Page 59 - Marketing the Basics 2nd

segMentation, targeting and positioning 51
growth requirements are then placed under closer scrutiny. At this stage, the investigator analyses the capabilities of the competition, the buying power of suppliers, the buying power of buyers, the availability of substitutes. In other words, a segment must undergo a Porter Analysis.
Lastly, if a segment is of the right size and growth potential, as well as having a favourable industrial structure, the company must consider their corporate objectives and capabilities. If entering the segment is counter to the stated objectives of the firm, or if the firm does not have the resources, skills or contacts to properly service the segment, they should reject the entry proposition. To win in a segment, a firm must offer superior value over the existing alternatives.
SELECTING TARGET MARKET SEGMENTS
Once the firm decides which segment or segments to serve, they have five entry strategies: single-segment concentration, selective specialization, product specialization, market specialization and full-market coverage
singLe-segMenT concenTRaTion
In this strategy, the vendor decides to target only one segment and concentrate all its efforts into capturing a leadership position. With a leadership position, the firm can maximize the economies of scale, control the distribution channels and develop a loyal customer base. They can also be seen as ‘the’ supplier in a particular segment, that is their focus, that is what they are truly world class at.
seLecTive speciaLizaTion
This strategy entails entering more than one segment. By entering a number of attractive segments, the firm spreads its operating risk and investments along a number of potentially profitable ventures. A key question to ask is if any synergies exist between the segments you operate within. In other words, does offering a product in one segment contribute to the success of another product in another?