Chapter 8
Destor, Juliza
Cordero, Cryzler
Ervin, Gibo
Irasga, Harvey
Target Markets & Channel Design Strategy
Channel manager decisions regarding the design of the firms marketing channel.
· MUST be a function of the firms target markets needs and wants
· Remember customer value is the driver of design.
Framework for Market Analysis
The Four Market Size Dimensions of All Market
1. Market Geography
2. Market size
3. Market density
4. Market Behavior
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.
Locating Markets
Channel managers ascertain the geographical locations of target markets through the use
of:
· The Bureau of Census
Regions, States, counties, MSAs (x > 50k*), secondary markets (x < 50k)*, etc.
· Postal Zip Codes
· GIS
Computerized systems that combine physical geography with cultural geography
(Dunne, Lusch, & Carver 2010)
Tracking Changes in Market Geography
In the U.S.
A high degree of mobility means markets change frequently.
Globally
Southeast Asian countries & former Eastern Bloc countries of Europe have become key
locations.
Market Size
Refers to the number of buyers or potential buyers in a given market
Can be either end-users or industrial buyers
Channel Managers Task
When using Bucklins model for market size data, it is important to consider the particulars
of certain situations
For Example:
Will an increase in buyers increase or decrease average cost of serving customers?If an increase
in average cost is likely, can channel structure be changed to reduce costs before market
reaches its increased size?
Market Density
Refers to the number of buyers or potential buyers per unit of geographical area.
Efficient Congestion
Congested, high-density, markets can promote efficiency in the performance of several basic
distribution tasks (e.g., transportation, storage, communication, and negotiation.)
Strategic Implication of Density
· Density offers efficiency
Opportunity to achieve high levels of customer contact at lower average costs
· Manufacturers often seek out intermediaries (wholesalers & retailers) operating in
dense markets
Market Behavior
Market Behavior is characterized by, or encompasses
1. When the market buys
2. Where the market buys
3. How the market buys, and
4. Who buys
When the Market Buys
Buying Patterns Implications
-Seasonal - Variance creates peaks and valleys in production
-Weekly - Should seek members who are in tune with changes in patterns
-Daily - How could a Category Killer help the manufacturer?
Where the Market Buys
A Function of:
The types of intermediaries from which buyers make a purchase
Implications
Particular types of products are typically purchased where?
What product categories align well with ones product(s)?
A function of:
The location of these intermediaries
Implications
Are these patterns likely to change?
How the Market Buys
➢ Large vs. Small Quantities?
➢ Self-Serve vs. Assisted Shopping?
➢ One-Stop vs. Multi-Store Shopping?
➢ Impulse vs. Planned Purchases?
➢ Cash vs. Credit?
➢ Shop at home vs. Prefer Traditional Store?
➢ Shopping vs. Non-Shopping Good
Who Buys
Who makes the actual purchase?
➢ Affects type of retailer chosen
➢ May alter channel members for industrial goods
Who decides whether to purchase?
Who in family unit
Buying centers for industrial goods
Buying Centers
A set of people who participate in industrial buying decisions & who are responsible for the
consequences resulting from those decisions.
Typical Participants (or Roles Performed):
➢ Users
➢ Influencers
➢ Deciders
➢ Approvers
➢ Buyers
➢ Gatekeepers
Note: Individuals may perform more than one.
Changes in Market Behavior
· Channel Managers must be attune to:
1. Changes likely to occur in the targeted markets shopping behavior.
2. Whether these changes are likely to remain (i.e., permanent) or are more likely fleeting
(i.e., short-term).
Implications of Changes in Market Behavior
· Increased demand for
➢ Knowledgeable & helpful sales assistance:
Increase in personal selling in department/specialty stores
➢ Minimum service with very low prices
Increase in retailers w/ sparse surroundings & aesthetics
➢ Convenience & no crowds of shoppers
Increase in firms offering mail order & catalog services to avoid crowds & shop from
home
➢ Efficiency in information gathering & purchasing
Increase in Internet shopping, especially for B2B
➢ Innovation in service, selection, or effectiveness
Department stores featuring different layouts, kiosks, and specialty stores
adopting fast turn (e.g., Zara)*