Targeting the market
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Target market selection
Presentation and Discussion
Charles Blankson, Ph.D.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Segmenting & targeting markets
• What is Market Segmentation ?
Dividing the market (consumers/buyers)
into parts, portions, sections, “segments”
etc.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Operationalization of market
segmentation
• Identify bases to segment (to divide into parts).
• Develop profiles of the segments – look for
profit of emerging segments etc.
Targeting
• Develop measures having decided on the
strategy – e.g. single or multi segments or sole
or multi product.
• Select target segments
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Major segmentation variables for consumer
markets
• Geographic:
• Region, county size, borough, city, population density,
climate.
• Demographic:
• Age, gender/sex, family size, family life cycle, income,
occupation, education, religion, race, ethnic
background, nationality.
• Psychographic:
• Social class, life style, personality.
• Behavioral:
• Occasions, benefits, user status, usage rate, loyalty
status, readiness state, attitude toward the offering.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Major segmentation variables for
industrial/business markets
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Demographic:
Industry, company size, location
Operating variables:
Technology, user/non-user status, customer capabilities
Purchasing approaches:
Purchasing structure, nature of existing relationships, general
purchase policy, purchasing criteria.
Situation factors:
Urgency, specific application, size order
Personal characteristics:
Buyer-seller similarity, attitude toward risk/risk aversion, loyalty.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Prioritizing target markets
Segment Identification:
• Involves the process of aggregating customers
into segments in order to satisfy a particular
problem.
Segment Qualification:
• The process whereby the operational relevance
of the segments identified is assessed. This
relates to how easily the segments can be
characterized, measured, targeted and served.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Prioritizing target markets
Segment Attractiveness:
• This concerns deciding which segments to serve
and which to ignore. This involves a range of
market attractiveness criteria such as: (a)
market growth, (b) future potential, © level and
structure of competition, (d) company assets
(resources), (e) nature of customer needs and (f)
entry barriers.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
High School students in
Philadelphia, PA
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Market Attractiveness Criteria
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Literature area
Kotler (1994, 2000)
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Webster (1991)
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Hutt and Speh (1989)
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Porter (1980)
• Attractiveness criteria
• Measurability, accessibility,
substantiality, actionability.
• Measurable, relevance to
major customer group,
operational relevance for
market strategy.
• As Webster, plus segment
compatibility with current
marketing and business
strengths.
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Competitive rivalry, Threat of
substitutes, Supplier power,
Buyer power, Threat of new entrants.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Criteria for selecting target markets
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Profitability
Market growth
Market size
Likely customer satisfaction
Sales volume
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Competitive rivalry
Market share
Relative strengths in key functions
Customers’ price sensitivity
Customer image of company
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Likelihood of sustainable differential
advantage
Ease of access of business
Opportunities in the industry
Product differentiation
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Technological factors
Fit with business strategy
Stability of market
Environmental factors
Threat of substitutes
Barriers to entry
Negotiating powers of buyer
Ease of profiling customers
Supplier power.
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Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Diversity of criteria and approaches
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Life is simple
How many customers
Where located
Profit levels
Sales levels
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Short but effective
Brand loyalty
Contributions ($)
Market growth rates
Competitive intensity
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Forward thinking
Customer fit
Future potential sales volumes
Customers’ needs
Likely differential advantage
Financial value to the business.
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Analytical
Weight
Variable
3
Market size
3
Margin
3
Market share
3
Differential
advantage/business strengths
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Three alternative market selection
strategies
• Undifferentiated marketing: typically mass marketing
• Differentiated marketing: Company pursues one segment at a time
with a specific marketing mix tactic
• Concentrated: Company uses all efforts to pursue one identified
segment at a time. Other profitable segments may be pursued later
on and when appropriate.
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Lecture based on:
Simkin, L. and Dibb, S. (1998), Prioritizing Target Markets, Marketing Intelligence & Planning,
Vol.16, No. 6 & 7, pp.407-417.
Others:
Webster F.E. (1991), Industrial Marketing Strategy, John Wiley, New York, N.Y.
Hutt, M.D. and Speh, T.W. (1989), Business Marketing Management, The Dryden Press, Chicago, IL.
Porter, M.E. (1980), Competitive Strategy, Free Press, New York, N.Y.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics
Reading for next week
• Read Chapters 1, 2, 3 and 4 by next
week.
Charles Blankson, Ph.D., Dept. of
Marketing & Logistics