Evans Berm An Chapter 10

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Transcript of Evans Berm An Chapter 10

  • 8/8/2019 Evans Berm An Chapter 10


    Chapter 10:

    Developing a Target Market


    Joel R. Evans & Barry Berman

    Marketing, 10e: Marketing in the 21st Century

  • 8/8/2019 Evans Berm An Chapter 10


    Chapter Objectives

    To describe the process of planning a target market


    To examine alternative demand patterns and

    segmentation bases for both final and organizationalconsumers

    To explain and contrast undifferentiated marketing

    (mass marketing), concentrated marketing, and

    differentiated marketing (multiple segmentation)

    To show the importance of position in developing a

    marketing strategy

    To discuss sales forecasting and its role in target


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    Amarketmarket consists of all possibleconsumers for a good or service.

    Atarget market strategyconsists of analyzing

    consumer demand,

    targeting the market, anddeveloping an


    marketing strategy.

    Market segmentationdivides the market into

    distinct subsets

    of customers.

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    The Steps in Planning a Target Market



    Target theMarket

    Develop theMarketingStrategy

    1. Determine demand patterns

    2. Establish possible bases of segmentation

    3. Identify potential market segments

    4. Choose a target market approach

    5. Select the target market(s)

    6. Position the companys offering inrelation to competition

    7. Outline the appropriate marketing mix(es)

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    Alternative Consumer Demand Patterns for

    A Good or Service Category


    DemandConsumers have rather

    similar needs and desiresfor a good/service


    Clustered Demand

    Consumer needs anddesires can be grouped

    into two or moreidentifiable clusters

    (segments), each with itsown set of purchase


    Diffused Demand

    Consumer needs anddesires are so

    diverse that no clearclusters (segments)can be identified.

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    Geographic Demographics

    These describe basicidentifiable characteristicsof towns, cities, states,regions, and countries.

    One factor, or a combinationof factors, may comprise an

    identifiable locale.

    For example, Californias

    high-tech industries, great

    weather, high educationalattainment, etc., all

    contribute to its geographic

    demographic profile.

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    Personal Demographics

    These are basic identifiablecharacteristics of individualfinal consumers andorganizational consumers,

    groups of final consumers, andorganizational consumers.

    Demographics are often used as

    segmentation bases becausegroups of people or

    organizations, with similardemographics often have similar

    needs & desires that are distinct

    from those with differentbackgrounds.

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    Consumer Lifestyles

    Many lifestyle factors can be applied to final and/ororganizational consumers.

    Selected Factors:Selected Factors:Product use

    NAICS codes

    Company sizeType of industry

    Growth of business

    Age of companyLanguage used

    Corporate culture

    Selected FactorsSelected Factors::Social class

    Family life cycleUsage rate & experience

    Brand loyalty

    Personality & motives

    Perceived riskInnovativeness

    Opinion leadership

    B2C B2B

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    The Heavy Half

    Aheavy-usage segment is at times calledthe heavy half. This is when a consumer

    group, or one market segment, accounts for

    a large proportion of a goods or services

    sales relative to the size of the market.

    The Swiss drink many

    times more iced tea thando the French, Spanish,or Portuguese.

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    Classifying Consumers

    Benefit segmentation groups consumers based ontheir reasons for using products. It relates to the

    different benefits sought from goods and services

    by various market niches. Blending demographic and lifestyle factors also

    sets up possible bases of segmentation.

    VALS and Social Styles are two models describing

    market segments in terms of a broad range offactors.

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    Social Styles Model for

    Organizational Consumers

    AmiablesConforming Supportive

    Unsure Respectful

    Pliable WillingDependent Dependable

    Awkward Agreeable

    DriversPushy Strong-willed

    Severe Independent

    Tough PracticalDominating Decisive

    Harsh Efficient

    AnalyticalsCritical Industrious

    Indecisive Persistent

    Stuffy SeriousPicky Exacting

    Moralistic Orderly

    ExpressivesManipulative AmbitiousExcitable Stimulating

    Undisciplined EnthusiasticReacting Dramatic

    Egotistical Friendly


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    Target Market Approach

    Undifferentiated Marketing (Mass Marketing) one product, one plan to one basic market.

    Concentrated Marketing

    One product/plan toone group of consumers.

    Differentiated Marketing (MultipleSegmentation) Appeals to two or more market

    segments with a different plan for each.

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    Contrasting Target Market Approaches

    Undifferentiated Marketing(Mass Marketing)The firm tries to reach a wide range of consumers

    with one basic marketing plan. These consumers

    are assumed to have a desire for similar goods and

    service attributes. One product for everybody.

    Concentrated MarketingThe firm concentrates on one group of consumers

    with a distinct set of needs and uses a tailor-made

    marketing plan to attract this single group. Oneproduct to one market niche.

    Differentiated Marketing(Multiple Segmentation)The firm aims at two or more different market

    segments, each of which has a distinct set of needs,

    and offers a tailor-made marketing plan for each

    segment. Two or more products to two or more


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    Majority Fallacy (1)

    This is a false

    assumption that the

    largest marketsegment holds the

    greatest marketing


    It may cause a firm

    to fail because

    competition is


    The firm inThe firm in green faces heavyfaces heavycompetition and intense brandcompetition and intense brand

    loyalty to timeloyalty to time--honored productshonored products

    because it picked a saturatedbecause it picked a saturated


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    Majority Fallacy (2)

    Smaller market segments may

    hold far greater opportunities.

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    Developing a Sales Forecast






    of Firm

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    Methods of Sales Forecasting (1)

    Simple Trend Analysis sales forecast based onfirms recent performance.

    Market Share Analysis similar to trend analysisbut assumes market share will stay the same.

    Jury of Executives company experts predictsales.

    Sales Force Surveys salespeople shareexperiences and customer feedback.

    Consumer Surveys measure attitudes, purchaseintentions, expectations, consumption rates, and


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    Methods for Sales Forecasting (2)

    Chain-Ratio Method firm starts with generalmarket information and then computes a series of

    more specific information. Combined data yield a

    sales forecast. Market Build Up Method firm gathers data from

    small, separate market segments and aggregates


    Test Market

    sales estimate from short-run,geographically limited sales of new products.

    Advanced Statistical Analyses methods for salesforecasting that include computer simulations.

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    Chapter Summary

    The chapter describes the process of planning a targetmarket strategy.

    It examines alternative demand patterns and

    segmentation bases for both final and organizationalconsumers.

    It explains and contrasts undifferentiated marketing(mass marketing), concentrated marketing, anddifferentiated marketing (multiple segmentation).

    It shows the importance of positioning in developing amarketing strategy.

    It discusses sales forecasting and its role in targetmarketing.