Chapter Goals

To gain an understanding of: Segmenting markets from a lifestyle and productrelated perspective Dealing with different numbers of market segments Positioning the product, brand or firm to appeal to segment(s) Niche marketing and related approaches Forecasting and determining market potential

Target Markets
Is a group of customers, people or firms at whom the seller specifically aims its marketing efforts Represents a companys best market opportunity Requires an understanding of who they are, why they buy and how they buy

Guidelines in Target Market Selection

Target should be compatible with the organizations goals and image. Must be a match between the market opportunity and the companys resources. Target segments must offer potential for profit. Target market must offer the opportunity to compete effectively.
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The Concept of Market Segmentation

Markets consist of buyers who differ in their: Wants Resources (time and money) Locations Buying attitudes Buying behaviors
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Market Segmentation
Is the process of dividing the total market into distinct groups of buyers with different needs, characteristics, or behavior and who might require separate products or marketing mixes. Remember different market segments are motivated by different things and find different appeals attractive.

Target Market Strategies

market aggregation: target the product or service to a mass market with little differentiation single-segment segmentation: selecting a single segment to target; if the segment is small, this may be considered a niche strategy multiple-segment segmentation: identifying two or more segments as target markets; involves developing a different marketing approach for each
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Benefits of Market Segmentation and Target Marketing

Helps sellers define their market opportunities. Helps develop the right product, price structure, distribution channels and communication approach to reach the target market efficiently. Helps to focus the marketing efforts on the buyers who have the greatest purchase interest.
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Bases for Market Segmentation Consumer and Business Users

Ultimate consumers or End Users: buy products for their own personal or household use. Business users: are individuals or firms who buy products to use in their company or to make other products.

Bases for Segmenting Consumer Markets

1.Geographic Segmentation: involves dividing a market into different geographical units such as nations, provinces, regions, countries, cities. 2.Demographic Segmentation: involves dividing the market into groups based on variable such as age, gender, family size, family life cycle, income, occupation, education, religion, race and nationality.

3. Psychographic Segmentation: involves dividing buyers into different groups based on social class, lifestyle, personality characteristics. 4.Behavioral Segmentation: involves dividing buyers into groups based on their knowledge, attitude, uses or responses to a product.

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Implications of Segmentation
market aggregation is really a productionoriented strategy; it requires that the firm find some way to differentiate its product or service increasingly, firms are turning to superior service as their differentiating strategy multiple-segment marketing requires that the firm develop different versions of the product offering for each segment; or it may simply mean different approaches to serving segments
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Positioning for the Market Segment

Positioning is the image of your brand held by the public and especially, your segment. Usually try to position on attributes consumer sees as important, such as speed, convenience, safety. Positioning Maps help see how key players in a market are viewed by consumers. Helps to see competitive clusters and market gaps.
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Positioning Maps

Two dimensional graphs of how a product, brand, or company is perceived versus the competition.

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Three steps in developing a positioning map

1. Evaluate the attributes important to consumers in the purchase decision for a particular product. 2. Determine which two attributes are most important. 3. Rate competing brands or companies on these attributes.
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Niche Marketing
this is a specific form of positioning the company decides to occupy a market niche where it can be distinct and competition weak identify segments that are not well served determine how to gain a competitive advantage expand the niche by meeting consumer needs defend the niche position by improving product and service offerings

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Positioning Strategies
Against Competition: Were as good or better Cola Wars, battery-bashers. Market Gap: Find spot others missed. Set Brand Apart: Stress your differences and avoid head-to-head competition. Nothing runs like a Deere. Leadership: Be the one others follow. Used by Presidents Choice, Sony. Lifestyle Segment Appeals: Use lifestyle to define. Some buy fancy cameras to take creative photography, others to impress.
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Repositioning

This is a variation of a positioning strategy that involves changing the market position of a brand or store in response to changes taking place in the broader market environment.

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The Sales Forecast

A sales forecast is an estimate of probable sales for one companys brand of the product during a stated time period in a specific market segment and assuming the use of a predetermined marketing plan.

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The Sales Forecast

It is based on a specific marketing plan. It can be expressed in dollars or product units. It is best prepared after market potential and sales potential have been estimated. It typically covers a 1-year period. Marketing goals and broad strategies must be established before a sales forecast is made. Once it is made, it becomes a key controlling factor in all operational planning throughout the company.
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Basic Forecasting Approaches

Top Down: Develops a forecast of economic conditions and industry trends. Determines the market potential for a product. Determines the sales potential for the product. Measures the share of this market the firm is currently getting or plans to capture. Forecasts the firms sales of the product. Bottom Up: Generates estimates of future demand from customers or the companys salespeople. Combines the estimates to get a total forecast. Adjusts the forecast based on managerial insights into the industry, competition, and general economic trends. 20

Demand Forecasting: Key Terms

Market factor/index: Something that is related to the product you sell -- new home starts and appliances. Market potential: Total volume by all firms in market. Sales Potential: Your piece of market = your share. Sales Forecast: Estimated sales during defined period assuming certain marketing plan and environment. The forecast allows firms to estimate future revenues and becomes an important part of the planning process.

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Demand Forecasting Methods

Market-factor analysis: Demand for a product is assumed to be related to the factor-- housing starts and appliances. o Direct Derivation: See what determines sales-roofing firms look for 15-year-old houses for business. o Correlation Analysis: Statistical analysis that shows two things are linked-- perhaps pets in an area and dog food sales. Survey of buyer intentions: A sample of current or potential customers are asked how much of a particular product they would buy at a given price 22 during a specified future time period.

 Test marketing: A firm markets its product in a limited geographic area, measures sales, and then projects the sales over a larger area. Past sales and trend analysis: A flat percentage increase is applied to the volume achieved last year or to the average volume of the past few years. Trend analysis more sophisticated, uses more statistical analysis. Salesforce composite: A bottom-up method consisting of collecting estimates of sales for the future period from all salespeople. Executive judgement: Obtaining opinions regarding future sales volume from one or more executives. 23

More Forecasting Methods