CHAPTER 6 MKTG 409

market
aggregate of people who have needs for producs in a product class and who have avbility, willingness, and authority to purcahase such products
consumer market
purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits
organizational
business-to-business market
individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations
4 requirements of a market
1. Need for product
2. ability to purchase
3. willing to use buying power
4. authority to buy
TARGET MARKETING SELECTION PROCESS
1. Identify appro. TARGETING STRATEGY
2. determine SEGMENTATION VARIABLES
3. develop SEGMENT PROFILES
4. evaluate SEGMENTS
5. select TARGET MARKETS
STEP 1
(Target Marketing Selection Process)
TMSP
Identify appropriate targeting strategy
(type 1)
undifferentiated targeting strategy
a strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product
undifferentiated targeting strategy must be
1. homogeneous market

2. organization must develop and maintain single marketing mix that satisfies customers needs

homogeneous market
a market in which a large portion of customers have similar needs for a product
(type 2)
concentrated targeting strategy
a strategy in which an organization targets a single market segment using one marketing mix
Advantages/Disadvantages

Concentrated Targeting Strategy

A ) allows firm to specialize
D) dependent on that market for financial security
5 conditions must exist for market segmentation
1. need is heterogeneous
2. segment identifiable/disvisible
3. total market should be divided so seg compared to estimated sales potential
4.>=1 segment must have enough profit for market mix.
5. reachable segment with particular mix.
heterogeneous market
a market made up of individuals or organizations with diverse needs for products in a specific product class
(type 3)
Differentiated targeting strategy
A strategy in which an organization targets two or more segments by developing a marketing mix for each
STEP 2
(Target Marketing Selection Process)
2. Determine segmentation variables
market segment
individuals, groups, or organizations with one or more similar characteristics that cause them to have similar product needs
market segmentation
the process of dividing the total market into groups with relatively similar product needs to design a marketing mix that matches those needs
segmentation variables
(location, age, gender)
Characteristics of individuals groups or organizations used to divide a market into segments
3 factors to consider when selecting segmentation variable
1. relate to consumers needs
2. variables must be measurable
3. company resources and size
4 Consumer Segmentation Variables
1. Demographic Variables
2. Geographic Variables
3. Psychological Variables
4. Behavioristic Variables
Geographic Variables…
7 regions
climate terrain, city, size, population
1. pacific
2. southwest
3. central
4. mid-west
5. southeast
6. middle atlantic
7. New England
Market density
the number of potential customers within a unit of land area
geodemographic segmentation
market segmentation that clusters people in ZIP code areas and smaller neighborhood units based on lifestyle and demographic information
micromarketing
market segmentation when organizations focus on precise marketing efforts on very small geodemographic markets
Psychological variables
lifestyle, motive, personality characteristics
lifestyle
-segments according to how ppl spend their time
belief, education, income
benefit segmentation
the division of a market according to benefits that customers want from the product
Variables Segmenting Organizational markets
1. Geographic location
2. Type
3. Customer size
4. Product UseP
STEP 3
(Target Marketing Selection Process)
Develop segment profile
market potential
the total amount of a product that customers will purchase within a specified period at a specific level of industrywide marketing activity
Profile
describles similarities among potential customers within a segment, also explains their differences
STEP 4
(Target Marketing Strategy Process)
Evaluate relevant market segments
STEP 4
(5) Evaluate Relevant Market segments
1. Sales estimates
2. Market potential
3. Company sales Potential
4. Competitive assessment
5. Cost estimates
Sales estimate factors
1. product level
2. geographic area
3. times
4. level of competition
company sales potential
(3 influences)
the maximum percentage of market potential that an individual firm can expect to obtain for a specific product

a. Market potential limits
b. magnitude of industry activities
c. intensity and effectiveness of activities

Company Sales potential
measuring: buildup approach
estimating how much product in area will purchase in period, multiplied estimate by # of potential buyers + totals of all areas
STEP 5
(Target marketing Strategy Process)
5. Select specific Target market
Step 5 Select specific target market
(4)
A. enough differences to segment
B. inline with company’s goals
C. enough resources
D. political/legal reasons
sale forecast
amount of product expected to sell during SPECIFIC period at level of marketing activities
5 categories of forecasting techniques
1. executive judgement
2. surveys
3. sales force forecasting survey
4. Expert forecasting survey
5. Delphi Technique
Delphi Technique
experts create initial forecast submit to the company for averaging then refine forecasts
expert judgement
based on past, intuition of one or more executives
(4) Times Series analysis
forecasting method that uses historical sales data to discover patterns
trend, cycle, seasonal, random factor analysis
cycle analysis
3-5 year period to ascertain whether sales fluctuate in consistent manner
seasonal analysis
daily, weekly, or monthly sales
random factor analysis
attribute erratic sales variation to random nonrecurring events
Regression Analysis
predicting sales based on relaionship between past sale and one more variable (population or income)
Market Test
making product available to buyers in one or more test areas and measuring purchases and consumer responses