To succeed in today's competitive marketplace, companies must be customer centred - winning customers from competitors by delivering greater value. However, before it can satisfy consumers, a company must first understand their needs and wants. So, sound marketing requires a careful analysis of consumers. An understanding of buyer behaviour guides this process. Companies know that they cannot satisfy all consumers in a given market - at least, not all consumers in the same way. There arc too many kinds of consumer with too many kinds of need, and some companies are in a better position to serve certain segments of the market. As a consequence, each company must divide the total market, choose the best segments and design strategies for profitably serving chosen segments better than its competitors do. This process involves five steps: demand measurement and forecasting, market segmentation, market targeting, market positioning and competitive positioning.
After a company has defined market segments, it can enter one or many segments of a given market. Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter. A company should target segments in which it has a differential advantage over its competitors; where it can generate the greatest customer value and sustain it over time. A company with limited resources might decide to serve only one or a few special segments; this strategy limits sales, but can be very profitable, Alternatively, a company might choose to serve several related segments - perhaps those with different kinds of customer, but with the same basic wants. Or perhaps a large company might decide to offer a complete range of products to serve all market segments. Most companies enter a new market by serving a single segment, and if this proves successful, they add segments. Large companies eventually seek full market coverage. They want to be the 'General Motors' (GM) of their industry.
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