecasted sales
Total prospective buyers = one million
Target market 25% =0.25
Distribution/communication
Coverage 75% of target mkt.=0.75
Annual purchase rate units =20
Average unit price (Rs) =10
Forecasted sales =1,000,000x.25x.75x20x10
=Rs 37.5 million