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Opportunity Analysis,
Market Segmentation, and
Market Targeting
Mostafa Ewees
In this chapter, you will learn In this chapter, you will learn about…about…
4-2
1. Opportunity Analysis
2. What is a Market?
3. Market Segmentation
Benefits of Market Segmentation
Bases for Market Segmentation
Requirements for Effective
Market Segmentation
In this chapter, you will learn In this chapter, you will learn about…about…
4-3
4. Offering-Market Matrix
5. Market Targeting
6. Market Sales Potential and Profitability
Estimating Market Sales Potential
Sales and Profit Forecasting
Marketing Strategy involves…Marketing Strategy involves…
4-4
Selection of Markets
Development of programs to reach these markets
• Customer Satisfaction
• Organizational Objectives
Opportunity Analysis Opportunity Analysis Involves…Involves…
Opportunity Identification
Opportunity
- Organization Matching
Opportunity Evaluation
4-5
Opportunity IdentificationOpportunity Identification
Identifying new types of classes
of buyers
Uncovering unsatisfied needs of
buyers
Creating new ways or means for
satisfying buyer needs
4-6
Opportunity-Organization Opportunity-Organization MatchingMatching
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 match4-7
Opportunity EvaluationOpportunity Evaluation
Qualitative
◦Evaluates the likelihood of
capitalizing on a market niche
Quantitative
◦Yields estimates of market sales
potential and company sales
forecasts4-8
Has both qualitative & quantitative phases
Opportunity Evaluation MatrixOpportunity 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
A Market Consists A Market Consists of…of…
4-10
Prospective buyers willing and able to purchase the existing or potential offering of an organization.Focus on
Buyers EffectiveDemand “Offering”
rather than product or
service Market Share
What is Market What is Market Segmentation?Segmentation?
The breaking down or building up
of potential buyers into groups
called
Market Segments
4-11
Benefits of Benefits of Market SegmentationMarket Segmentation
4-12
1. Identifies opportunities for new product development
2. Helps design marketing programs most effective for reaching homogenous groups of buyers
3. Improves allocation of marketing resources
Market Segmentation Market Segmentation VariablesVariables
4-13
Market Market SegmentationSegmentation
VariablesVariables
Benefits SoughtBenefits SoughtPsychographicPsychographic
SocioeconomicSocioeconomic BehavioralBehavioral
Fundamental-Buyer Related Fundamental-Buyer Related QuestionsQuestions
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?
4-14
Each Market Segment should Each Market Segment should be…be…
4-15
MeasurableMeasurable
DifferentiableDifferentiable
AccessibleAccessible
SubstantialSubstantial
Sample Offering - Market Matrix Sample Offering - Market Matrix for Handheld Calculatorsfor Handheld Calculators
Business Scientific Home School
Simple
Moderate
Complex
Very complex
4-16
Market Segments (User Groups)
Market TargetingMarket TargetingSpecifying segments to pursueSpecifying segments to pursue
4-17
Differentiated Marketing
The organization pursues
several different market
segments simultaneously
Organization
Market
Market TargetingMarket TargetingSpecifying segments to pursueSpecifying segments to pursue
4-18
Concentrated Marketing
The organization focuses
on a single market
segment
Organization
Market
Market Sales PotentialMarket Sales Potential
1. The marketing mix activities and
efforts of all organizations
2. A set of environmental conditions
4-19
Maximum level of sales available to all
firms serving a defined market in a
specific time period given:
Market Sales Potential and Market Sales Potential and ProfitabilityProfitabilityChain Ratio MethodChain Ratio Method
Market Sales Potential is a function of:
1. The number of Prospective Buyers
(B)
2. The Quantity Purchased (Q)
3. The Price of an Average Unit (P)
4-20
Market Sales Potential = B x Q x P
4-21
Chain Ratio MethodExample
Market Potential for cola-flavored carbonated drink in Canada:
1. Population (P) = 32,000,000
2. Proportion of P that consumes carbonated beverages (R)
= 95%
3. Proportion of R that consumes cola-flavored carbonated
beverages (C) = 70%
4. Average number of liters of cola consumed per cola-
consumer per week (L) = 1.7 liters
5. 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
What is a Sales Forecast?What is a Sales Forecast?
4-22
Level of sales a single
organization expects to achieve
based on a chosen market
strategy and an assumed
competitive environment.
Forecasted Sales reflect…Forecasted Sales reflect…
1. The size of the target market
2. The marketing mix chosen for
the target market
3. The assumed number of
competitors and competitive
intensity in the target market
4-23
Making aMaking aSales ForecastSales Forecast
4-24
1. Market potential (M)
2. Proportion of market you are
Targeting (T)
3. Extent of market Coverage (C)
4. Number of Units expected to sell per
customer during the year (U)
5. Average Price per unit (P)
Sales Forecast is a function of:
Sales Forecast = M x T x C x U x P
Making a Sales ForecastMaking a Sales ForecastExampleExample
4-25
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