This chapter discusses opportunity analysis, market segmentation, and market targeting. It covers identifying market opportunities, determining if opportunities match an organization's capabilities, and evaluating opportunities. The chapter also discusses defining markets based on buyers, segmenting markets, and targeting specific market segments. Key aspects of market segmentation like benefits, bases, and requirements are explained. Methods for estimating market sales potential and creating sales forecasts are presented.

1. Chapter 4
Opportunity Analysis,
Market Segmentation, and
Market Targeting

2. 4-2
In this chapter, 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

3. 4-3
In this chapter, 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. 4-4
Marketing Strategy
involves…
Selection of Markets
Development of
programs to reach these
markets
• Customer
Satisfaction
• Organizational
Objectives

5. 4-5
Opportunity Analysis
Involves…
Opportunity Identification
Opportunity
- Organization Matching
Opportunity Evaluation

6. 4-6
Opportunity Identification
Identifying new types of classes
of buyers
Uncovering unsatisfied needs of
buyers
Creating new ways or means for
satisfying buyer needs

7. 4-7
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

8. 4-8
Opportunity Evaluation
Qualitative
– Evaluates the likelihood of capitalizing on
a market niche
Quantitative
– Yields estimates of market sales potential
and company sales forecasts
Has both qualitative & quantitative phases

9. Opportunity 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

10. 4-10
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

11. 4-11
What is Market
Segmentation?
The breaking down or building up
of potential buyers into groups
called
Market Segments

12. 4-12
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

13. 4-13
Market Segmentation
Variables
Market
Segmentation
Variables
Benefits Sought
Psychographic
Socioeconomic Behavioral

14. 4-14
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?

15. 4-15
Each Market Segment
should be…
Measurable
Differentiable
Accessible
Substantial

16. 4-16
Sample Offering - Market Matrix
for Handheld Calculators
Business Scientific Home School
Simple
Moderate
Complex
Very
complex
Market Segments (User Groups)

17. 4-17
Market Targeting
Specifying segments to pursue
Differentiated Marketing
The organization pursues
several different market
segments simultaneously
Organization
Market

18. 4-18
Concentrated Marketing
The organization focuses
on a single market
segment
Organization
Market
Market Targeting
Specifying segments to pursue

19. 4-19
Market Sales Potential
1. The marketing mix activities and efforts
of all organizations
2. A set of environmental conditions
Maximum level of sales available to all firms
serving a defined market in a specific time
period given:

20. 4-20
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

21. 4-21
Chain Ratio Method
Example
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

22. 4-22
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.

23. 4-23
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

24. 4-24
Making a
Sales Forecast
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

25. 4-25
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