Marketing Management

Dawn Iacobucci

2010 South-Western, a part of Cengage Learning

Targeting

Chapter 3
Marketing Framework
What Is Targeting & Why Do It?

What is Targeting?
Selecting a market(s) to pursue

Why do it?
Its difficult to be all things to all people
How to Choose a Target

When choosing target market(s),

marketers should consider
1. The markets fit with the firms capabilities
More subjective/challenging to assess
2. The profitability potential of the market
More objective
Strategic Criteria for Targeting

Go for it:
Sports apparel producer
in the attractive volley ball
apparel market

Hmm:
CD producer in the
attractive video game
market

Hmm:
Typewriter producer in the
unattractive typewriter
market

Avoid:
PC producer in the
unattractive e-book market
Discussion Question

Assume you are the market leader in the

refrigerator market. Which markets might fall
into each of the categories below?
1. Fit with Firms Capabilities

Does this market fit with what we are?

Questions
Can we satisfy this market?
What are our strengths?
What resources do we have?
What is our experience?
What is our corporate culture?
What are our current brand personalities,
etc.?
SWOT Analysis

Internal
Strengths
What do we do well?

Weaknesses
What do we not do
well?

Assess firm relative to

competitors

Utilize the customer

point of view
SWOT Analysis

External
Opportunities
What is occurring in
the external world that
is favorable to us?

Threats
What is occurring in
the external world that
is unfavorable to us?

Created by changes in
the 5 Cs
Competitive Analysis

Perceptual Map
Shows how customers
perceive firm relative to
competitors

Most attributes and

benefits can be
represented by
Price & Quality
Dimensions for quality
will vary by industry
Discussion Question

If your firm, represented by Us below, wants

to target the price sensitive market, which
competitor should it be most concerned with?
How would that competitor likely react to your
firm targeting this market?
2. Profitability Potential

How likely is it that the market will be

profitable?
Function of
market size
anticipated market growth
current and anticipated levels of competition
customer behavior and expectations
Market Size

Project the size of various segments

Considerations
The more precisely defined the target, the easier it
is to estimate
Be as precise as possible in estimating
Determine upper and lower bounds of estimates
Run scenarios to determine sensitivity of estimates

Compare the size of each segment

Example: Market Size

High School Football Pants Market Comparison

Market 1:
33 high schools x
90% of schools have teams x
75 players per team x
3.5 pairs of pants each
= 7,796.25 pairs of pants x
$35 contribution = $272,868.75

Market 2
85 high schools x
90% of schools have teams x
75 players per team x
3.5 pairs of pants each
= 20,081.25 pairs of pants x
$35 contribution = $702,843.75
Example: Market Size
Market Growth

Project the market growth for various

segments
Projecting market growth is risky
One technique
Obtain industry sales data for previous years
Compute a moving average mean
years 1, 2 and 3; years 3, 4 and 5; etc.
Utilize regression to fit a curve to these data

Compare growth rates for each market

Identify Competitive Threat

Identify the number of competitors in

each market
Look in the yellow pages
Conduct an on-line search
Utilize various terms to ensure thoroughness
e.g., hair salon, beauty shop, etc.

Compare the competitive threat in each

market
Estimate Profitability

Estimate profitability of each segment

Estimate price for each segment
Estimate costs for each segment
variable costs: product material, etc.
fixed costs: insurance, rent, etc.

Compare profitability of each segment

B2B Market Size

One approach
Start with the total population
Break it down into relevant proportions
Example:
(population x %aware x %trial x %repeat) x per annum
purchase
Census.gov cross-classifies businesses by sector
(e.g., NAICS codes) and size (e.g., by sales or
number of employees)
Discussion Question

Which market would you recommend

this firm pursue and why?