PROFESSIONAL PRACTICES

(HU 2×1)

LECTURE # 9

MUHAMMAD ASAD

INSTRUCTOR
DEPARTMENT OF COMPUTER SCIENCE
Key Learning Point :-

- Discussion about the market targeting

 There are some businesses who believe that everyone will be their
customer --- It is not true.

 Targeting is focused on --- Evaluating available segment’s

attractiveness --- and --- Select one or more segments to serve.

 You only want those people who have a need for the products and
services --- You are offering.
 Many of your customers belong to multiple target markets at a time ---
Like, Mr. Sami a man, a father and a husband.

 Each category has some products and services --- That Mr. Sami
need to fulfil his needs, wants, and responsibilities in each respective
position.

 Here you noticed that everything about Mr. Sami puts his in a target
market for some marketers.
 WHAT IS MARKET TARGETING ?
 A market is segmented using age, gender, income, education,
lifecycle, social status, social class and many more.

 After identifying segmentation few segments are selected to reach

target customers.

“The process of evaluating and selecting market segments is

known as market targeting”
MARKET TARGETING PROCESS

There are two steps of market targeting process --- The first step is to
evaluate market segmentation and select those segments that suit the
business --- In the second step, marketers select appropriate market
targeting strategies.
STEP#1: EVALUATION MARKET SEGMENTS
 The market targeting process involves assessing those segments ---
Marketers already identified in the market segmentation --- But when
we talk about evaluating market segments --- It is based on certain
criteria.

 These are not the only questions. The questions may vary according to
industry, business nature and the depth of research you conducted.
 Business owners and marketers must answer these questions while
assessing the market segments…
What are the sizes of the segments I am looking for?
What are the demographics of identified segments?
What is the competition level of each segment?
What is the growth potential in the segments?
What segments can help to achieve company goals?
How to best utilize company resources pursuing the
segments?
THREE FACTORS MUST BE CONSIDERED
TO EVALUATE A MARKET SEGMENT

SEGMENT SIZE SEGMENT

and STRUCTURAL
GROWTH ATTRACTIVENESS

COMPANY OBJECTIVES
and
RESOURCES
SEGMENT SIZE AND GROWTH
 The company must first collect and analyze data --- On identified
segment sales, growth rates, and the expected profitability for
various segments.

 It will be interested in segments that have the right size and

growth characteristics --- But “right size and growth” is a relative
matter (National vs Multi-National busines).
 The largest, fastest-growing segments are not always the most
attractive ones for every company --- Smaller companies may lack
the skills and resources needed to serve larger segments --- Or ---
They may find these segments too competitive.

 Such companies may target segments --- That are smaller and
less attractive --- In an absolute sense, but that are potentially more
profitable for them.
FOR EXAMPLE

Define who your potential buyers are, also known as the market
segment --- Like , women with children under 18, college students, and
etc. Gather demographic, behavior, and psychographic information on
your market segment.

Market Size --- Research demographic statistics to find the population

number of your segment --- Like, if the market segment is U.S. college
students, the market size is 20 million --- As research shows there are
20 million college students in the U.S.
SEGMENT STRUCTURAL ATTRACTIVENESS

 The company also needs to examine major structural factors that

affect long-run segment attractiveness.

 A segment is less attractive if it already contains many strong and

aggressive competitors --- The existence of many potential
substitute products --- May limit prices and the profits that can be
earned in a segment.
 The relative power of buyers also affects segment attractiveness ---
Buyers with strong bargaining power relative to sellers --- Will try to
force prices down, demand more services (within current price), and
set competitors against one another --- All at the expense of seller
profitability.

 Finally, a segment may be less attractive if it contains powerful

suppliers --- Who can control prices or reduce the quality or quantity
of ordered goods and services.
COMPANY OBJECTIVES AND RESOURCES

 Even if a segment has the right size and growth and is

structurally attractive --- The company must consider its own
objectives and resources.

 Some attractive segments can be dismissed quickly --- Because

they do not mesh with the company’s long-run objectives --- Or ---
The company may lack the skills and resources needed to
succeed in an attractive segment.
FOR EXAMPLE
AUTOMOBILE MARKET
The economy segment of the automobile market is large and growing.

But given its objectives and resources, it would make little sense for
luxury performance carmaker Mercedes-Benz / BMW to enter this
segment.

A company should only enter segments in which it can create

superior customer value and gain advantages over its competitors.
 ANY QUESTION

You can contact me at: asadali@uosahiwal.edu.pk

Your query will be answered within one working day.