1. Market Segmentation, and Market Targeting
Chapter 4
Opportunity Analysis,
Market Segmentation, and Market Targeting

2. In this chapter, you will learn about…
Opportunity Analysis
What is a Market?
Market Segmentation
Benefits of Market Segmentation
Bases for Market Segmentation
Requirements for Effective Market Segmentation

3. In this chapter, you will learn about…
Offering-Market Matrix
Market Targeting
Market Sales Potential and Profitability
Estimating Market Sales Potential
Sales and Profit Forecasting

4. Marketing Strategy involves…
Selection of Markets
Customer Satisfaction
Organizational Objectives
Development of programs to reach these markets

5. Opportunity Analysis Involves…
Opportunity Identification
Opportunity
- Organization Matching
Opportunity Evaluation

6. Opportunity Identification
Identifying new types of classes of buyers
Uncovering unsatisfied needs of buyers
Creating new ways or means for satisfying buyer needs

7. Opportunity-Organization Matching
Determines whether an identified opportunity is consistent with an organization’s business, mission, and competencies
SWOT Analysis often employed
Financially attractive opportunities are sometimes rejected at this stage due to lack of match

8. Opportunity Evaluation
Has both qualitative & quantitative phases
Qualitative
Evaluates the likelihood of capitalizing on a market niche
Quantitative
Yields estimates of market sales potential and company sales forecasts

9. Opportunity Evaluation Matrix
Market niche criterion
Competitive Activity
Buyer Requirements
Demand/
Supply
Political, Technological, and Socioeconomic Forces
Organizational Capabilities
Buyer Type
Buyer Needs
Means for Buyer Needs

10. “Offering” rather than product or service
A Market Consists of…
Prospective buyers willing and able to purchase the existing or potential offering of an organization.
Focus on
Buyers
Effective
Demand
“Offering” rather than product or service
Prospective buyers willing and able to purchase the existing
Or potential offering of an organization.
Market Share

11. What is Market Segmentation?
The breaking down or building up of potential buyers into groups called
Market Segments

12. Benefits of Market Segmentation
Identifies opportunities for new product development
Helps design marketing programs most effective for reaching homogenous groups of buyers
Improves allocation of marketing resources

13. Market Segmentation Variables
Socioeconomic
Behavioral
Market
Segmentation
Variables
Psychographic
Benefits Sought

14. Fundamental-Buyer Related Questions
Who are they?
What do they want to buy?
How do they want to buy?
When do they want to buy?
Where do they want to buy?
Why do they want to buy?

15. Each Market Segment should be…
Measurable
Differentiable
Substantial
Accessible

16. Sample Offering - Market Matrix for Handheld Calculators
Market Segments (User Groups)
Business
Scientific
Home
School
Simple
Moderate
Complex
Very complex

17. Market Targeting Specifying segments to pursue
Organization
Differentiated Marketing
The organization pursues several different market segments simultaneously
Market

18. Market Targeting Specifying segments to pursue
Organization
Concentrated Marketing
The organization focuses on a single market segment
Market

19. Market Sales Potential
Maximum level of sales available to all firms serving a defined market in a specific time period given:
The marketing mix activities and efforts of all organizations
A set of environmental conditions

20. Market Sales Potential and Profitability Chain Ratio Method
Market Sales Potential is a function of:
The number of Prospective Buyers (B)
The Quantity Purchased (Q)
The Price of an Average Unit (P)
Market Sales Potential = B x Q x P

21. Chain Ratio Method Example
Market Potential for cola-flavored carbonated drink in Canada:
Population (P) = 32,000,000
Proportion of P that consumes carbonated beverages (R) = 95%
Proportion of R that consumes cola-flavored carbonated beverages (C) = 70%
Average number of liters of cola consumed per cola-consumer per week (L) = 1.7 liters
Average price per liter of cola (A) = $ 0.50
Market Sales Potential = P x R x C x L x A
= 32 Million x 0.95 x 0.70 x 1.7 x 52 x 0.50 = $94.06 Million

22. What is a Sales Forecast?
Level of sales a single organization expects to achieve based on a chosen market strategy and an assumed competitive environment.

23. Forecasted Sales reflect…
The size of the target market
The marketing mix chosen for the target market
The assumed number of competitors and competitive intensity in the target market

24. Making a Sales Forecast
Sales Forecast is a function of:
Market potential (M)
Proportion of market you are Targeting (T)
Extent of market Coverage (C)
Number of Units expected to sell per customer during the year (U)
Average Price per unit (P)
Sales Forecast = M x T x C x U x P

25. Making a Sales Forecast Example
Total number of potential buyers = 1 Million
Target Market (25%) = x 0.25
Market Coverage (75%) = x 0.75
Units purchased per year (20) = x 20
Average Price ($10) = x $10
Forecasted Sales = $ 37.5 Million