Marketing Strategy and Competitive Positioning pdf ebook

Size of the segment
Clearly, one of the factors that makes a potential target attractive is its size. High-volume 
markets offer greater potential for sales expansion (a major strategic goal of many compa-
nies). They also offer potential for achieving economies of scale in production and market-
ing and hence a route to more efficient operations.
Segment growth rate
In addition to seeking scale of operation, many companies are actively pursuing growth 
objectives. Often it is believed that company sales growth is more easily achieved in grow-
ing markets.
As the global unit sales of smartwatches grew by 56 per cent in 2018, some analogue 
watch makers decided to build connected or ‘hybrid’ watches in an attempt to tap into 
that growth segment. This comes from research showing that fans of analogue watches 
will never completely give them up. Hybrid watches combine the aesthetics of traditional 
watches with some of the functions of smartwatches via a bluetooth-enabled chip. Adop-
ters are happy to sacrifice the full functionality of a smartwatch for a classic design. As 
technology improves, so will the capability of these hybrid watches. Although the jury is 
still out as to the future successes of these watches, a Juniper’s research conducted early 
2019 ‘concluded that hybrid watches would account for more than half of the smartwatch 
market by 2022’ (de Burton 2019).
Stage of industry evolution
We looked earlier (see Chapter 3) at the characteristics of markets at different stages of evolu-
tion. Depending on the company’s objectives (cash generation or growth), different stages may 
be more attractive. For initial targeting, markets in the early stages of evolution are generally 
Figure 9.3
Factors affecting 
market segment 
attractiveness
Market factors
Size; growth rate; life cycle stage;
predictability; price elasticity;
bargaining power of buyers; cyclicality
of demand
Competitive factors 
Intensity; quality; threat of substitution;
degree of differentiation
Business environment factors
Economic fluctuations; political and
legal; regulation; social; physical
environment
Economic and technological factors
Barriers to entry and exit; bargaining
power of suppliers; technology
utilisation; investment required;
margins

---

238
CHAPTER 9 SELECTING MARKET TARGETS
more attractive as they offer more future potential and are less likely to be crowded by current 
competitors (see competitive intensity later in the chapter). Typically, however, growth requires 
marketing investment (promotion, distribution, etc.) to fuel it, so that the short-term returns 
may be modest. Where more immediate cash and profit contribution is sought, a mature 
market may be a more attractive proposition, requiring as it does a lower level of investment.
Predictability
Earlier we stressed the predictability of markets as a factor influencing their attractiveness 
to marketers. Clearly the more predictable the market, the less prone it is to discontinuity 
and turbulence, the easier it is to predict accurately the potential value of the segment. The 
more certain, too, is the longer-term viability of the target.