OPPORTUNITY ANALYSIS, MARKET SEGMENTATION, AND

MARKET TARGETING
_________________________________________________________________________

 MARKETING STRATEGY FRAMEWORK

 OPPORTUNITY ANALYSIS

Opportunity Analysis consists of three interrelated activities

 Opportunity-Organization Opportunity Evaluation
Matching
Opportunity Identification
Does the opportunity fit the Which opportunity should
company? pursue?
Is it worth?

Note 1:Opportunities arise when Note 1: Each opportunity requires Qualitative Quantitative
firm believes that available options success requirements.
are not satisfactive. Matches the • Market sales
attractiveness of potential
Note 1:Opportunities may be a gap Note 2: To benefit from such an opportunity estimates.
in the market, Something company opportunity company should have with the
can fits in, something that provides some strength So the question is potential for • Sales forecasts.
more growth or more revenues or Does the company have what it takes uncovering a
even compression of cost. to see such opportunities? market niche,
which depends • Budgets.
There are new customers because of Determines whether an identified on:
generation shifts. market opportunity is consistent
with the definition of the firm’s • Competitive
There is a new technology business, mission statement, and activity.
companies may use to satisfy the distinctive competencies.
needs. • Buyer
requirements.

• Market
Opportunities arise from: demand.
• Assesses strengths and
• Identifying new types of buyers. weaknesses via a SWOT. • Supplier
• Uncovering unsatisfied needs of • Identifies the success sources.
buyers. requirements.
• Creating new ways or means for • Rejects those that do not conform
satisfying buyer needs. to a firm’s character even if they • Environmental
offer sizable sales and profit. forces.

Opportunity analysis focuses on • Organizational

finding markets that an organization capabilities.
can profitably serve.

(Which is the target market that

Company can work with better?)

Like STING.

Note: Marketers often plan to deliver better mean to satisfy the needs.
 OPPORTUNITY EVALUATION MATRIX—ATTRACTIVENESS CRITERIA

Competitive Buyer Demand/ Environmental Organizational

Market Niche
Activity Requirements Supply Forces Capabilities
Criterion

How many and What affects buyer Do different How sensitive are Can we gain
which firms willingness and buyer types have different buyers to access to buyers
compete for this ability to buy? different levels of these forces? through marketing
user group? effective mix variables?
Buyer Type

demand? During Covid-19

some people spent Can we supply
Like Crest and For example Is the How important more money for these buyers?
Clorets customer price are adequate Vaccines or drugs.
sensitive or not? sources
of supply?
Maybe the
company is selling
a luxury product so
people will favor
luxury over
necessity.

Are there buyer Are buyer needs How sensitive are

Which firms are
needs that are not likely to be buyer needs to
Buyer Needs

satisfying which
being satisfied? long-term? these forces?
buyer needs?
Which buyer
Do we have or For example there
Somebody buy the needs
What are they? can we acquire are political
car for image and can our firm
resources to conflicts around
somebody else may profitably satisfy?
satisfy buyer the world that make
buy the car for
needs? people favoring the
transportation
local products
mean.
rather than foreign
products.

What are the Is the technology To what extent How sensitive are Do we have the
strategies being for satisfying are the means for the means for financial, human,
employed to buyer needs satisfying buyer satisfying buyer technological,
satisfy buyer changing? needs affected by needs to these and marketing
Means for Satisfying

needs? supply sources? forces? expertise to

Buyer Needs

satisfy buyer
What strategy Maybe company For Example For Example needs?
company will use? builds on Is there someone Suppose the
technology but this will provide the company will
Is the company technology will resources for the outsource, Is the
going to grow old at a company? And IF outsourcing
collaborate with certain point , and not what will reliable?
other company to the company may company do? Like Hawaii
come up with a not have access to
new product? OR new technology to Is the demand for
Modifying the continue producing the means for
existing product by its product like satisfying buyer
adding new feature Kodak needs changing?
or new
technology? Is the demand will
grow for long
run?
Like Gaming
industry
 WHAT IS A MARKET?

A market consists of the prospective buyers (individuals or organizations) willing and able to purchase
the existing or potential offering (product or service) of an organization.

Note: Company can enhance the ability of the customer to purchase by means.

Implications for marketers:

1. Buyers
Focus on buyers, not products or services.

2. Effective Demand
Exchanges cannot occur unless buyers are able and willing to purchase a product or service.

3. Offerings ( Value proposition )

Purchases consist of offerings, not products or services, due to the values or benefits that buyers
derive from them.

A) Market Structure

View as a composite of mini- or regional markets

to:

1. Identify competitors and how they compete.

2. Monitor changes in sales volume.
3. Assess differences between buyers’ taste
preferences and the competition.

• Who are the customers? And where are they

located?

• Are their needs homogenous or diffused or clustered?

• How are competing for them?

• What are the PODs (points of difference) and POPs (points of parity)?

• Are the people tastes can be served by more or less one single offering?

So marketers offer flexible offering in order to increase No.of segments.

B) Market Share

Market share is the sales dollars ($) or units (#) of a firm, offering, or brand divided by the sales of the
“market,” expressed as a percentage (%)

Firm, Offering, or Brand Sales

Market Share = ___________________________________ * X%

Market Sales

Market Definition Coffee Dollar Sales Atlantic Blend Sales Market Share

__________________________________
 A served market is one in which a company, offering, or brand competes for targeted customers.
 Marketing managers often look closely at served market share when considering strategic options.

1. “High” Served Market Share

Use a market development strategy
2. “Low” Served Market Share
Use either a product development or market penetration strategy
 MARKET SEGMENTATION

Market Segmentation Mass Customization

Note: Marketers use segmentation to understand
their customers better.
Market Segmentation “A technique that
involves breaking down or building up of potential
buyers into groups, which are called market
segments.”
Mass Customization “Tailors products and
services to the tastes and preferences of individual
buyers in high volumes and at a relatively low cost.”
Combines the efficiencies of mass production and the
effectiveness of designing offerings to a single buyer’s
unique wants.

 Each segment possesses a homogeneous Note: Some of marketers would go even farther and
characteristic that relates to its purchasing create a personalized marketing mix. Some of large
behavior and response to a marketing companies as well go foe very expensive Fully
program. customized marketing mix.(One tone marketing)

 “Cannot be all things to all people”. EX: Rolls Royce

 Information technology and flexible

manufacturing and service delivery systems
can create “segments of one”.

Benefits of Market Segmentation:

1. Identifies opportunities for new product

development.

2. Helps in the design of marketing programs

that are most effective for reaching
homogeneous groups of consumers.

3. Improves the allocation of marketing

resources.
 1. Segmenting Consumer Markets
There is no single way to segment a market. A marketer has to try different segmentation variables, alone
and in combination, to find the best way to view market structure.

A) Geographic segmentation divides the market into different geographical units such as nations,
regions, states, counties, cities, or even neighborhoods.

A company may decide to operate in one or a few geographical areas or operate in all areas but pay attention
to geographical differences in needs and wants.

Many companies today are localizing their products, advertising, promotion, and sales efforts to fit the needs
of individual regions, cities, and neighborhoods.

For example, Domino’s Pizza, the nation’s largest pizza delivery chain, keeps its marketing and customer
focus decidedly local. Customers anywhere in the nation can use the online platform or smartphone app
to track down local coupon offers, locate the nearest store with a GPS store locator, and quickly receive a
freshly-made pizza. They can even use Domino’s Pizza Tracker to follow their pies locally from store to
door.

B) Demographic segmentation divides the market into segments based on variables such as age, life-
cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.

Demographic factors are the most popular bases for segmenting customer groups. One reason is that
consumer needs, wants, and usage rates often vary closely with demographic variables. Demographic
variables are easier to measure than most other types of variables.

Even when marketers first define segments using other bases, such as benefits sought or behavior, they must
know a segment’s demographic characteristics to assess the size of the target market and reach it efficiently.

C) Age and life-cycle stage segmentation divides a market into different age and life-cycle groups.

Consumer needs and wants change with age. Some companies offer different products or use different
marketing approaches for different age and life-cycle groups. Other companies offer brands that target
specific age or life-stage groups.
For example, Amazon targeted a younger tablet market for using the Kindle Fire tablet, introducing
Free Time Unlimited, a multimedia subscription service targeted toward 3- to 8-year-olds. Marketers must
be careful to guard against stereotypes when using age and life-cycle segmentation.

D) Gender segmentation divides a market into different segments based on gender.

Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.

For example, P&G was among the first to use gender segmentation with Secret, a brand specially
formulated for a woman’s chemistry, and packaged and advertised to reinforce the female image. More
recently, the men’s personal care industry has exploded, and many cosmetics brands that previously
catered mostly to women—like L’Oreal and Nivea—now successfully market men’s lines.

E) Income segmentation divides a market into different income segments.

The marketers of products and services such as automobiles, clothing, cosmetics, financial services, and
travel have long used income segmentation.

Many companies target affluent consumers with luxury goods and convenience services. Other marketers
use high-touch marketing programs to court the well-to-do.

Not all companies that use income segmentation target the affluent. For example, many retailers—such as
the Dollar General, Family Dollar, and Dollar Tree store chains—successfully target low- and middle-
income groups. The core market for such stores is represented by families with incomes under $30,000.

F) Psychographic segmentation divides a market into different segments based on social class, lifestyle, or
personality characteristics.

Psychographic segmentation: Dunkin’ Donuts successfully

targets the “Dunkin’ tribe”—not the Starbucks coffee snob but
the average Joe. Dunkin’ Donuts isn’t like Starbucks—it
doesn’t want to be.”

People in the same demographic group can have very different

psychographic characteristics.

In Chapter 5, we discussed how the products people buy reflect

their lifestyles. Marketers also use personality and attitude
variables to segment markets.

For example, different soft drinks target different personalities.

Mountain Dew projects a youthful, rebellious, adventurous
personality whereas Coca-Cola Zero appeals to target personality
types which are more mature, practical, and cerebral but good-
humored. Its subtly humorous ads promise “Real Coca-Cola taste and zero calories.”
One of the most popular classification systems based on psychographic measurements is VALS:
 G) Behavioral segmentation divides a market into segments based on consumer knowledge, attitudes,
uses of a product, or responses to a product.

Many marketers believe that behavior variables are the best starting point for building market segments.

Example: Schwinn makes bikes for every benefit segment. For

example, Schwinn’s urban bikes are “for riders who want a
functional, durable, and stylish bike to commute or ride casually
in urban areas.”

Occasions refer to when consumers get the idea to buy, actually

make their purchase, or use the purchased item.

Occasion segmentation can help firms build up product usage.

Campbell’s advertises its soups more heavily in the cold winter
months, and Home Depot runs special springtime promotions for
lawn and gardens products. Other marketers prepare special offers and ads for holiday occasions or
nontraditional occasions.

Benefits sought refers to finding the major benefits people look for in a product class, the kinds of people
who look for each benefit, and the major brands that deliver each benefit.
Markets can be segmented by user status: nonusers, ex-users, potential users, first-time users, and regular
users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers, and
reinvigorate relationships with ex-users.

Markets can also be segmented by usage rate: light, medium, and heavy product users. Heavy users are
often a small percentage of the market but account for a high percentage of total consumption.

For instance, a recent study showed that heavy seafood consumers in the United States are a small but
hungry bunch. Less than 5 percent of all shoppers buy nearly 64 percent of unbreaded seafood consumed in
the United States.

Consumers can be loyal to brands, and buyers can be divided into groups according to their degree of
loyalty. Some consumers are completely loyal—they buy one brand all the time and can’t wait to tell others
about it. Other consumers are somewhat loyal—they are loyal to two or three brands of a given product or
favor one brand while sometimes buying others. Still other buyers show no loyalty to any brand—they either
want something different each time they buy, or they buy whatever’s on sale.

A company can learn a lot by analyzing loyalty patterns in its market, starting with its own loyal customers.

In behavioural segmentation, marketers divide buyers into groups on the basis of their knowledge of,
attitude toward, use of, or response to a product.

Group A: Decision Roles Group B: Behavioral Variables

1. Initiator
For example, a child suggesting buying a particular
toy to their parents.
• Occasions
Marketer maybe the initiator.

2. Influencer • Benefits
For example, a friend recommending a specific brand
of headphones to influence a purchase decision.
Maybe Mothers.

3. Decider
• User Status
For example, a parent deciding to buy a new family car
based on safety features and affordability.
• Usage Rate
4. Buyer “The individual physically making the
purchase at the store or online.”

5. User • Buyer-Readiness
For example, the family member who will be using the
product or service, like a child playing with the toy or a
parent is driving the new car. • Loyalty Status
Note 1: When it comes to the communication
messages (IMC) marketer talks to everyone.
Note 2: Distribution messages (For example, Buy
this from the nearest Toy shop) talk to buyer. • Attitude
2. Bases for Segmenting Business Markets
Additional Segmentation Variables for Business Market:

Socioeconomic Characteristics Behavioral Variables

• Company Size • Purchasing Objectives

• Location • Product Benefits
• Industry
• Customers Served

Need to answer six buyer-related questions:

1. Who are they?

2. What do they want to buy?

Deserts for example

3. How do they want to buy?

Offline OR online

4. When do they want to buy?

5. Where do they want to buy?

6. Why do they want to buy?

Gift OR Personal Consumption

Requirements for Effective Market Segmentation (Criteria)

 Measurable

 Differentiable

 Accessible

 Substantial
 Market Targeting
Once the firm has identified its market-segment opportunities, it must decide how many and which ones
to target.

A seven-step approach is shown in Table 8.2.

Marketers ask three questions after a market has been segmented:

1. Where to Compete?

Question focuses on which market segments should be chosen for marketing efforts.

Market targeting (or target marketing) “The specification of the segment(s) the organization wishes to
pursue”.

2. How to Compete?

Question focuses on how many market segments the organization will pursue and the marketing strategies to
employ.

Two market targeting approaches are:

Differentiated Marketing Concentrated ( Niche) Marketing

Simultaneously pursues several different market
segments with a unique marketing strategy for each
segment.
Manages multiple products across multiple market
segments, which increases marketing-related
expenditures.
Focuses on a single market segment, sometimes
marketing one product to one segment.
More commonly, offers one or more product lines
to a single market segment.
Provides operating economies.

Note: This is the most difficult and costly strategy Limits growth opportunities if the segment size
because each of every segment Should be served by declines.
different integrated market program, but it also the
most profitable because the company providing the
same exact need for each segment.

But there are two additional targeting approaches are:

Undifferentiated (Mass) marketing Micromarketing

A market-coverage strategy in which a firm decides
to ignore market segment differences and go after
the whole market with one offer.
Note 1: Undifferentiated (Mass) marketing means
Developing one single market mix foe the enter market.
Note 2: This strategy can be appropriate if the product
company offers is commodity product because people
are looking for the same exact function.
Like Steal
Note 3: And it can also work if the industry at the
beginning.
Tailoring products and marketing programs to the
needs and wants of specific individuals and local
customer segments; it includes local marketing
and individual marketing.
A. Local marketing: Tailoring brands and
marketing to the needs and wants of local
customer segments—cities, neighborhoods,
and even specific stores.
B. Individual marketing: Tailoring products and
marketing programs to the needs and preferences
of individual customers.
Note: Individual marketing may be One to one or
Mass Customization.
NOKIA’S DIFFERNTIATED MARKETING STRATEGY

Market Segment
Basic Expression Active Classic Fashion Premium
Buyers World
Younger Color, young, Travelers
who want travelers
Offering characteristics First time buyers who active adults with various
to show off wanting a
users, teens desire desiring to business
with a PDA,
need voice customized connect with need who
personal connectiv
connectively and friends ; sport prefer
sense of ely and
personalized enthusiastic functionality
style games
product
Series 1000/
Durable , ease for use and
low price
Series 2000

Challengeable covers, color

Series 3000
displays , downloadable
ring tones and games

Small size, Stylish, durable,

Series 5000
user friendly, color displays
and fitness monitor

Traditional style , web

Series 6000
browser , network, phone
book, calendar and camera

Mp3 music player, styling,

Series 7000
games ,camera , color
display and internet access

Enhance user interface,

Series
camera, color, display
,multimedia, messaging and
8000
PDA

3. When to Compete?
 MARKET SALES POTENTIAL AND PROFITABILITY

Total market Demand (Market Sales Potential) is the total sales or total potential sales of all players in the
industry in the defined geographical area during a certain period of time.

OR The total volume that would be bought by a defined consumer group in a defined geographic area, in a
defined time period, in a defined marketing environment, under a defined level and mix of industry
marketing effort.”

OR The maximum sales level that might be available to all organizations serving a defined market in a
specific time period given:

1. The marketing-mix activities and related expenditures of all organizations.

2. A set of environmental conditions.

 Market Sales Potential estimates the maximum potential Sales a product can have.

 Market Sales Potential represents the estimated market size for a product category and its
prospective market share.

Note1: Estimating a market’s sales potential for an offering is a difficult task.

Note2: Markets and offerings can be defined in ways that can lead to different estimates of market size
and dollar sales potential.

Note3: For new offerings or markets, marketers may rely entirely on judgment and creativity when
estimating market sales potential.

Note4: The demand for the company called sales potential and the upper limit of market demand
called market potential.

Estimating Market Sales Potential

Market sales potential = B* p * q

(B): The number of prospective buyers (B) who are willing and able to purchase an offering.
(P): The price (P) of an average unit of the offering.
(q): The quantity (Q) of an offering purchased by an average buyer in a specific time period.

The chain ratio method serves three purposes:

1. A quantitative estimate of market sales potential.
2. Highlights factors that are controllable and not controllable.
3. Flexible in estimating market sales potential for different buyer groups and offerings.
For example, Market Sales Potential for Cola-Flavored Soft Drinks in a Country =

Population aged 8 years and over× proportion of the population that consumers soft drinks on a daily basis
× proportion of the population preferring cola-flavored soft drinks× the average number of carbonate soft
drink occasions per day× the average amount consumed per consumption occasion (in ounces) × 365 days
in a calendar year× the average price per ounce of cola.

Market Indicators They are quantitative in nature and seek to interpret stock or financial index data in an
attempt to forecast market moves. Market indicators are a subset of technical indicators and are typically
comprised of formulas and ratios. They aid investors' investment/trading decisions.
OR The factors company can rely on to determine the demand for a certain market.

For example, if company selling lollipops and targeting kids from 8 to 12, the company has to know what
is the percentage of such segment out of total population.
 Example: Market Factor Forecast: Dry ever Diaper

Next Year Second Year

Projected population, ages 0-18 months 4,850,000 4,800,000

*Percentage using diapers *100% *100%
=Number using diapers = 4,850,000 = 4,800,000
*Average daily diapers per child * 2.55 *2.55

= 12,367,500 = 12,240,000
=Diapers daily, ages 0-18 months

Projected population, ages 19-30 months 3,300,000 3,200,000

*Percentage using diapers *80% *80%
=Number using diapers = 2,640,000 = 2,560,000
*Average daily diapers per child * 2.19 * 2.19

= 5,781,600 = 5,606,400
=Diapers daily, ages 0-18 months

Projected population, ages 31-42 months 3,500,000 3,300,000

*Percentage using diapers *40% *40%
=Number using diapers = 1,400,000 = 1,320,000
*Average daily diapers per child * 1.10 * 1.10

= 1,540,000 = 1,452,000
=Diapers daily, ages 0-18 months

Total daily diapers, all ages= Diapers daily,

ages 0-18 months + Diapers daily, ages 0-18 12,367,500 + 5,781,600 + 1,540,000 12,240,000 + 5,606,400 +
months + Diapers daily, ages 0-18 months = 1,452,000 =
19,689,100 19,298,400
*Percentage disposable diapers * 95% *95%
= Number disposables daily = 18,704,645 = 18,704,645
*Dry ever market share percentage * 20% *20%
= Expected daily sales (units) = 3,740,929 = 3,666,696
Wholesale price per diaper 0.07 0.07

Annual sales forecast in dollars 95,580,736 93,684,083

Sales Forecast realistic Expectation of sales.

OR The level of sales a single organization expects to achieve based on a chosen marketing strategy and an
assumed competitive environment.

For example , company required to produce 1000 car but it can’t fulfill this number because for example
it has distribution difficulties so it can at best reach 75% of target market.

 Some fraction of estimated market sales potential.

 Reflects the size of the target market(s) chosen by the organization and the marketing mix chosen for
the target market(s).
 Reflects the assumed number of competitors and competitive intensity in the chosen target market(s).

Sales Forecasting Methods

Methods Advantages Disadvantages Best Used

Quick, easy, and simple Subjective For new products

Executive Opinion Lacks analytical rigor

Relatively simply Salespeople are When reps are of

sometimes overly a high caliber
Usually fairly accurate optimistic
When each rep
Sales force composite Involves those people who are Salespeople may has a small
responsible for the results sandbag (estimate number of
low) to look better customers
Time consuming

Done by those who will buy the Time consuming For new products
product, so accuracy should be good.
Survey of buyers High cost When there are a
intentions small number of
Customer may not customers
cooperate

Objective and inexpensive No consideration for For established

Trend projections: major product or products
Use historical data market changes
When market
• Moving average Require some factors are
• Exponential statistical analysis predictable
smoothing
• Regression analysis For aggregate
company forecasts

Objective Unforeseen changes When market

Analysis of market in the market can factors are stable
Fairly accurate and simple lead to inaccuracy and predictable
factors

Very accurate Time consuming For new products

Test markets which do not
Cost require large
investments
In Sales Forecasting Companies do the following:

1. Review the identified opportunities and decide which one can be most profitably pursued given
organizational capabilities.
2. Prepare a pro forma income statement that shows forecasted sales, budgeted expenses, and
estimated net profit.

Sales Forecast Example: Chain Ratio Method