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Basics of Marketing - Kotler Philip
Identifying the most attractive segments of the market
Suppose that when choosing a strategy of market coverage, the criteria just described are used and the firm chooses to use the method of concentrated marketing. Now she should identify the most attractive segment for the market. Consider the following situation.
A successful snowplow manufacturer wants to create a novelty. The company's management is exploring several possibilities and is stopping at the idea of releasing a snowmobile. Management believes that the company is able to master the production of any of the three types of snowmobile: with a gasoline, diesel or electric engine. And besides, the company can create a snowmobile design for any of the three markets: consumer, industrial and military. Nine variants of commodity-market combinations are presented in Figure 47. If we assume that the company initially wants to concentrate its efforts on a single segment, the management will have to decide on which one.
The firm will need to collect information about all nine market segments. This should be information about sales volumes in monetary terms, expected sales growth rates, projected profit margins, intensity of competition, requirements for marketing channels, etc. The most profitable segment should have a high level of current sales, high growth rates, high profit margins, weak competition and uncomplicated requirements for the marketing channel. As a rule, none of the segments responds in the desired way to all these characteristics, so we will have to make compromises.
GOODS |
Consumer |
Military |
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Snowmobile with gasoline engine |
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Snowmobile with diesel engine |
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Snowmobile with electric motor |
Fig. 47. Commodity-market grid for snowmobiles
After the firm identifies objectively attractive segments for itself, it should ask which of them best fits its strong business sides. For example, the military market may seem extremely attractive, but the firm may have absolutely no experience with it. And vice versa, she can have a lot of experience working with the consumer market. So the company should choose a segment that is not only attractive on its own, but also such, for successful work in which it has the necessary business preconditions.
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