Download SBE06.02

D. Marketing a Small Business
6.00 Explain the fundamentals of
marketing in a small business.
6.02 Explain market
identification.
Marketing Concepts

Market: The group of
potential customers
who have similar
needs/wants,
sufficient buying
power, and the
willingness to give up
a portion of that
buying power in order
to buy your
product/service.
Marketing Concepts

Market
Segmentation:
Dividing the total
market into smaller,
well-defined groups
with similar wants/
needs and similar
key characteristics.
Marketing Concepts

Target Marketing:
Identifying market
segments with the
greatest potential for
sales and focusing
marketing decisions
on satisfying the
individuals that make
up these segments.
Marketing Concepts

Target Market:
The group or
groups of
potential
customers
identified as
most likely to
patronize the
business and buy
its products.
Market Segmentation

Geographic
segmentation:
Dividing markets by
where customers
are located.




North or South
Rural or Urban
City or Suburbs
Mild/harsh Climate
Market Segmentation

Demographic
segmentation: Dividing
markets by
characteristics people
have in common.






Age
Income
Education
Occupation
Ethnic background
Life stage
Market Segmentation

Psychographic
segmentation:
Dividing markets by
identifying common
interests, attitudes,
values, lifestyle, or
personality traits
among the individuals
that constitute the
market.
Market Segmentation

Behavioral
segmentation:
Dividing markets by
identifying common
responses to
products and
product features.




Rate of use
Occasion response
Loyalty response
Benefits derived
Characteristics of a
Market Segment




Measurable: Potential sales income must be
measurable.
Substantial: Potential sales income must be
substantial enough to warrant the investment
required to reach the segment.
Reachable: Individuals in the segment must
be reachable with available promotional tools.
Responsive: The likelihood of the segment
responding positively to promotional efforts
must by high enough to warrant the
investment.



Market potential: The total amount of
revenue that can potentially be generated in
a specific industry or market.
Market share: The percentage of the total
sales revenue captured by a firm within a
market or industry.
Market position: The perceived standing of a
firm or a product in the minds of customers
as compared to the competition.
Positioning Strategies




Play to the
competition’s
weaknesses.
Lead with your
strengths.
Look for
underserved
markets.
Target different
market segments.


Regardless of the
strategy, a company
must focus efforts
on communicating
its position to its
target market.
It is in the best
interest of an
organization to plan
its position in the
market.
Average Market Share
Total sales
volume/number
of competitors
in a given
market.
Competition Analysis

When developing a competition analysis
for your business plan consider:






Who are your 5 nearest direct competitors?
Who are your indirect competitors?
How are their businesses performing?
What have you learned from their
operations and advertising?
What are their strengths and weaknesses?
How does their product/service differ from
yours?