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4 Targeting © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 

Marketing Framework

Targeting Once the market is segmented, marketers select (target) one or more of those markets to pursue Firms select target markets which are a good fit with the firm and have good profit potential

How to Choose a Target Top down: strategic fit Does this market fit with who we are? Bottom up: profitability How profitable will this segment be?

How to Choose a Target “Go for it” and “avoid” are easy decisions “Hmms” are dilemma scenarios

SWOT

SWOT Strengths and weaknesses are relative to competitors Opportunities and threats are usually driven by changes in one of the 5Cs

Competitive Comparisons Companies typically assess their strengths relative to their competitors

Competitive Comparisons Perceptual maps show customers’ perceptions of firm’s strengths/weaknesses relative to competitors

Market Sizing Use the purchase decision making process: Awareness, trial, repeat, etc. Population x %aware x %trial x %repeat Multiply by how much & how often buy (Population x %aware x %trial x %repeat) x per annum purchase Multiplied by average retail price paid

Managerial Recap Targeting is important but not difficult Choose target by iterating between Corporate fit Utilize SWOT to help clarify corporate fit Segment sizing Use secondary data (e.g., demographics) Use customer survey data on attitudes & preferences and behavior to smooth out the size estimation