Chap 5 focusing on the customer

Factors Influencing Served Market Decision TM 5-9 2.. Defining Served Market: An example TM 5-11 4.. MEANING OF MARKET EMERGENCECustomer need gives rise to a market opportunity, and a ma

A Identify Markets to Serve (TM 5-1)

B Concept of Need (TM 5-2)

C Market Emergence

1 Meaning of Market Emergence (TM 5-3)

2 Market Potential (TM 5-4)

3 Method of Measuring Market Potential (TM 5-5)

D Market Boundary

1 Dimentions of Market Boundary (TM 5-6)

2 Determining Market Boundaries: An Example (TM 5-7)

3 Market Evolution in Three Dimensions (TM 5-8)

E Served Market

1 Factors Influencing Served Market Decision (TM 5-9)

2 Approaches for Choosing Served Market (TM 5-10)

3 Defining Served Market: An example (TM 5-11)

4 Served Market Alternatives (TM 5-12)

F Segmentation

1 Bases for Customer Segmention (TM 5-13)

2 Choosing Segmentation Criterion (TM 5-14)

3 Conditions for Judging Selected Segments (TM 5-15)

4 Micromarketing (TM 5-16)

465

CONCEPT OF NEED

 Physiological

 Safety

 Belongingness

 Self-esteem

 Self-actualization

MEANING OF MARKET EMERGENCE

Customer need gives rise to a market opportunity,

and a market emerges To judge the worth of this,

market potential becomes important.

MARKET POTENTIAL

Market potential is the total demand for a product

in a given environment

METHODS OF MEASURING MARKET POTENTIAL

 Break-down methods

 Build-up methods

DIMENSIONS OF MARKET BOUNDARY

 Technology

 Customer function

 Customer segment

 Level of production/distribution

Customer Customer Functions Functions

Customer Customer Groups Groups

Alternative Alternative

Technologies Technologies

Adoption and Diffusion - Systematization – Extension to Extension to New Customer Groups New Customer Functions

Customer Functions

Customer Groups Alternative

Technologies

Technological Substitution Extension to New Technologies

FACTORS INFLUENCING SERVED

MARKET DECISION

 Perceptions of which product function and technology groupings can best be protected and dominated

 Internal resource limitations that force a narrow

focus

 Cumulative trial-and-error experience in reacting to threats and opportunities

 Unusual competencies stemming from access to

scarce resources or protected markets

MARKET

I Breadth of Product Line

A Specialized in terms of technology, broad range of product uses

B Specialized in terms of product uses, multiple technologies

C Specialized in a single technology and a narrow range of product uses

D Broad range of (related) technologies and uses

E Broad vs narrow range of quality/price levels

II Types of Customers

A Single customer segment

B Multiple customer segments

1 Undifferentiated treatment

2 Differentiated treatment

III Geographic Scope

A Local or regional

B National

C Multinational

IV Level of Production/Distribution

A Raw or semi-finished materials or components

B Finished products

C Wholesale or retail distribution

DEFINING SERVED MARKET: AN EXAMPLE

Consumer IndustrialMarket Military Gas-driven

Snowmobiles

Technology SnowmobilesDiesel-driven

Electric-driven snowmobiles

(a) Technology / Market

Matrix

Customer Use

Consumer Industrial Military Large

Small

(b) Customer Use / Customer Size Matrix

Source: Philip Kotler, “Strategic Planning and the Marketing Process,” Business, May-June 1980,

pp 6-7 Reprinted by permission of the author.

SERVED MARKET ALTERNATIVES

 Product/market concentration

 Product specialization

 Market specialization

 Selective specialization

 Full coverage

BASES FOR CUSTOMER

SEGMENTATION

A Consumer Markets

1 Demographic factors (age, income, sex, etc.)

2 Socioeconomic factors (social class, stage

in the family life cycle)

3 Geographic factors

4 Psychological factors (lifestyle,

personality traits)

5 Consumption patterns (heavy, moderate, and

light users)

6 Perceptual factors (benefit segmentation,

perceptual mapping)

7 Brand-loyalty patterns

B Industrial Markets

1 End-use segments (identified by SIC code)

2 Product segments (based on

technological differences or production economics)

3 Geographic segments (defined by

boun-daries between countries or by regional differences within them)

4 Common buying factor segments (cut across

product/market and geographic segments)

5 Customer size segments

CHOOSING SEGMENTATION CRITERION

 Identify potential customers and the nature of their needs

 Segment all customers into groups having:

– Common requirements

– The same value system with respect to the

importance of these requirements

 Determine the theoretically most efficient means of serving each market segment, making sure that the distribution system selected will differ-entiate each segment from all others with respect to cost and price

 Adjust this ideal system to the constraints of the real world: existing commitments, legal restric-tions, practicality, and so forth

CONDITIONS FOR JUDGING SELECTED SEGMENT

 Should be one in which the maximum differential in competitive strategy can be developed

 Must be capable of being isolated so that the

competitive advantage can be preserved

 Must be valid, even though imitated

Micromarketing or segment-of-one marketing refers

to trimming down the segment to smaller

sub-segments, even to an individual Micromarketing

combines information retrieval and service delivery

It requires:

 Knowing the customers

 Making what they want

 Using targeted and new media

 Using non-media

 Reaching customers in the store

 Sharpening promotions

 Working with retailers