CHAPTER 4

LESSON 2
MARKET TARGETING

Market Targeting – a stage in market identification process that aims to determine the set of
ibuyers with common needs and characteristics
– they are the market segment that the entrepreneurial venture intends to
serve

Two Major Processes of Market Targeting

1. Market segment evaluation
2. Market segment selection

Market Segment Evaluation*

An entrepreneur must conduct a proper and critical evaluation of every segment. While
doing so, he/she must consider the following important factors:
 Size and growth of the segment
The size and growth of a segment are considered favorable indicators for doing business
in that particular location. Hence, entrepreneurs tend to flock in that area.
 Structure of the segment
The structure of each segment varies. The entrepreneur must study the different barriers
that will lessen the forces of competition.
 Capability of the business
Another factor that must be carefully evaluated by the entrepreneur is the internal
environment of the business, including its resources.

Segmentation Matrix
The segmentation process is easily facilitated through the use of segmentation matrix.
The size of the segment is usually expressed in terms of estimated product demand, while the
expected growth may be expressed in terms of potential profitability of the segment.
The forces of competition may be classified as strong when the barriers to it are generally
weak or low. On contrast, the contrast is weak when the barriers are strong.
In the segmentation matrix below, although size and growth of segment 2 is lower than
that of segment 1, the different forces of competition, however, are weak and the business is
highly capable. Hence segment 2 becomes the priority segment to be served.

Potential Power Power Capability Priority

Substitute
Segments Size Growth New of the of the of the of the
Products
Entrants Buyer Supplier business Segment
Segment 1 3.0 M 5% Strong Weak Strong Strong Low No. 2
Segment 2 1.0 M 3% Weak Weak Weak Weak High No. 1
Market Segment Selection*
The number of segments to serve determines the appropriate entrepreneurial marketing
strategy to use. Generally, the entrepreneur can select one segment or all segments of the total
market with different entrepreneurial marketing strategies.

Three Basic Entrepreneurial Marketing Strategies

1. Individual or One-On-One Marketing
-- the business provides a product that is suited or fitted to the particular need of the customers
-- based on the concept that customers have different needs and wants

2. Segmentation Marketing
 Differentiated Marketing
-- several segments are covered, and products are designed to suit the specific needs of
a particular segment
 Concentrated Marketing
-- sometimes called niche marketing
-- the business selects only a few segments but intends to serve a large number of
customers in the chosen segments

3. Mass or Undifferentiated Marketing

-- products are mass produced for the whole market where consumers are not differentiated
-- based on the concept that customers have common needs and wants