Study Notes for target market selection

Outline of the target market selection evaluation criteria

Target markets should be evaluated on:

Financial Issues

  • Segment size
  • Segment growth rate
  • Profit margins

Structural Attractiveness

  • Competitors (direct and indirect)
  • Competitive rivalry
  • Access to distribution channels
  • Current channel relationships

Strategic Direction

  • Fit with the firm’s strategic future
  • Growth expectations
  • Marketing Expertise

Resources (financial position and staff resources)

  • Capability (to develop products and compete)
  • Importance of brand equity (ability to leverage, dilution concerns)

Opportunity Cost

  • Are other growth options more attractive?

The target market selection process

  1. Starts with the market segment profiles
  2. Assesses the market segment against the criteria/evaluation checklist (listed above)
  3. Usually scores/rates each segment will against the assessment items in the checklist
  4. Some firms may considers the importance of each factor (and assign a weighting)
  5. Then a final overall assessment is generated
  6. Appropriate target markets are then selected

Related Topics

Study Notes for Target Markets

Study Notes for Market Segmentation Evaluation Criteria