Transcript Identifying your market

Identifying Your Market
Marketing Segmentation
Target Market
Market
Segment
Geographic
Segmentation
Marketing Concepts
• Market: The group of
potential customers who have
similar needs/wants, sufficient
buying power, and the
willingness to give up a
portion of that buying power in
order to buy your
product/service.
Marketing Concepts
• Market Segmentation:
Dividing the total market
into smaller, well-defined
groups with similar wants/
needs and similar key
characteristics.
Marketing Concepts
• Target Marketing:
Identifying market segments
with the greatest potential for
sales and focusing
marketing decisions on
satisfying the individuals that
make up these segments.
Marketing Concepts
• Target Market: The
group or groups of
potential customers
identified as most likely to
patronize the business
and buy its products.
Analyzing Markets
Market segmentation
is a way of analyzing a
market by specific
characteristics in order
to create a target
market
Segmentation Methods
•GEOGRAPHIC
•DEMOGRAPHIC
•PSYCHOGRAPHIC
•BEHAVIORAL
Demographics –
statistics that describe
a population in terms of
personal
characteristics.
• Age
– Baby Boom Generation
– Generation X
– Generation Y
• Gender
• Income
– Disposable income –
money left after
taking out taxes
– Discretionary income
– money left after
paying for basic
living necessities
such as food,
shelter, and clothing
• Marital Status
• Ethnic Background
U.S. Trend – The percentage of the
Caucasian population is declining,
while other ethnic populations
increase.
Psychographics
• Involves grouping
people with similar
lifestyles, as well as
shared attitudes,
values, and opinions.
– Activities
– Attitudes
– Personality & Values
Music teachers,
dancers, and other
music lovers would
be one category of
people who share
psychographic
characteristics.
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Geographics –
Segmentation
based on
where people
live
Behavioral Segmentation
• Looking at the benefits desired by
consumers, shopping patterns, and
usage rate. Market benefits, not just the
physical characteristics of a product.
Behavioral Segmentation
• Many businesses find that the 80/20 rule
applies.
• 80 % of a company’s sales are
generated by 20 % of its loyal
customers.
Mass Marketing Vs
Segmentation
• Mass marketing not as popular as it
once was.
• Niche marketing (the current trend) –
markets are narrowed down and defined
with extreme precision.
Characteristics of a
Market Segment
1.
2.
3.
4.
Measurable: Potential sales income must be
measurable.
Substantial: Potential sales income must be
substantial enough to warrant the investment
required to reach the segment.
Reachable: Individuals in the segment must
be reachable with available promotional tools.
Responsive: The likelihood of the segment
responding positively to promotional efforts
must by high enough to warrant the investment.
Characteristics of a
Market Segment
• Market potential: The total amount of revenue that
can potentially be generated in a specific industry or
market.
• Market share: The percentage of the total sales
revenue captured by a firm within a market or
industry.
• Market position: The perceived standing of a firm
or a product in the minds of customers as compared
to the competition.
Positioning Strategies
To be successful in your business, you
must:
• Play to the competition’s weaknesses.
• Lead with your strengths.
• Look for underserved markets.
• Target different market segments.
• Focus efforts on communicating its position
to its target market.
• Plan its position in the market
Average Market Share
Total sales
volume/number of
competitors in a
given market.
Competition Analysis
• When developing a competition analysis for
your business plan consider:
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–
–
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Who are your 5 nearest direct competitors?
Who are your indirect competitors?
How are their businesses performing?
What have you learned from their operations and
advertising?
– What are their strengths and weaknesses?
– How does their product/service differ from yours?