Market segmentation and target market selection

Are there significant indirect competitors or close substitute products? They are interested in the comfortable shoes at a fair price.

Target Market Selection

Why do people use soaps? Extensive data is now available to support segmentation at very narrow groups or even for the single customer, allowing marketers to devise a customised offer with an individual price which can be disseminated via real-time communications.

Samuel Pepys, for example, writing indescribes being invited to the home of a retailer to view a wooden jack. This allowed the sale of goods to the common people, without encouraging them to come inside. Selective specialization- this is a multiple-segment strategy, also known as a differentiated strategy.

Target market selection is a key part of marketing strategy and typically involves significant analysis, discussion and review throughout the firm. Other important factors like climatic conditions and geographical locations also play an important role in deciding the target market.

Depending on company philosophy, resources, product type or market characteristics, a business may develop an undifferentiated approach or differentiated approach. One American study, for example, suggested that almost 60 percent of senior executives had used market segmentation in the past two years.

As shown, firms initially segment the market and, as part of this process, construct segment profiles for each segment. Market segment Description of the segment Elites These are professional sports people or consumers who compete in sports at a top level.

Target Market Strategies There are several different target-market strategies that may be followed. Role of brand Would the firm be required to create a new brand, or could an existing brand be leveraged into the new target market, or is brand relatively unimportant?

As market size increased, manufacturers were able to produce different models pitched at different quality points to meet the needs of various demographic and psychographic market segments.

However, with the advent of digital communications and mass data storage, it has been possible for marketers to conceive of segmenting at the level of the individual consumer. For example, buyer intentions, salesforce estimates, test marketing, and statistical demand analysis are useful for determining sales potential.

Tedlowidentifies four stages in the evolution of market segmentation: For this example, we will use a manufacturer of sports shoes who has identified four market segments, as per the following segmentation tree diagram. This means that they have three additional market segments to evaluate and consider.

The following diagrams show examples of the five market selection patterns given three market segments S1, S2, and S3, and three products P1, P2, and P3. Profit margins Is this a high profit margin segment or one that is price competitive?

Let us go through the below example: Target Audience 1 Against body odour - Soaps with a strong and lasting fragrance. Segment size What is the size of the segment mainly in terms of unit and revenue sales?

Each of these product types is designed to meet the needs of specific market segments. Resources Does the firm have the capability, in terms of financial and marketing resources, to successfully compete in this segment? What level of new investment would be required in this regard?

In an undifferentiated approach, the marketer ignores segmentation and develops a product that meets the needs of the largest number of buyers. The product itself may or may not be different - in many cases only the promotional message or distribution channels vary.

Competitors How dominant are the established competitors? A study of the German book trade found examples of both product differentiation and market segmentation in the s. Market specialization- the firm specializes in serving a particular market segment and offers that segment an array of different products.

But in spite of its limitations, market segmentation remains one of the enduring concepts in marketing and continues to be widely used in practice. As transportation systems improved, the economy became unified.

Targeting strategies usually can be categorized as one of the following: Daily comfort These are people who wear sports shoes on an everyday basis, simply because they are comfortable.

Selecting Target Markets

The impact of applicable micro-environmental and macro-environmental variables on the market segment should be considered. Sugars marketed to consumers appeal to different usage segments — refined sugar is primarily for use on the table, while caster sugar and icing sugar are primarily designed for use in home-baked goods.

Target marketing contrasts with mass marketing, which offers a single product to the entire market. This segment consists of consumers who regularly exercise or play sports at a social level. Attractiveness of a Market Segment The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment: It may be more profitable to serve one or more smaller segments that have little competition.Another major decision in developing the segmentation strategy is the selection of market segments that will become the focus of special attention (known as target markets).

The marketer faces a number of important decisions.

Selecting a Target Market Example

Market segmentation examples; Target Markets. Overview of Target Markets; Evaluating Target Markets; Selecting Target Markets. Selecting a Target Market Example; Example of How to Select a Target Market. Using the list of evaluation/assessment points, let’s review how a firm would evaluate three different market segments.

For this. Learn how your small business can use target marketing effectively by using the three most common kinds of market segmentation. It is essential for the organizations to identify the set of people whom they want to target.

To select a target market, it is essential for them to consider few factors. Lets study these factors in detail. MSG Management Study Guide. Home; Market Segmentation; Target Market Selection; Target Market Selection. Market segmentation is a two-step process of: naming broad product markets, and segmenting those markets in order to select target markets.

Use Demand Metric’s FREE MARKET SEGMENTATION TOOL to help you with market sizing and analysis, and to develop customer profiles. Market segmentation is one of the steps that go into defining and targeting specific markets.

It is a process of dividing a larger market into division of consumer or specific group based on their needs and wants.

Market segmentation and target market selection
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