Strategic Marketing Basics

Following the market segmentation process, it is now appropriate to measure the opportunities that these various segments represent, i.e. their attractiveness and the competitiveness of the company in each of them.

 

This targeting decision process uses the results of the attractiveness/competitiveness analysis .

 

The  attractiveness of a market segment is the value generation potential for an average competitor: segment A is more attractive than segment B if an average competitor has more chance to generate value (profit) in segment A than in segment B.

One of the first step is to consider the size (in value) and growth potential of the segment. You also need to evaluate the intensity of the rivalry in this market (number and strength of competitors, bargaining power of direct customers, existence of substitute products, existence of barriers to entry, risks linked to the segment).

 

In a second phase, the marketer will evaluate the competitiveness of the company / organization on each segment, based on elements as the competitive position (share of market), the brand image or company reputation, the cost position vs competitors, the existence of some unique competitive advantage, etc.)

 

as a next step, it is also necessary to ensure that the envisaged segments are accessible for the company and that it has the necessary know-how and resources to satisfy the needs of the selected targets. Finally, you should check that the identified segments fit the mission and the general strategy the enterprise set for itself.