Industry/Market Potential

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Industry/Market Potential

• Understanding Segments
• and
• Exploiting Gaps

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Mapping the Industry or Market

• Key Questions
• What products are in the industry?
• Which markets or customers are served?
• Who are the current competitors?
• Where are the competitors found?

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THE BASIS FOR SEGMENTATION CUSTOMER AND PRODUCT
CHARACTERISTICS
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Segment of the U.S. Beer Market
Customer Type (Geographic Region)
North-east
Midwest
South-east
South-west
West
Luxury-priced imports
Product Type
Super premium
Premium beers (except light)
Light beers
Popular budget-priced
Malt liquor
Independent food stores, convenience stores
Bars Restaurants
Supermarkets
Liquor Stores
Distribution channel
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Which are the Biggest, Fastest Growing, and Most
Profitable Customer Segments?

• Data Needed
• Identification of customer segments (according to
  needs, behaviors, and key characteristics)
• Current size and value of each customer segment
• Probability of each customer segments

Circle size represents millions spend
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Analyzing segment alternatives Applying the five
forces of competition.
Buyer types
Product types
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Two-Dimensional Niche Space for Two Competitors,
A and B
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Outcomes of Segmentation Analysis

• Who buys our product and why
• (buyer profiles-psycho/socio/geo/demographic)
• Need or function fulfilled
• Problems solved
• Who does not buy our product (light
  usersnon-buyer profiles)
• When purchased
• Where (channel) purchased

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Rivals Substitutes Which competitors
are selling what and to whom What
alternatives are buyers purchasing to
satisfy the need/function/problem for which
our product competes Segment Attractiveness
Current size-revenue/profit potential Demand
penetration/growth Competition
Compatibility with
strategy/supply/distribution chain
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Segmentation Gap Analysis Allows Managers
toDivide the market into meaningful and
measurable segments according to customers
profiles (needs, attitudes, behaviors,
attributes) and products offered (existing or
new).Estimate the size and profit potential of
each segment by analyzing the revenue and cost
impacts of serving each segment.
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Target segments according to their
potential (profit, entry, defensive) and to the
companys ability to serve them in a proprietary
way. Invest resources to tailor product,
service, marketing, and distribution programs to
conform to the needs of each targeted segment.
Continuously monitor each segment
(customer/product shifts, competition,
penetration) and adjust the approach over time as
conditions change.
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Before Entry - Some Important Questions to Ask

• What gaps will you fill? And why does that gap
  exist?
• Will your entry give rise to a new product
  market?
• How will your entry affect current product
  markets?
• How might current competitors respond to your
  entry?
• How will targeted customers respond to your
  entry?
• What competitive advantage (if any) will you
  possess?
• What might be your major vulnerabilities?
• What can your firm do to preempt and respond to
  competitors?

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Identify Potential Market Gaps
Price/cost
Cant afford at this price
Untapped Market Demand
Potential No. of Customers
Competitive Gap
Competitors products satisfy
Usage vs. Needs Compatibility Performance, speed,
features, etc.
Product does not fit customers needs or situation
Current Business Segment 60
Distribution gap
Noncustomers cannot obtain
Personal Users 40
Usage Gap
Noncustomers unaware
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• Expand the product line
• a. Fill out existing product line
• b. Add product line elements
•  Expand distribution
• a. Broaden distribution coverage
• b. Increase distribution intensity
• c. Improve distribution exposure
• Stimulate heavier use
• a. Find new users by
• 1  1.Stimulating nonusers to use
• 2  2.Stimulate light users to use more
• 3  3.Increase amount used each occasion
• b. Find new uses for the product
• c. Promote product usage at new times
• Penetrate competitors positions
• a. Direct assault on competitors
• b. Attack substitutes
•  Defend your present position

Price/Product line gap
Distribution gap
Usage gap
Competitive gap
Your sales
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Three Different Types of Distribution Gaps

• 1. Distribution COVERAGE Gap
• Firm fails to distribute its products in
  all geographic
• regions
• 2. Distribution INTENSITY Gap
• Firm has an inadequate number of outlets
  to distribute its
• products
• 3. Distribution EXPOSURE Gap
• Firm has poor or inadequate shelf space,
  location,
• displays, etc. within outlets

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Analyzing segment alternatives Applying the five
forces of competition.
Buyer types
Product types
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Levis possible growth modes
New Products
Existing Products
Market Penetration Strategy
Product Development Strategy
Existing Markets
Market Development Strategy
Product/Market Diversification Strategy
New Markets
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Repositioning Levis
High Price
Lewis has figured out that kids dont wear the
same jeans their parents do and that trendy
retailers dont stock the same lines as
J.C.Penny. So its creat- ing a portfolio of
dozens of brands and sub-brands, from
cheap basics to high-priced fashion
Vintage 125
Dockers Equipment For legs 100
Red Line 100
Sta-Prest 75
Dockers K-1 65
Slates 65
Slates Collection 60
Red Tab Elesco 60
Dockers Premium 50
Red Tab Dry Good 45
Silver Tab 45
Classic
501 35
Designer
L2 30
Red Tab Basics 30
Dockers Classic 30
Low Price