PRINCIPLES OF

MARKETING
Module 04 (Q3-Week 8-9): Market Opportunity Analysis and Consumer Analysis (Part 2)

Prepared by: Mr. Christian Faith C. Zebua

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Module 04 (Q3-Week 8-9): Market Opportunity Analysis and Consumer Analysis (Part 2)

I. LEARNING COMPETENCIES
1. Differentiate the buying behavior and decision making of individual/household customer versus
the business (organizational) customer.
2. Identify and segment market for a product or service.
3. Select the appropriate target market segment and its positioning.

II. LESSON PRESENTATION

Consumer and Organizational Markets

Consumer Markets

Consumer markets are individuals and/or households who purchase products and services for
personal consumption.

Consumer Buying Process

1. Problem/ Need Recognition

2. Information Search
3. Alternative evaluation
4. Purchase decision
5. Post-purchase behavior

Consumer Buying Roles

Initiator A person who first suggests the idea of buying the particular product or service.
Influencer A person whose view or advice influences the decision.
Decider A person who decides on any component of a buying decision; whether to buy, what to buy,
how to buy, or where to buy.
Buyer The person who makes the actual purchase.
User A person who consumes or uses the product or service.

A company needs to identify these roles because they have implications for designing the product,
determining messages, arid allocating the promotional budget. If the husband decides on the car make
then the auto company will direct advertising to reach husbands. The auto company might design certain
car features to please the wife. Knowing the main participants and their roles helps the marketer fine-tune
the marketing program.

Consumer Market and Buying Behavior

Marketing Stimuli refers to the elements of the marketing mix, oftentimes referred to as the four
Ps:

Product
Price
Place
Promotion

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Consumer Behavior Model

Consumer Cultural Factors Consumer Personal Factors

Culture Age & Life Cycle
Subculture Lifestyle
Social Class Personality
Occupation
Economic Capability
Consumer Social Factors Consumer Psychological Factors
Reference Groups Motivation
Aspirational Groups Beliefs & Attitude
Role and Status Perception
Learning

Nine Stages of a Family's Life Cycle (William D. Wells & George Gubar)

Stage 1: Bachelor/bachelorette stage

Stage 2: Young, newly married couple with no children
Stage 3: Married couple, with eldest child below elementary school age
Stage 4: Married couple, with youngest child six years old or over
Stage 5: Older married couple, family head still working, all children living on their own
Stage 6: Widow/widower, in labor force
Stage 7: Widow/widower, retired

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Organizational Markets

Organizational markets refer to all the individuals and companies who purchase goods and services
for some use other than personal consumption.

An organization buys a variety of products and services. These may include a variety of items, some
of these are mentioned:
Raw material: Steel, aluminium, iron ore, etc.
Major capital items: Machinery, plant, etc.
Minor capital items: Pumps, valves.
Fabricated components and parts, and auto-assemblies: Castings, forgings, small parts of iron, rubber,
plastic, etc.
Processed chemicals: Fluxes for melting, powders, chemicals.
Consumables: Lubricating oils, electrodes, fuel, gas, etc.
Office equipment: Paper, copier, type writers.
Services: Transport, travel, touring, etc.

4 Types of Organizational Markets

Industries include individuals and companies that buy goods and services in order to produce other
goods and services.
Resellers consist of individuals or companies that purchase goods and services produced by others
for resale to consumers.
Governmen consists of government agencies at all levels that purchase goods and services for carrying
t out the functions of government.
Institutional consists of individuals and companies such as schools or hospitals that purchase goods and
services for the benefit or use of persons cared for by the institution

3 Types of Organizational Buying Decisions

Straight Rebuy In this routine, orders are placed for office supplies, raw materials, other items of daily
use, where the supplier is known and a procedure is already laid down, which is
followed in a routine manner.
Modified Rebuy Buyers may change or modify the product according to the situation, e.g., nylon rope for
ordinary rope. Plastic washers in place of steel or brass washers, aluminum instead of
copper, hydraulic in place of mechanical. This may be done for economic consideration,
or for the ease of procurement, or to modify or change the product. The change may
also be due to external or internal environmental changes.
New Task When a task is performed, items may be bought without previous experience and for
the first time. These could be new machines like computer or Fax machines. The need
for such a product may not have occurred previously. For a new task, a new set up and
new items are necessary, which may not have been purchased before.

Consumer Buying Roles (Organizational)

Users are the people and groups within the organization that actually use the product.
Influencers are people who may or may not use the product but have experience or expertise that can
help improve the buying decision.
Deciders is the person who makes the final purchasing decision.
Buyers are individuals who represent a business. When they make purchases, these buyers
typically consider both their personal tastes and the suspected tastes of the customers to

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 whom the organizational buyer's business will sell.
Gatekeeper are people who will decide if and when you get access to members of the buying center.
s These are people such as buying assistants, personal assistants, and other individuals who
have some say about which sellers are able to get a foot in the door.

Organizational Segmentation Variables

Industry Affiliation
Organizational Size
Geographic Location
End-use Application

Organizational Buying Process

1. Problem Recognition
2. Need Description
3. Product/Service Specification
4. Supplier Search
5. Proposal Solicitation
6. Supplier Selection
7. Purchase Order
8. Performance Audit

Market Segmentation

Market segmentation is a marketing term that refers to aggregating prospective buyers into groups
or segments with common needs and who respond similarly to a marketing action. Market segmentation
enables companies to target different categories of consumers who perceive the full value of certain
products and services differently from one another.

Consumer Segmentation Variables

1. Demographic Segmentation - is one of the most popular and commonly used types of market
segmentation. It refers to statistical data about a group of people.
Demographic Market Segmentation examples:
Age
Gender
Income
Location
Family Situation
Annual Income
Education
Ethnicity

Where the above examples are helpful for segmenting B2C audiences, a business might use the
following to classify a B2B audience:
Company size
Industry
Job function

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 Because demographic information is statistical and factual, it is usually relatively easy to uncover
using various sites for market research.

2. Psychographic Segmentation - categorizes audiences and customers by factors that relate to their
personalities and characteristics.
Psychographic Market Segmentation examples:
Personality traits
Values
Attitudes
Interests
Lifestyles
Psychological influences
Subconscious and conscious beliefs
Motivations
Priorities

Psychographic segmentation factors are slightly more difficult to identify than demographics
because they are subjective. They are not data-focused and require research to uncover and understand.

3. Behavioral Segmentation - While demographic and psychographic segmentation focus on who a

customer is, behavioral segmentation focuses on how the customer acts.
Behavioral Market Segmentation examples:
Purchasing habits
Spending habits
User status
Brand interactions

Behavioral segmentation requires you to know about your customer’s actions. These activities may
relate to how a customer interacts with your brand or to other activities that happen away from your
brand.

4. Geographic Segmentation - is the simplest type of market segmentation. It categorizes customers based
on geographic borders.
Geographic Market Segmentation examples:
ZIP code
City
Country
Radius around a certain location
Climate
Urban or rural

Geographic segmentation can refer to a defined geographic boundary (such as a city or ZIP code) or
type of area (such as the size of city or type of climate).

Target Market (Segment)

Target market is the end consumer to which the company wants to sell its end products too. Target
marketing involves breaking down the entire market into various segments and planning marketing
strategies accordingly for each segment to increase the market share.

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 In simple words, not all products can be consumed by all customers and each product has a
different set of consumers who want to purchase the product. In order to attract a particular segment of
the market, the company at times, modifies the product accordingly.

Elements of an Ideal Target Market (Segment)

1. Measurable: Market segments are usually measured in terms of sales value or volume (i.e. the number
of customers within the segment). Reliable market research should be able to identify the size of a market
segment to a reasonable degree of accuracy, so that strategists can then decide whether, how, and to
what extent they should focus their efforts on marketing to this segment.

2. Substantial: Simply put, there would be no point in wasting marketing budget on a market segment that
is insufficiently large, or has negligible spending power. A viable market segment is usually a homogenous
group with clearly defined characteristics such as age group, socio-economic background and brand
perception. Longevity is also important here: no market segmentation expert would recommend focusing
on an unstable customer group that is likely to disperse, or change beyond recognition within a year or
two.

3. Accessible: When demarcating a market segment, it is important to consider how the group might be
accessed and, crucially, whether this falls within the strengths and abilities of the company’s marketing
department. Different segments might respond better to outdoor advertising, social media campaigns,
television infomercials, or any number of other approaches.

4. Differentiable: An ideal market segment should be internally homogeneous (i.e. all customers within the
segment have similar preferences and characteristics), but externally heterogeneous. Differences between
market segments should be clearly defined, so that the campaigns, products and marketing tools applied
to them can be implemented without overlap.

5. Actionable: The market segment must have practical value – its characteristics must provide supporting
data for a marketing position or sales approach, and this in turn must have outcomes that are easily
quantified, ideally in relation to the existing measurements of the market segment as defined by initial
market research.

A good understanding of the principles of market segmentation is an important building block of a

company’s marketing strategy – the foundation for an efficient, streamlined and ultimately successful
approach to customers, and a means of targeting your products and services accurately, with the minimum
of wastage.

Market Positioning

Market Positioning refers to the ability to influence consumer perception regarding a brand or
product relative to competitors. The objective of market positioning is to establish the image or identity of
a brand or product so that consumers perceive it in a certain way.

For example:
A handbag maker may position itself as a luxury status symbol
A TV maker may position its TV as the most innovative and cutting-edge
A fast-food restaurant chain may position itself as the provider of cheap meals

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Elements of a Good Brand Position

Unique
Beneficial
Credible
Selecting a Good Brand Position
Perceptual Mapping

Perceptual Map in Market Positioning

A perceptual map is used to show consumer perception of certain brands. The map allows you to
identify how competitors are positioned relative to you and to identify opportunities in the marketplace.

An example of consumers perception of price and quality of brands in the automobile industry are
mapped below:

Communicating Brand Position

Packaging
Labelling
Selling price
Advertising
Brand endorser
Tagline

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Identifying and Selecting Competitive Advantage

Competitive advantage (or competitive edge) is the superiority of an organization over its
competitors. These are factors that allow a company to produce goods or services better or more cheaply
than its rivals. These factors allow the productive entity to generate more sales or superior margins
compared to its market rivals.

Take a look again in Module 03 Michael Porter’s three generic types for strategic thinking on how
to gain competitive advantage:
Cost advantage
Differential advantage
Focus advantage

III. SUMMARY OF LESSON

 Consumer markets are individuals and/or households who purchase products and services for personal
consumption.
 Organizational markets refer to all the individuals and companies who purchase goods and services for
some use other than personal consumption.
 Market segmentation is a marketing term that refers to aggregating prospective buyers into groups or
segments with common needs and who respond similarly to a marketing action.
 Target market is the end consumer to which the company wants to sell its end products too.
 Market Positioning refers to the ability to influence consumer perception regarding a brand or product
relative to competitors.
 Competitive advantage is the superiority of an organization over its competitors.

IV. ACTIVITY ENGAGEMENT

Direction: Search on the following companies. Identify their target market/s and their competitive
advantage/s. (40 pts.)

Company Target Market Competitive Advantage

Jollibee

McDonalds Philippines

Petron

7/11

Toyota

V. ENRICHMENT
Direction: Using the same business/product/service you have thought of in Module 02 and 03, develop a
perceptual map in market positioning. Plot a least five competitors. Don’t forget to indicate the name (or nature) of
your business/product/service. (20 pts.)

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VI. EVALUATION
Direction: Using the business/product/service you have thought of from the previous module, identify your target
market/s and think of three good ways to position your brand. (3 pts. each)

Business/Product/Service Target Market/s Positioning Strategies

1.
2.
3.

VII. RESOURCES
https://prezi.com/p/ublgun69t5mf/market-opportunity-analysis-and-consumer-analysis/?fallback=1
https://www.yourarticlelibrary.com/decision-making/5-roles-played-by-a-buyer-while-making-a-buying-decision/22159
https://www.allbusiness.com/barrons_dictionary/dictionary-organizational-market-49626051.html#:~:text=Organizational
%20markets%20are%20divided%20into,by%20others%20for%20resale%20to
https://www.wisdomjobs.com/e-university/consumer-behaviour-tutorial-94/organisational-buying-situations-10608.html
https://smallbusiness.chron.com/differences-betweenorganizationalconsumermarkets641.html#:~:text=What%20are
%20Organizational%20Buyers%3F,organizational%20buyer's%20business%20will%20sell.
https://www.investopedia.com/terms/m/marketsegmentation.asp#:~:text=Market%20segmentation%20is%20a
%20marketing,similarly%20to%20a%20marketing%20action.
https://blog.alexa.com/types-of-market-segmentation/
https://economictimes.indiatimes.com/definition/target-market
https://www.linkedin.com/pulse/20140730082827-41390803-market-segmentation-criteria-five-essential-criteria
https://corporatefinanceinstitute.com/resources/knowledge/strategy/market-positioning/
https://www.investopedia.com/terms/c/competitive_advantage.asp

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