Opportunity Analysis,

Market Segmentation, and

Market Targeting
In this section, you will
learn about…

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 section, you will
learn about…

4. Offering-Market Matrix

5. Market Targeting

6. Market Sales Potential and Profitability

Estimating Market Sales Potential

Sales and Profit Forecasting

4-3
 Marketing Strategy
involves…

Selection of Markets
• Customer
Satisfaction
• Organizational
Objectives
Development of programs
to reach these markets

4-4
Opportunity Analysis
Involves…

Opportunity Identification
Opportunity
- Organization Matching
Opportunity Evaluation

4-5
Opportunity Identification

Identifying new types of classes

of buyers
Uncovering unsatisfied needs of
buyers
Creating new ways or means for
satisfying buyer needs

4-6
Opportunity-Organization
Matching

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 match
4-7
 Opportunity Evaluation

Has both qualitative & quantitative phases

Qualitative
– Evaluates the likelihood of capitalizing on
a market niche

Quantitative
– Yields estimates of market sales potential
and company sales forecasts

4-8
 Opportunity Evaluation Matrix

Political,
Market Demand/ Technological,
Competitive Buyer Organizational
niche and
Activity Requirements Supply Capabilities
criterion Socioeconomic
Forces

Buyer
Type

Buyer
Needs

Means
for Buyer
Needs
 A Market Consists of…
Prospective buyers willing and able to
purchase the existing or potential
offering of an organization.
Focus on
Buyers Effective
Demand “Offering”
rather than
product or
service Market
Share
4-10
 What is Market
Segmentation?

The breaking down or building up

of potential buyers into groups
called
Market Segments

4-11
 Benefits of
Market Segmentation

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

4-12
 Market Segmentation
Variables

Socioeconomic Behavioral

Market
Segmentation
Variables

Psychographic Benefits Sought

4-13
Fundamental-Buyer
Related Questions

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?

4-14
 Each Market Segment
should be…

Measurable

Differentiable Substantial

Accessible

4-15
Sample Offering - Market Matrix
for Handheld Calculators

Market Segments (User Groups)

Business Scientific Home School

Simple

Moderate

Complex

Very
complex

4-16
 Market Targeting
Specifying segments to pursue

Organization

Differentiated Marketing

The organization pursues

several different market
segments simultaneously

Market
4-17
 Market Targeting
Specifying segments to pursue

Organization

Concentrated Marketing

The organization focuses

on a single market
segment

Market
4-18
 Market Sales Potential

Maximum level of sales available to all firms

serving a defined market in a specific time
period given:

1. The marketing mix activities and efforts

of all organizations

2. A set of environmental conditions

4-19
Market Sales Potential and
Profitability
Chain 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)

Market Sales Potential = B x Q x P

4-20
 Chain Ratio Method
Example
Market Potential for cola-flavored carbonated drink in Place X:

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
4-21
What is a Sales Forecast?

Level of sales a single organization

expects to achieve based on a chosen

market strategy and an assumed

competitive environment.

4-22
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

4-23
 Making a
Sales Forecast
Sales Forecast is a function of:

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 = M x T x C x U x P
4-24
 Making a Sales Forecast
Example

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

4-25