Step 5: Select, Implement, and Record Chosen Course of Action

1. Define Market & Select Target

2. Develop Market Mix

What is a Market?

• A market is a group of individuals or organizations (i.e. buyers) having the willingness and ability to buy goods or services to satisfy a particular class of wants or needs.

• Understanding the market; selecting the best market & understanding its buying behavior are key to the success of the marketing plan.

Steps in Market Analysis1. Define Market to Identify

Competitive Arena to identify competitive arena

e.g. Coffee Market

Steps in Market Analysis

2. Segment the Market to Determine Competitive tactics.– If you can find an objective reliable way to define

groups of people;– If you can measure the sales and profit potential of

the segments;– If these segments can be profitably reached using

marketing– If you can expect a different response from the unique

marketing plans you offer each segment

Segmentation Effective If…• Measurable – Size, purchasing power, profiles of

segments can be measured• Substantial – Size of market large enough to justify

tailored strategy costs• Accessible – Reachable via personal or

impersonal media• Differential – Homogenous within & heterogeneous

between; must respond differently to different marketing mix elements & actions.

• Actionable – Company can develop different marketing strategies to serve segments.

Steps in Market Analysis

3. Develop profiles of the resulting segments

4. Evaluate the attractiveness of each segment & Select the Target Segment(s)

– Understand Customer Motivation and Behavior to determine relevant assets and skills

Demographic Age, gender, family size, life cycle, race, occupation, income

GeographicNations, states, regions, counties, cities, neighborhoods

Bases for Segmenting Consumer Markets

Explain how each factor affects a company’s marketing strategy.

Continued on next slide!

PsychographicLifestyle or personality

BehavioralOccasions, benefits, uses, attitudes, loyalty, buyer-readiness

Bases for Segmenting Consumer Markets

Multi-AttributeSmaller and better defined target groups, geoclustering

Bases for Segmenting Business Markets

• Demographic

• Operating variables

• Purchasing approaches

• Situational factors

• Personal characteristics

Selecting and Entering Market Segments

P = ProductM = Market

Single-segmentconcentration

P1

P2

P3

M1 M2 M3

ProductspecializationM1 M2 M3

P1

P2

P3

SelectivespecializationM1 M2 M3

P1

P2

P3

Selecting and Entering Market Segments

P = ProductM = Market

Marketspecialization

P1

P2

P3

M1 M2 M3

Full marketcoverage

M1 M2 M3

P1

P2

P3

1. Identify the variables which are used to segment this market.

1. Diaper Rash

2. Special Occasion

3. Other? Brainstorm!

1. Determine whether variables will lead to effective segment.1. Measurable2. Substantial3. Accessible4. Differential5. Actionable

2. Is segment(s) attractive?1. Size, Growth, Profitability, Risk, In sync with Company Objectives

3. Identify Type of segmentation strategy.1. Single-segment2. Selective Specialization3. Product specialization4. Market specialization5. Full market coverage

How Do you segment Toothpaste market?

Toothpaste Market Segmentation

Benefit Segment

Demographics Behavior Psychographics Brand

Economy Men Heavy Users Value oriented

Medical Large Families Heavy Users Hypochondriac,

Conservative

Cosmetic

(Bright teeth)

Teens,

Young Adults

Smokers Sociable,

Active

Taste Children Spearmint Lovers

Self involved

Airport Inn Travelodge

$ $ $ $ $ $179.95 and up

$ $ $ $ from $129.95

$ $ $ from $89.95

$ $ from $49.95

$ from $29.95

How Do You Segment Las Vegas Hotel Market?

Customer Analysis

• To develop an effective marketing plan, it is necessary to understand customers and their buying behavior

What Do You Need To Know About the Customers?

• Who constitutes the market?

• How many are there?

• Why does the market buy it?

• When does the market buy it?

• Where does the market buy it?

• How much do they buy? How often?

• How do they make their buying decision?

Consumer Buying Decisions

• Multifaceted– Product, Brand, Dealer Choice; Purchase Timing, Amount

• Multi Step– Problem Recognition, Information Search, Evaluation, Decision,

Post Purchase Behavior

• Subject to Multiple Influences– Cultural, Social, Personal and Psychological Factors and

External Environment

Features Influencing Brand Choice In Disposable DiapersRank Order – Number of Respondents

Features 1* 2 3 4 5 Totals

Absorbency 31 9 4 - 1 45

No Leak 11 9 4 2 1 32

Refastenable Tapes

3 10 8 4 6 31

Elastic Legs 4 6 8 8 3 29

Elastic Waist 3 4 3 8 6 24

Size Availability 1 - 1 5 3 10

Gender Specific - 2 - 1 1 4

Printed Designs - - - 1 1 2

Wetness Indicator 1 - 1 - - 2

Other 7 - - - - 7

*1 = most important factorSource: Wilson & Dallas, Nonwovens Industry, January 1992

Factors Influencing Choice of Diaper TypeRank Order – Number of Responses

Factor 1* 2 3 4 5 Totals

Convenience 15 11 14 3 3 46

Brand 8 16 6 8 3 41

Price 14 7 11 6 2 40

Daycare Requirements

4 8 7 3 3 25

Environmental Concerns

6 3 2 5 3 19

No washer or dryer

2 1 - - - 3

Other 6 3 2 - - 11

*1 = most important factorSource: Wilson & Dallas, Nonwovens Industry, January 1992