Transcript Market Opportunity Analysis

GLOBAL MARKETING
Marketing Segmentation
Market Attractiveness
Positioning
What is Market Segmentation?
• Process of dividing a potential market into
distinct subsets of consumers with
common needs or characteristics.
• Separating a heterogeneous market into
smaller homogeneous units.
Important Elements of Market
Segmentation
• Each market segment has unique needs
and wants and will have a unique demand
curve.
• Each market segment requires its own
marketing strategy and marketing plan.
• Market segmentation produces increased
costs to the firm in the short run.
• Increased costs are generally offset by
increasing sales in the long run.
The Segmentation Process
Needs-Based
Segmentation
The Segmentation Process
Needs-Based
Segmentation
Segment
Identification
Segmentation Bases
• Geographic
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Country
Region
County size
SMSA population
Density
• Demographic
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Age
Sex
Education
Occupation
Race
Family life cycle
Segmentation Bases
• Psychographic
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Social class
Personality
Lifestyle
Activities, interests, &
opinions (AIO’s)
• Behavioralistic
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Decision unit
Usage rate
Readiness
Benefits sought
Occasion
Brand loyalty
The Segmentation Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Market Attractiveness
• Market attractiveness represents the
degree of market opportunity offered by a
market segment and the ability of the firm
to meet the segment’s needs within a
competitive setting.
• Determining market attractiveness is a
four-step process.
Determining Market
Attractiveness...
• First, pre-select criteria that will be used to
evaluate market attractiveness and
competitive position.
Market Attractiveness Factors
• Market/customer
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Size ($’s, units)
Market potential
Market growth rate
Product life cycle stage
Differentiation potential
Customer loyalty
Price elasticity
• Economic/technological
– Investment intensity
– Industry capacity
– Level & maturity of
technology utilization
– Ability to pass through
inflation effects
– Barriers to entry/exit
– Access to raw materials
Market Attractiveness Factors
• Competitive
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Industry structure
Competitive groupings
Substitution threats
Perceived differentiation
among competitors
– Individual competitors’
strengths
• Environmental
– Regulatory climate
– Degree of social
acceptance
Competitive Position Factors
• Market Position
– Relative market share
– Rate of change in share
– Perceived actual or
potential differentiation
– Breadth of current or
planned product line
– Company image
• Economic/technological
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Relative cost position
Capacity utilization
Technological position
Patented technology
Competitive Position Factors
• Capabilities
– Management strength &
depth
– Financial
– R&D/product
development
– Manufacturing
– Marketing
– Salesforce
• Capabilities, con’t
– Distribution system
– Labor relations
– Relations with
regulators
• Interactions with other
segments
– Market synergies
– Operating synergies
Determining Market
Attractiveness (continued)...
• Second, weight the market attractiveness
and competitive position factors.
– What is the relative importance of each factor
to your firm?
• Third, rate each segment on attractiveness
and competitive position.
Example of Weighting and
Rating
Factor Group
Market
Econom ic/technolgy
com petition
Environm ent
Total
Attractiveness
Weight
Rating*
50
20
20
10
100
8
9
9
10
36
Total
400
180
180
100
860
Attractivenes s rating = 860/10 = 86
Factor Group
Market pos ition
Econom ic/technology
Capabilities
Interaction with other s egm ents
Total
Business Strengths
Weight
Rating*
20
20
50
10
100
Bus ines s s trength rating = 890/10 = 89
*Rating s cale = 0-10.
9
8
9
10
36
Total
180
160
450
100
890
Determining Market
Attractiveness (continued)...
• Fourth, evaluate the implications of
alternative positions within the market
attractiveness/competitive position matrix
for target market selection, strategic
objectives, and resource allocation.
– Select segment(s) that offer best opportunity
for profits.
Competitive Position
Strong
Medium
Weak
Build selectively:
- Specialize
around limited
strengths
- Overcome
weaknesses
- Withdraw if
sustainable
growth is not
possible
Limited expansion
or harvest:
- Look for ways to
expand without
high risk
- Minimize
investment and
focus
operations
Divest:
- Sell when
possible to
maximize cash
value
High
Desirable
Protect position:
- Invest to grow
- Concentrate on
maintaining
strength
Desirable
Invest to build:
- Challenge for
leadership
- Build on
strengths
- Reinforce
vulnerable areas
Medium
Desirable
Build selectively:
- Emphasize
profitability by
increasing
productivity
- Build up ability to
counter
competition
Protect & refocus:
-Defend strengths
-Seek ways to
increase earnings
without speeding
market’s decline
Manage for
earnings:
- Protect existing
strengths
- Invest to improve
position only in
areas where risk
is low
Market
Attractiveness
Low
Manage for
earnings:
- Protect position
- Minimize
investment
The Segmentation Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Segment Positioning
Strategy
Positioning
• Match offerings of firm to the needs and wants of
market segments.
• Effective positioning involves understanding
customers’ perceptions about both the
psychological and physical characteristics of
offerings.
• Positioning starts with a product. But positioning
is not what you do to a product—it’s what you do
to the mind of the customer. That is, you position
the product in the mind of the customer.
Positioning Strategy
• Learn the customer’s viewpoint. Create
positioning statement based on unique
customer needs.
Primary Needs
Articulated Needs
Exciting Needs
Positioning Statements
• To communicate positioning, a marketing
plan should include a positioning
statement following the form:
“To (target group and need) our (brand)
is (concept) that (point of difference).”
Example:
“To young, active soft-drink consumers
who have little time for sleep, Mountain
Dew is the soft drink that gives you more
energy than any other brand because it
has the highest level of caffeine. With
Mountain Dew, you can stay alert and
keep going even when you haven’t been
able to get a good night’s sleep.”
Points to Remember About
Positioning:
• Based on consumer perceptions of
tangible and intangible characteristics of
offering.
• The intensity of the brand will affect
positioning.
The Segmentation
Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Segment Positioning
Strategy
Positioning
“Acid” Test
Testing the Positioning
Statement
• Test the positioning statement with target
consumers--what do they think, how do
they react to the statement?
• Assess need level: the stronger the need,
the higher the expected customer interest.
– “Do you see this product as solving a problem
or filling a need for you?”
Testing, continued...
• Communicability and believability: if the
scores on these dimensions are low, the
positioning must be refined or revised.
– “Are the benefits clear to you and believable?”
Testing, continued...
• Perceived value: The higher the
perceived vale, the higher the expected
consumer interest.
– “Is the price reasonable in relation to the
value?”
Testing, continued...
• Gap level between the new product and
existing products: The greater the gap,
the higher the expected consumer interest.
– “Do other products currently meet this need
and satisfy you?”
The Segmentation
Process
Needs-Based
Segmentation
Segment
Identification
Segment
Attractiveness
Segment Positioning
Strategy
Positioning
“Acid” Test
Strategy
Implementation
Segmentation Strategies
Mass
Marketing
Mass
Customization
Multisegment Strategy
• Pursue two or more segments that are
attractive and profitable, but not the whole
market.
Sequential Segment Strategy
• Multisegment approach, but rather than
pursuing all the attractive segments
simultaneously, pursue the most
attractive first; when cash flow from that
segment is positive, then pursue the next
most attractive segment, and so on.
Single-Segment Strategy
• Focus on just one attractive segment.
Niche Segment Strategy
• Focus on a smaller group within a
segment.
• Requires a further customization of
marketing strategy.
Mass Customization Strategy
• Focus on all niches within a segment by
customizing strategies to each
subsegment.