Chapter 6.3 Flashcards
Personal characteristics
- The market can be segmented on the basis of organisational values, risk profiles or loyalty towards suppliers
- The industrial marketer must compile a comprehensive description of the characteristics, needs and demands of the various market segments
Steps in segmenting the industrial market
- Identify major industrial market segments
- Profile each segment based on its characteristics
- Identify needs of each segments profile
- Design product and service specifications from needs
2 Basis for sub-diving markets
-Customer Location
-Customer type
Customer Location
Business markets are often segmented on a geographical basis because some industries are geographically concentrated
Customer type
The factors that influence this basis of segmentation:
C-T-O-P-P
C-T-O-P-P
-Customer size
-Type of industry
-Organisational structure
-Purchasing style
-Purchase criteria
Selecting potential target markets
S-A-S-I
-Sufficiency
-Accessibility
-Stability
-Identifiable
Sufficiency
The potential market must be worthwhile to marketers and must therefore be sufficiently big enough
Accessibility
It implies that the target market must be economically viable
Stability
Marketers prefer to target consumer segments that are relatively stable in terms of demographics and psychological factors, with customer needs that increase over time
Identifiable
Market segments should be of such nature that they are easily identifiable
5 Evaluation criteria for evaluating target markets
C-C-A-T-T
-Compatibility with the organisations objectives
-Cost of reaching the target market
-Attractiveness and potential profitability
-Target market size and growth potential
-The resources and skills of the organisation
Compatibility with the organisations objectives
If found that the objectives of the organisation can’t be fulfilled by the choice of a particular market segment, it should be disregarded
Attractiveness and potential profitability
The attractiveness of the target market lies in its size and growth opportunities and in the promise of long term productivity
Target market size and growth potential
A target market doesn’t necessarily need to be ‘big’, a small on can often be more profitable
The resources and skills of the organisation
A segment can only be chosen as a larger market if marketing management is fully committed to serving this market better than any other competitor can
Target market evaluation steps
- Identify the criteria that’ll be used to measure the attractiveness and competitive position
- Determine the importance of a target market based on the attractiveness and competitive position
- Assess where each potential target market is currently standing
- Make calculated predictions where each target market is likely to go
- Evaluate the possible outcomes likely to impact on the business strategy and resource requirements
Steps to evaluating the attractiveness of a particular target market
- Deciding the appropriate evaluation criteria
- Weighing factors to reflect their importance
- Assessing the current position of each target market
- Project the future position of each target market
- Evaluate the implications of possible future changes
Assessing the attractiveness of the organisation hinges on four factors
C-E-C-E
-Customer market
-Economic and technological factors
-Competitive factors
-Environmental factors
The competitive position of the organisation also hinges on four factors
-S-E-C-C
-Synergy with other market segments
-Economic and technological factors
-Capabilities of the organisation
-Current market position
