CHOOSING ATTRACTIVE

MARKET SEGMENT: A
FIVE-STEP PROCESS
Prepared By:
Murnizahayati Aripin (2014567151)
NurulShah Sofea Muhammad Shah Dhina
(2014921835)
Siti Aisyah Zulkarnai (2014316405)

MARKETING SEGMENTATION
Dividing market into
with distinct needs,
or behavior who
separate products
mixes

distinct groups
characteristics,
might require
or marketing

The purpose of segmentation - to

help start-ups identify their most
attractive market segments.

MARKETING SEGMENTATION
Target segments can prioritizes by
their potential with evaluate :
Their future attractiveness
Their firms strengths and capabilities
relative to the segments needs
Competitive situations.

CHOOSING ATTRACTIVE
MARKET SEGMENTS:
A Five-Step Process
1

4
3

CHOOSING ATTRACTIVE
MARKET SEGMENTS:
A Five-Step Process
Step 1: Select market-attractiveness and
competitive-position factors
Market-attractiveness factors
Assessing
the
attractiveness
of
segmentsinvolves determining the:
a) markets size
b) growth rate
c) assessing various trends

Competitive-position factors

markets

or

market

Understanding the attractiveness of the industry in which one

competes is also important
Entering a segment that would place the firm in an unattractive
industry or increase its exposure in an unattractive industry in
which it already competes may not be wise.
Entering a new market or market segment without a source of
competitive advantage is a trap.

A Five-Step Process

Step 1: Select market-attractiveness and

Market attractiveness factors
Competitive position factors
competitive-position
factors
Customer needs and behaviour
Opportunity for competitive advantage
Are there unmet or underserved needs we Can we differentiate?
Can we perform against critical success
can satisfy?
factors?
Stage of competing products in product
life cycle: is the timing right?
Market or market segment size and growth Firm and competitor capabilities and
rate
resources
Market potential in units, revenue,
Management strength and depth
Financial and functional resources:
number of prospective customers
Growth rate in units, revenue, number of marketing, distribution, manufacturing,
prospective customers
R&D, etc.
Might the target segment constitute a
Brand image
Relative market share
platform for later expansion into related
segments in the market as a whole?
Macro trends: are they favourable, on
Attractiveness of industry in which we
balance?
would compete
Demographic
Sociocultural
Threat of new entrants Threat of
substitutes
Economic
Political/legal
Buyer power
Supplier power
Technological
Physical
Competitive rivalry
Industry capacity
Driving forces: are they favourable, on
balance?

CHOOSING ATTRACTIVE
MARKET SEGMENTS:
A Five-Step Process
Step 2 : Weight Each Factor

A Five-Step Process
Step 2 : Weight Each Factor
Assessing the distance runner market segment
Rating (0-10 scale)
Market attractiveness factors

Weight

Total

Customer needs and behaviour:

unmet needs?

0.5

10

5.0

Segment size and growth rate

0.3

2.1

Macro trends

0.2

1.6

Total : Market attractiveness

1.0

8.7

Competitive positions factors

Opportunity for competitive
advantage

0.6

4.2

Capabilities and resources

0.2

1.0

Industry attractiveness

0.2

1.4

CHOOSING ATTRACTIVE
MARKET SEGMENTS:
A Five-Step Process
Step 3: Rate Segments on Each Factor, Plot Results
on Matrices

The purpose of segmentation - to help

start-ups identify their most attractive
market segments. To asses each of the
criteria identified in Step 1 (Market
Attractiveness Factors and Competitive
Position
Factors)

qualitative
and
quantitative data.
Once the assessment is made, the weight
results can be plotted on a market
attractiveness/
competitive
position
matrix.

A Five-Step Process
Step 3: Rate Segments on Each Factor, Plot Results
on Matrices
Market-Attractiveness/Competitive-Position Matrix

CHOOSING ATTRACTIVE
MARKET SEGMENTS:
A Five-Step Process
Step 4: Project future position for each segment
) Determine how the markets attractiveness is
tendency to change over the next three to five
years.
(customer / competitor)

Determine how the businesss competitive position

in the market tendency to change

Both expected changes can be plotted on the

matrix

A Five-Step Process
Step 4: Project future position for each segment
Manager must address several broader issues:

Changes in
product or
process
technology
Social or
political
trends

Economic
climate
Bargaining
power or
vertical
integration of
customer

CHOOSING ATTRACTIVE
MARKET SEGMENTS:
A Five-Step Process
Step 5: Choose segments to target, Allocate
resources
Managers should consider a market segment to be a
desirable target of market attractiveness & potential
competitive position only if :
It is strongly
positive on at
least one of the
two dimensions,

and at least
moderately positive
on the other.

A Five-Step Process
Step 5: Choose segments to target, Allocate
resources
However, business may decide to enter a market that
currently falls into one of the middle cells under
conditions:
Tendency market
attractiveness/
competitive strength
improve

Markets to enter larger

market

Shared costs or
synergies

A Five-Step Process
Step 5: Choose segments to target, Allocate
resources
Implications of Alternative Positions within the MarketAttractiveness/ Competitive-Position Matrix for Target
Market Selection, Strategic Objectives, and Resource
Allocation

A Five-Step Process
Step 5: Choose segments to target, Allocate
resources
Implications of Alternative Positions within the MarketAttractiveness/ Competitive-Position Matrix for Target
Market Selection, Strategic Objectives, and Resource
Allocation

CHOOSING ATTRACTIVE
MARKET SEGMENT: A
FIVE-STEP PROCESS

Thank You