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9.5 Global Market Segmentation and Target Marketing
9.3 Choosing Attractive Market Segments A Five-Step Process 9.2 How Are Market Segments Best Defined?
9.1 Why do market segmentation makes sense



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  1. ^ successful entrepreneurial ventures target narrowly defined market segments
  2. ^ puts the nascent firm in position to achieve early success in a market segment that it understands particularly well.
  3. ^ conserves precious resources
  4. ^ segmenting the market into narrow niches
    is not always the best strategy,
    particularly for established firms having substantial resources

  5. ^ seeking somewhat-specialised benefits from a product or service
  6. ^ to avoid direct competition with larger firms that are pursuing the bigger segments
  7. ^ A business can pursue a mass-market strategy in two ways
  8. ^ design a single product-and-marketing programme that will appeal to the largest number of consumers
  9. ^ to capture sufficient volume to gain economies of scale and a cost advantage.
  10. ^ design separate products and marketing programmes for the differing segments.
  11. ^ differentiated marketing
  12. ^ often target one or more fast-growth segments, even though they may not currently be very large.
  13. ^ requires strong R&D and marketing capabilities to identify and develop products appealing to newly emerging user segments, plus the resources to finance rapid growth



Introduction


Most [1] successful entrepreneurial ventures target narrowly defined market segments at the outset, as did Phil Knight and Bill Bowerman, for two reasons.

One, doing so [2] puts the nascent firm in position to achieve early success in a market segment that it understands particularly well.

Second, such a strategy [3] conserves precious resources, both financial and otherwise.

[4] But segmenting the market into narrow niches and then choosing one niche to target is not always the best strategy, particularly for established firms having substantial resources.



Three common targeting strategies are niche-market, mass-market andgrowth-market strategies.
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9.4.1 Niche-Market Strategy


This strategy involves serving one or more segments that, while not the largest, consist of substantial numbers of customers [5] seeking somewhat-specialised benefits from a product or service.

Such a strategy is designed [6] to avoid direct competition with larger firms that are pursuing the bigger segments.


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For example, overall coffee consumption was down substantially in the 1990s, but the sales of gourmet coffees boomed.



9.4.2 Mass-Market Strategy



[7] A business can pursue a mass-market strategy in two ways.

First, it can ignore any segment differences and [8] design a single product-and-marketing programme that will appeal to the largest number of consumers.

The primary object of this strategy is [9] to capture sufficient volume to gain economies of scale and a cost advantage.

This strategy requires substantial resources, including production capacity, and good mass-marketing capabilities.

Consequently, it is favoured by larger business units or by those whose parent corporation provides substantial support.



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For example, when Honda first entered the American and European motorcycle markets, it targeted the high-volume segment consisting of buyers of low-displacement, low-priced cycles.
Honda subsequently used the sales volume and scale economies it achieved in that mass-market segment to help it expand into smaller, more-specialised segments of the market.


A second approach to the mass market is to[10] design separate products and marketing programmes for the differing segments.

This is often called [11] differentiated marketing.




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For example, Marriott does this with its various hotel chains.
Although such a strategy can generate more sales than an undifferentiated strategy, it also increases costs in product design, manufacturing, inventory, and marketing, especially promotion.
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9.4.3 Growth-Market Strategy
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Businesses pursuing a growth-market strategy [12] often target one or more fast-growth segments, even though they may not currently be very large.

It is a strategy often favoured by smaller competitors to avoid direct confrontations with larger firms while building volume and share.

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Most venture capital firms invest only in firms pursuing growth-market strategies, because doing so is the only way they can earn the 30 per cent to 60 per cent annual rates of return on investment that they seek for portfolio companies.



Such a strategy usually [13] requires strong R&D and marketing capabilities to identify and develop products appealing to newly emerging user segments, plus the resources to finance rapid growth.

The problem, however, is that fast growth, if sustained, attracts large competitors.

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This happened to DEC when IBM entered the minicomputer business.

The goal of the early entrant is to have developed an enduring competitive position via its products, service, distribution, and costs by the time competitors enter.









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  6. consumer behaviour
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  8. evidence based forecast
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  10. internal records
  11. just in time
  12. logistical alliance
  13. market potential
  14. market segmentation
  15. market segments
  16. marketing program
  17. marketing research
  18. mass market
  19. mass market strategy
  20. michelin; us west;
  21. micro segmentation
  22. middleman
  23. modified rebuy
  24. multi-functional sales teams
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  27. multiple level relationships
  28. mutual trust
  29. narrow market segment
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  99. visceral thing that cannot be trained
  100. wild guess