Opportunity Analysis,

Market Segmentation, and

Market Targeting

Mostafa Ewees

In this chapter, you will learn In this chapter, you will learn about…about…

4-2

1. Opportunity Analysis

2. What is a Market?

3. Market Segmentation

Benefits of Market Segmentation

Bases for Market Segmentation

Requirements for Effective

Market Segmentation

In this chapter, you will learn In this chapter, you will learn about…about…

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4. Offering-Market Matrix

5. Market Targeting

6. Market Sales Potential and Profitability

Estimating Market Sales Potential

Sales and Profit Forecasting

Marketing Strategy involves…Marketing Strategy involves…

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Selection of Markets

Development of programs to reach these markets

• Customer Satisfaction

• Organizational Objectives

Opportunity Analysis Opportunity Analysis Involves…Involves…

Opportunity Identification

Opportunity

- Organization Matching

Opportunity Evaluation

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Opportunity IdentificationOpportunity Identification

Identifying new types of classes

of buyers

Uncovering unsatisfied needs of

buyers

Creating new ways or means for

satisfying buyer needs

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Opportunity-Organization Opportunity-Organization MatchingMatching

Determines whether an identified

opportunity is consistent with an

organization’s business, mission,

and competencies

SWOT Analysis often employed

Financially attractive opportunities

are sometimes rejected at this

stage due to lack of match4-7

Opportunity EvaluationOpportunity Evaluation

Qualitative

◦Evaluates the likelihood of

capitalizing on a market niche

Quantitative

◦Yields estimates of market sales

potential and company sales

forecasts4-8

Has both qualitative & quantitative phases

Opportunity Evaluation MatrixOpportunity Evaluation Matrix

Market niche

criterion

Competitive Activity

Buyer Requirements

Demand/

Supply

Political, Technological,

and Socioeconomic

Forces

Organizational Capabilities

Buyer Type

Buyer Needs

Means for Buyer

Needs

A Market Consists A Market Consists of…of…

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Prospective buyers willing and able to purchase the existing or potential offering of an organization.Focus on

Buyers EffectiveDemand “Offering”

rather than product or

service Market Share

What is Market What is Market Segmentation?Segmentation?

The breaking down or building up

of potential buyers into groups

called

Market Segments

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Benefits of Benefits of Market SegmentationMarket Segmentation

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1. Identifies opportunities for new product development

2. Helps design marketing programs most effective for reaching homogenous groups of buyers

3. Improves allocation of marketing resources

Market Segmentation Market Segmentation VariablesVariables

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Market Market SegmentationSegmentation

VariablesVariables

Benefits SoughtBenefits SoughtPsychographicPsychographic

SocioeconomicSocioeconomic BehavioralBehavioral

Fundamental-Buyer Related Fundamental-Buyer Related QuestionsQuestions

Who are they?

What do they want to buy?

How do they want to buy?

When do they want to buy?

Where do they want to buy?

Why do they want to buy?

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Each Market Segment should Each Market Segment should be…be…

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MeasurableMeasurable

DifferentiableDifferentiable

AccessibleAccessible

SubstantialSubstantial

Sample Offering - Market Matrix Sample Offering - Market Matrix for Handheld Calculatorsfor Handheld Calculators

Business Scientific Home School

Simple

Moderate

Complex

Very complex

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Market Segments (User Groups)

Market TargetingMarket TargetingSpecifying segments to pursueSpecifying segments to pursue

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Differentiated Marketing

The organization pursues

several different market

segments simultaneously

Organization

Market

Market TargetingMarket TargetingSpecifying segments to pursueSpecifying segments to pursue

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Concentrated Marketing

The organization focuses

on a single market

segment

Organization

Market

Market Sales PotentialMarket Sales Potential

1. The marketing mix activities and

efforts of all organizations

2. A set of environmental conditions

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Maximum level of sales available to all

firms serving a defined market in a

specific time period given:

Market Sales Potential and Market Sales Potential and ProfitabilityProfitabilityChain Ratio MethodChain Ratio Method

Market Sales Potential is a function of:

1. The number of Prospective Buyers

(B)

2. The Quantity Purchased (Q)

3. The Price of an Average Unit (P)

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Market Sales Potential = B x Q x P

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Chain Ratio MethodExample

Market Potential for cola-flavored carbonated drink in Canada:

1. Population (P) = 32,000,000

2. Proportion of P that consumes carbonated beverages (R)

= 95%

3. Proportion of R that consumes cola-flavored carbonated

beverages (C) = 70%

4. Average number of liters of cola consumed per cola-

consumer per week (L) = 1.7 liters

5. Average price per liter of cola (A) = $ 0.50

Market Sales Potential = P x R x C x L x A

= 32 Million x 0.95 x 0.70 x 1.7 x 52 x 0.50 = $94.06 Million

What is a Sales Forecast?What is a Sales Forecast?

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Level of sales a single

organization expects to achieve

based on a chosen market

strategy and an assumed

competitive environment.

Forecasted Sales reflect…Forecasted Sales reflect…

1. The size of the target market

2. The marketing mix chosen for

the target market

3. The assumed number of

competitors and competitive

intensity in the target market

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Making aMaking aSales ForecastSales Forecast

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1. Market potential (M)

2. Proportion of market you are

Targeting (T)

3. Extent of market Coverage (C)

4. Number of Units expected to sell per

customer during the year (U)

5. Average Price per unit (P)

Sales Forecast is a function of:

Sales Forecast = M x T x C x U x P

Making a Sales ForecastMaking a Sales ForecastExampleExample

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Total number of potential buyers = 1 Million

Target Market (25%) = x 0.25

Market Coverage (75%) = x 0.75

Units purchased per year (20) = x 20

Average Price ($10) = x $10

Forecasted Sales = $ 37.5

Million