1. Target Marketing Dr. B.N.F. Warnakulasooriya
M.Sc. in Management Programme
University of Sri Jayewardenepura
Dr.B.N.F. Warnakulasooriya

2. Dr.B.N.F. Warnakulasooriya
Target Marketing
Marketer distinguishes the major markets segments, targets one or more of these segments, and develops products and marketing programmes tailored to each selected segment.
TM involves
Market segmentation
Identify segmentation variables and segment the market
Developing profiles of resulting segments
Market targeting
Evaluate the attractiveness of each segment
Select the target segments
Dr.B.N.F. Warnakulasooriya

3. Dr.B.N.F. Warnakulasooriya
Market Positioning
Identify possible positioning concepts for each target Market
Select, develop,and communicate the chosen positioning concept.
Market Segmentation
Identify segmentation variables and segment the product
Different variables are used to segment consumer market.
Consumer responses
Consumer characteristics
Dr.B.N.F. Warnakulasooriya

4. Dr.B.N.F. Warnakulasooriya
Consumer characteristics
Geographic
Psycho graphic
Region
Social Class
Density
Lifestyle
Climate
Personality
Demographic
Behavioural
Age
Occasions
Gender
Benefits
Family size
Family life cycle
User Status
Income
Usage rate
Occupation
Readiness Stage
Education
Attitude toward product
Religion
Dr.B.N.F. Warnakulasooriya
Race

5. Requirements for effective segmentation
Measurable: The size, purchasing power, and the profile of the segment can be measurable.
Substantial: large and profitable enough to serve. Should be the largest possible homogeneous group worth going after with a tailored marketing mix.
Accessible: effectively reached and served
Differentiable: conceptually distinguishable and respond differently to different marketing mix elements and programmes.
Actionable : Effective programmes can be formulated for attracting and serving the segments.
Dr.B.N.F. Warnakulasooriya

6. Dr.B.N.F. Warnakulasooriya
Market Targeting
Evaluate the attractiveness of each segment
Select the target segments
Evaluating the market segments
Segment size and growth: Whether a potential segment has the right size growth characteristics.
Segment Structural Attractiveness: Porter has identifies five forces that determine the intrinsic long run profit attractiveness of a market segment.
Dr.B.N.F. Warnakulasooriya

7. Dr.B.N.F. Warnakulasooriya
The basic idea of this model is that the attractiveness of an industry or market depends largely on five factors that influence profitability
Porters Five Factor Model Of Market Profitability
Threats of potential Entrants
Competition among existing firm
Bargaining power of suppliers
Bargaining power of customers
Threats of substitute product
Dr.B.N.F. Warnakulasooriya

8. Dr.B.N.F. Warnakulasooriya
Intensity of current competitors: depend on several factors.
The size of exit barriers.
Exit barrier: Firm’s ability to withdraw from a business area.
Specialized assets - Plant, equipment, or other assets that are costly to transform into another application and that therefore have little salvage value.
Fixed cost such as labour agreements, leases, and a need to maintain parts for existing equipment.
Relationship to other business unit in the firm resulting from the firm’s image or from shared facilities, distribution channels, or sales force.
Government and social barriers -
Managerial pride or emotional attachment to a business or its employees that affects economic decisions
Whether their product offering and strategies are similar
The number of competitors, their size and their commitment
The existence of high fixed cost
Dr.B.N.F. Warnakulasooriya

9. Dr.B.N.F. Warnakulasooriya
Potential competitors: Whether potential competitors, identified or not, actually do enter depends in large part on the size & nature of barriers to entry.
Various barriers to entry:
Capital investment Required : Whether large or small investment is required
Economies of scale: If scale economies exist in production, advertising, distribution , or other areas it becomes necessary to obtain a large volume quickly.
Distribution channel: Gaining distribution in some market can be extremely difficult and costly.
Product differentiation :Protected product features, a brand and image, advertising and customer service are some of the attributes that can be used for differentiating product. If product differentiation barriers are high it may be difficult to enter into a market
Dr.B.N.F. Warnakulasooriya

10. Dr.B.N.F. Warnakulasooriya
Exit Barriers
Low
High
Low stable return
Low risky return
Low
Entry Barriers
High stable return
High risky return
High
Dr.B.N.F. Warnakulasooriya

11. Dr.B.N.F. Warnakulasooriya
Substitute product: Substitute products compete with less intensity than do the primary competitors. However they are still relevant
Customer power : When customers have relatively more power than sellers, they can force prices down or demand more services, set the competitors against each other, thereby affecting profitability.
A customer’s power will be greater when:
Its purchase size is a large proportion of the seller’s business
Alternative suppliers are available
The customer can integrate backward and make all or part of the product,
The buyers’ switching costs are low
The product are undifferentiated
Dr.B.N.F. Warnakulasooriya

12. Dr.B.N.F. Warnakulasooriya
Suppler power|: Suppliers power will be enhanced when:
The supplier industry is concentrated and sells to a variety of customers in diverse market.
The cost s to customers of switching suppliers are high
There are few substitutes
The supplied product is an important input
The suppliers can integrate forward
Company objectives and resources:
Consider whether segments mesh with the company’s long term objectives
Consider whether the company possesses the requisite skills and resources to succeed in that segment.
Dr.B.N.F. Warnakulasooriya

13. Five Patterns of Target Market Selection;
Single Market Concentration
The firm gains a strong Knowledge of the segment’s needs and achieves a strong market presence.
The firm enjoys operating economies through specializing its production, distribution, and promotion.
Dr.B.N.F. Warnakulasooriya

14. Dr.B.N.F. Warnakulasooriya
If it captures segment leadership, the firm can earn a high return.
However, there are risks. A particular market segment can turn sour or a competitor may invade the segment.
Selective specialization
A firm selects a number of segments, each objectively attractive and appropriate. There may be little or no synergy among segments, however diversifies the firm’s risk.
Dr.B.N.F. Warnakulasooriya

15. Dr.B.N.F. Warnakulasooriya
Product Specialization
The firm makes a certain product that it sells to several different market segment.
The firm can build a strong reputation in the specific product area
Market Specialization
The firm concentrate on serving many needs of a particular customer group (assortment of products).
Dr.B.N.F. Warnakulasooriya

16. Dr.B.N.F. Warnakulasooriya
The firm can build a strong reputation in serving this customer group and becomes a channel for additional products the customer group can use.
Full Market Coverage
The firm attempts to serve all customer groups with all the products they might need. Need resources.
A firm can cover a whole market in two broad ways: Undifferentiated marketing and Differentiated marketing
Dr.B.N.F. Warnakulasooriya

17. Five Patterns of Target Market Selection;
Selective
specialization
M1 M2 M3 P1 P2 P3
Product
specialization
M1 M2 M3 P1 P2 P3
Single-segment
concentration P1 P2 P3
M1 M2 M3
P = Product
M = Market
E.g. Fomula Racing cars
E. g. Radio/TV Channels
E.g. MS office 2000
Market
specialization
M1 M2 M3 P1 P2 P3
M1 M2 M3
Full market
coverage P1 P2 P3
Elephant House
E.g. Johnson & Johnson
Dr.B.N.F. Warnakulasooriya

18. Dr.B.N.F. Warnakulasooriya
Undifferentiated marketing: the firm ignores segment differences and goes after the whole market with one offer. It designs a product and other element of marketing mix that will endow the product with a superior image and appeal to the broader number of customers, and it relies on mass advertising and distribution. .
Dr.B.N.F. Warnakulasooriya

19. Dr.B.N.F. Warnakulasooriya
The narrow product line keeps down the cost of research and development, production, inventory, transportation, advertising, marketing research and product management.
The company can turn its lower costs into lower prices to win the price sensitive segment of the market.
Dr.B.N.F. Warnakulasooriya

20. Differentiated marketing:
the firm operates in several market segments and design different product for each. Differentiated marketing typically creates more total sales than undifferentiated marketing. However, it also increases the cost of doing business. Because differentiated marketing leads to both higher sales and higher cost, impact of this strategy on profitability should be carefully analyzed.