Marketing Management

Dawn Iacobucci

© 2010 South-Western, a part of Cengage Learning

Targeting

Chapter 3
What Is Targeting & Why Do It?

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

• Why do it?
– It’s difficult to be all things to all people
How to Choose a Target

• When choosing target market(s),

marketers should consider
1. The market’s fit with the firm’s capabilities
– More subjective/challenging to assess
2. The profitability potential of the market
– More objective
1. Fit with Firm’s 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 C’s
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
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

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)