Target market

From Wikipedia, the free encyclopedia

This article or section has multiple issues. Please help improve the article or discuss these issues on the talk page. It does not cite any references or sources. Please help improve it by citing reliable sources. Tagged since June 2008. It may contain original research or unverifiable claims. Tagged since June 2008. It reads like a personal reflection or essay. Tagged since June 2008. Its introduction provides insufficient context for those unfamiliar with the subject. Tagged since June 2008. It may need copy editing for grammar, style, cohesion, tone or spelling. Tagged since June 2008. It may require general cleanup to meet Wikipedia's quality standards. Tagged since June 2008.

[edit] Evaluating the market segments

1. Segment size and growth

Does the potential segment have the right size & growth characteristics

2. Segment structural attractiveness

The company has to appraise the impact on long-run profitability of five groups: industry, competitors, potential entrants, substitutes, buyers & suppliers.

• Threat of intense segment rivalry: a segment is unattractive if it already contains number of strong or aggressive competitors.
• Threat of new you stop likely to attract new competitors who will bring in new capacity, substantial resources & drive for market share growth.
• Threat of substitute products: a segment is unattractive if there exists actual or potential substitutes for the product & this place a limit on the potential prices & profits.
• Threat of growing bargaining power of buyers: a segment is unattractive if the buyers possess strong or increasing bargaining power. Buyers' bargaining power grows when they become more concentrated or organized , when the product represents a significant fraction of the buyers' cost, when the product is undifferentiated, when the buyers are price sensitive.
• Threat of growing barging power of suppliers: a segment is unattractive if the company's supplier-raw materials, equipments etc.- are able to lower prices or raise the quality or quantity of ordered goods or services.

3. Company's objectives and/or resources

The company needs to consider its own objectives & resources in relation to that segment could be dismissed because they do not mesh with the company's long term objectives. Even if the segment fits the company's objectives, the company must consider whether it possesses the requisite skills & resources to succeed in that segment. Sometimes companies use segments to market towards larger demographics.