Target Market and Competitive Advantages

CHAPTER # 04

Target Market• A target market is a group of

customers that the business has decided to aim its marketing efforts and ultimately its merchandise

• Rolls-Royce

Example

Commercial

Market segmentation

• Market segmentation is the division of A market into different groups of customers with distinctly similar needs and product/service requirements.

• Market segmentation is the division of a mass market into identifiable and distinct groups or segments, each of which have common characteristics and needs and display similar responses to marketing actions.

1Formation And Profiling Segments

2 Evaluation Of The Market Segments

3Selection Of Segmentation Strategy

Market segmentation Activities

Market segmentation Activities

FORMATION AND PROFILING SEGMENTS

Values/ Lifestyle Measure

Needs or Desired and benefitsPurchase Behavior

Classifying Characteristics

1. Needs/ Benefits Sought

• Needs and benefits are the characteristics or attributes of product that consumer seeks or consider important.

Example:• Nokia Mobiles

Needs/ Benefits Soughti. Multi-Item Scale: To know how

important or unimportant each benefit is to consumer.

ii. Conjoint Analysis: the qualities of product or service that are most desired by the customers.

a) Identification of Relevant Behaviorb) data Collectionc) Data Analysis

Conjoint Analysis

3 Analyze the Data.

Data Analysis:

To specify which attribute is important to study; e.g: Pizza Hut (Price, Delivery Time, Type of Crust or Split Toppings)

Identification of Relevant Behavior

1

Collect the data by given level

Data Collection:

2

2. Behavioral MeasuresData about customer purchases and transactions provides scope for analyzing who buys what, when, how often, how much they spend, and through what transactional channel they purchase. This provides very rich data for identifying ‘profitable’ customer segments.

• When and where consumed

• The nature of situation • What type• The quantity consumed• Brand color, and size

EXAMPLE: BEHAVIORAL MEASURES

Rooh Afza in Ramazan

3. Values/ Lifestyle Measure

Analyzing consumers’ activities, interests, and opinions, we can understand individual lifestyles and patterns of behavior, which in turn affect their buying behavior and decision-making processes. On this basis, we can also identify similar product and/or media usage patterns.

4. Classifying Characteristics

• Key variables concern age, sex, occupation, level of education, religion, social class, and income characteristics, many of which determine a potential buyer’s ability to purchase a product or service.

Demographic

• In many situations the needs of potential customers in one geographic area are different from those in another area. This may be due to climate, custom, or tradition.

• Geographic

Commercial

Evaluate the Market Segments

The market segments are studied against the five criteria:

1 Uniqueness

2 Responsiveness

3 Actionability

4 Stability and

5 Profitability

• Uniqueness refers to large between-group differences in the segments.

• The best basis for forming market segments is to creates segments that are more unique.

• The objective is to achieve competitive power.

• The more unique the segments are, the easier It is to translate the segmentation result into strategic and tactical actions.

Uniqueness

• If specific strategies and tactical actions are made for the specific segment, it is expected that the segment would be more responsive to those actions than other segments.

• For example Pleasure travelers may respond to price change whereas business travelers may not.

Responsiveness

• Actionability is the extent to which the manager can take action on the results of the segmentation analysis.

• Actionability expresses the notion that the segment targeted must be of an appropriate size for the company.

For Example• A need-based segment is

made to cater a particular group of patients.

Actionability

• The segment should be stable over time with respect to desired end benefits and classification factors.

• It is not necessary that same people remain in the segment.

• People with the needs identified by the segment should have same classification characteristics.

Stability

• The segment should have enough potential to contribute towards the organization’s objective and purpose of existence.

Profitability

• The last step in segmentation is to select a segmentation strategy.

• It must be decided whether to take mass marketing approach or segmented approach.

• Segmented approach is further divided as single segment approach or multiple segment approach.

• Single segment: Porsche • Multiple segment: Chevrolet,

Toyota

Segment Strategy

Examining Competitive Market Forces.

Examining Competitive Market Forces.

(Emphasis on first three)• What are the fundamental characteristics of my industry?

• Who are my competitors?• What are the current positions of my competitor?

• What moves are my competitor most likely to make?• What moves can we make to achieve a sustainable

competitive advantage?

Creating a market profile

Perceptual mapping

Examining Competitive Market Forces.

Creating a market Profile: Deals with industry characteristics such as:

– Size and growth rate of the industry– Substitute products– Suppliers to the industry– Principal customers– Manufacturing and distribution– Barriers to entry– Social and economic conditions affecting the industry

Perceptual Mapping: Also known as product positioning map. Who are my competitors & what are their current positions?

Perceptual Map (Fig 4-6)

Hill Top

Dave’s

West View

Rusty Scupper

• High Quality• Quiet

• Pleasant atmosphere

• Accessibility• Wide

selection

• Large portion

• Low Price• Fast Service

Perceptual mapping most likely ask consumers to rate brands with more than two attributes

Perceptual Map (Q# 10)

CITY TOURISTSLas Vegas 8,756Miami 2,620New York 17,411San Antonio 840San Francisco 9,375

• Night life• Sports• Shopping• Dining

• Culture• Museum• Sightseeing

• Weather

• Safety

New YorkLas Vegas

Miami

San Francisco

San Antonio

Perceptual Map (Q# 10)

Conclusion: Further create similar attributes as in the City

New York, San Francisco. Such as: Shopping facilities Sigh seeing Museums Sports & Nightclubs

THANK YOU!