Market Segmentation and Selection



I. Market Analysis (Situational Analysis)[1]

The Situational Environs

4 Demand and demand trends (What is the forecast demand for the product: Is growing or declining? Who is the decision maker? The purchase agent? How, when where, what, and why do they buy?

5 Social and cultural factors.

1. Demographics

2. Economics and business conditions for this product at this time and in the geographical area selected.

3. State of technology for this class of product. Is it high-tech state-of-art? Are newer products succeeding older ones frequently (short life cycle)? In short, how is technology affecting this product or service?

4. Politics. Are politics in any way affecting the situation for marketing this product?

5. Laws and regulations. (What laws or regulations are applicable here?)

The Neutral Environs

6. Financial environment. (How does the availability or unavailability of funds affect the situation?)

7. Goverments environment. (Is current legislative action in state, federal, or local goverment likely to affect marketing of this product or service?)

8. Media environment. (What’s happening in the media? Does current publicity favors this project?)

9. Special interest environment. (Aside from direct competitors, are any influential groups likely to affect your plans?)

The Competitor Environs

10. Describe your main competitors, their products, plans, experience, know-how, financial, human, and capital resources, suppliers, and strategy. Do they enjoy the favor with their customers? If so, why? What marketing channels do the competitor use? What are their strengths and weakness?

The Company Environs

11. Describe your products, experience, know-how, financial, human, and capital resources and suppliers. Do you enjoy the favor of your customers? If so, why? What are your strengths and weakness?

II. The Target Market

Describe your target market segment in detail by using demographics, psychographics, geography, lifestyle, or whatever segmentation is appropiate. Why is your target market? How large is it?

Market Segmentation and Selection[2]

Market segmentation is the process of dividing all possible users of a product into groups that have similar needs the products might satisfy. Market segmentation should be done prior to the final development of a new product.

Market Segmentation

1. Identify segmentation variables and segment the market

2. Develop profiles of resulting segments

Market Targeting

3. Evaluate the attractiveness of each segment

4. Select the target segment(s)

Market Positioning

5. Identify possible positioning concepts for each target segment

6. Select, develop and communicate the chosen positioning concept

Segmentation Variables

I. Geographic

Region, urban, suburban, size of city, population density, climate.

II. Demographic

Age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality.

III. Psychosocial

Social class, lifestyle, personality, references group( those you turn to for information).

IV. Behaviors and Feelings

Attitudes, benefits sought, readiness stage, perceived risk, innovativeness, involvement, loyalty status, usage rate, user status, usage situation, price sensitivity.

TARGET MARKET

Geographical location _______________________________________

Special Climate or topography ________________________________

CONSUMER BUYERS

Cultural, ethnic, religious, or racial groups _______________________

Social class(es) _____________________________________________

References group (s) ________________________________________

Basic Demographics: Sex ______ Age Range __________________

Education ________ Income _____________________

Household size description ___________________________________

Stage of family life cycle _____________________________________

Family work status: Husband _______ Wife _________________

Occupation ( Husband and wife) _______________________________

Decision maker _______________ Purchase agent ________________

Risk perception: Functional ___________ Psychological ___________

Physical _____________ Social ______________ Financial _________

Income for each family member ________________________________

Disposable income ____________________________________________

Additional descriptions, classifications, and traits of target market________

_____________________________________________________________

Target market wants and needs 1. _________________________________

2.________________________ 3. ________________________________

Product general description ______________________________________

Frequency of usage____________________ Traits ____________________

Size of target market ____________________________________________

Growth trends _________________________________________________

ORGANIZATIONAL BUYER

Decision makers __________________________________________

________________________________________________________

Primary motivation of each decision maker _____________________

________________________________________________________

Amount of money budgeted for purchase ______________________

________________________________________________________

Purchase history __________________________________________

________________________________________________________

Additional descriptions, classifications, and traits of target market___

________________________________________________________

________________________________________________________

Target market wants and needs: 1. ___________________________

2._____________________________ 3. ______________________

Product general description _________________________________

_______________________________________________________

Frequency of usage _________________ Traits ________________

Size of target market _____________________________________

Growth trends ___________________________________________

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[1] Cohen, W. The Marketing Plan. Wiley:1995

[2] Hawkins, Best & Coney. Consumer Behavior: Implications for Marketing Strategy. Irwin:1995

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