Target Markets and

1
Chapter 8

• Target Markets and
• Channel Design Strategy

2
Market Variables
8
Objective 1
The target markets needs and wants should drive
the manner in which the channel manager shapes
the design of the firms marketing channels.
3
Framework for Market Analysis
Objective 2
8
Market geography
Market behavior
Market density
Market size
Target Markets
4
Market Geography
8
Objective 3
Market geography refers to the geographical extent
of markets and where they are located.


Channel managers task To evaluate market
geography relative to channel structure to
ensure that the structure is able to serve the
markets effectively and efficiently.
5
Locating Markets

8
Channel manager delineates geographical locations
of target markets by using a combination of the
following

• The Bureau of Census
• data for geographical entities such as
• states, regions/divisions, counties,
• metropolitan statistical areas, towns
• townships
• 2. Postal ZIP codes

6
Tracking Changes in Market Geography
8
In the U.S.
Globally

• A high degree of mobility within the U.S. means
  that market geography changes frequently.

• Southeast Asian countries former Eastern bloc
  countries of central eastern Europe have become
  key locations.

7
Market Size
Objective 4
8
Market size refers to the number of buyers or
potential buyers (consumer or industrial) in a
given market.
Channel managers task When using Bucklins
model for market size data, it is important also
to consider the peculiarities of particular
situations and other relevant variables.
8
Market Density
8
Objective 5
Market density refers to the number of buyers or
potential buyers per unit of geographical area.
This market dimensions relationship to channel
structure is illustrated in the concept of
efficient congestion.
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Market Density Channel Strategy
8
Efficient congestion
Congested (high-density) markets can promote
efficiency in the performance of several basic
distribution tasks, particularly those of
transportation, storage, communication,
and negotiation.
10
Market Density Channel Strategy
8
The opportunity to achieve a high level of
customer access at low cost is higher in dense
markets than in more dispersed ones.
Strategic Implication

Manufacturers of a wide array of products seek
out distributors and retailers that operate in
dense markets.
11
Market Behavior
Objective 6
8



Market behavior consists of four subdimensions

• When the market buys
• Where the market buys
• How the market buys
• Who buys

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When the Market Buys
8
Variations occur
Seasonally
Daily
Weekly

• Implications for the channel manager
• Variations create peaks valleys in the
  manufacturers production schedule.
• He or she should attempt to select channel
  members who are in tune with these changing
  patterns.

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Where the Market Buys
8
Determined by

• The types of outlets from which final
• buyers choose to make their purchases

2. The location of those outlets

• Implications for the channel manager
• 1. He or she should know where customers
  generally
• buy particular types of products
• He or she should know whether these patterns
• may be changing.

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How the Market Buys
8

• Large quantities
• Self-service
• One-stop shopping
• Impulse buying
• 5. Cash
• 6. Shopping at home
• 7. Expending substantial effort through
  comparison shopping
• 8. Demanding extensive service

• Small quantities
• Assistance by salespeople
• Buying from several stores
• Extensive decision making prior to purchase
• Credit
• Shopping at stores
• Expending little effort
• 8. Demanding little service

Versus
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Who Buys
8
Who makes the physical purchase?
May influence the kinds of channel members used
to serve industrial markets
Affects the type of retailers chosen in the
consumer market
Who decides to make the purchase?
Buying centers at industrial level
In context of family unit at consumer level
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Buying Centers
8
Sets of people who participate in
industrial buying decisions and who are
responsible for the consequences resulting from
the decision

• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers

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Changes in Market Behavior
8
Objective 8
Must be tuned in to changes that are likely to
occur
Needs to determine whether changes are temporary
or long term
Channel Managers Role
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Implications of Changes
8
Good personal selling at the retail level
Making a comeback in department and specialty
store sectors due to increasing consumer demand
for knowledgeable and helpful salespeople
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Implications of Change
8
Retail stores with spartan surroundings minimum
service but very low prices

Consumers demanding membership in warehouse clubs
(Sams Club)
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Implications of Change
8
Mail-order buying
Shoppers are trying to save time and avoid the
inconvenience of shopping at crowded stores and
fighting traffic congestion
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Implications of Change
8
Online shopping
Personal computers are a means for consumers to
supplement their in-store shopping
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Implications of Change
8
Auto retailing foreign auto manufacturers
Car buyers demanding fewer hassles
confrontations typically common when buying a
car
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Implications of Change
8
Internet Shopping
Growing in all sectors, especially in industrial
or B2B
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Implications of Change
8
Innovations undertaken by channel member
Kohls racetrack layout exposes customers to the
maximum amount of merchandise in the shortest
time.