The Second Requirement (Market Identification and Segmentation Analysis) of the Market Feasibility/Viability section is clearer if it's put in the context of the marketing process:
First Step: Identify, profile and select distinct groups of customers.
Second Step: Communicate your product's key attributes to your target market.
Your "Strategic Concept Submission" focuses on the First Step (what you're going to do) while the "Final Plan" adds the Second Step's tactical actions (how you're going to do it).
The First Step is referred to as "Market Segmentation" and "Targeting" with the "distinct groups" of customers being your "Segments" or "Targets." The Second Step is referred to as "Positioning."
Keep reading to learn more about why this is done and how to do it...
It's necessary to find a segment where your competitive advantage can be exploited because it's impossible to serve every customer in an industry or market. Trying to serve everyone ends up serving no one. There are simply too many customers and too much diversity. A product fitting the needs of every potential consumer would be so "watered down" that, while no one might dislike it, no one would like it either.
Identifying a possible target market starts with market research. Focus groups are organized or surveys conducted to determine existing patterns and trends of product use. Information that is collected gets organized according to its dominant attributes and the importance ratings given each attribute.
"Clusters" are analyzed to determine their principal factors by "pairing" product attributes and consumer characteristics. An example might be low-priced mini-vans (a product attribute) and first-time car buyers (a consumer characteristic).
It's obviously not possible to do formal market research as part of your project. Instead, first describe the type of research you would do if this was a "real-world" assignment. Will you do surveys or put together focus groups? What questions will you ask? What kind of information will you be trying to learn. Hint: The nature of your product and existing uses of competing products will determine how you design your surveys or assemble focus groups.
Next, make some reasonable assumptions and conclusions about the information you'll get from your research. What do you think your focus groups and surveys will tell you? You probably can supplement your assumptions with some well-constructed Google searches.
Summarize your hypothetical findings so your reader gets a clear picture of how customers are going to respond to your product. Your "mission" is to fill in the blanks:
"It has been assumed the market research studies will show a product with attributes of X, Y and Z will be favorably received by a target customer group with the characteristics of A, B and C and D, E and F. These conclusions are based on findings that show _____________." (You'll obviously need several sentences to say it, but filling in these blanks gets you started.)
BASIS FOR SEGMENTING MARKET
You'll need to support your conclusions about who your market segment is likely to be. Organize this analysis around the factors that comprise the segments you're targeting.
In general, there are four categories of market segments: (1) Geographic, (2) Demographic, (3) Psychographic and (4) Behavioral.
Factors within each category look like this:
- Geographic: country, state, region, city or neighborhood.
- Demographic: age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality or social class. Demographic variables are the most common.
- Psychographic: lifestyle or personality and values. Chevrolet owners are identified as thrifty and conservative; furniture products are designed to suit a particular style of living.
- Behavioral: this factor is subdivided by specific motivation. Occasion - Is the product needed in conjunction with an event such as a wedding or holiday? Benefit - Will the product bring "fun" or "adventure?" User Status and Rate - Are your target market members existing users of the product, non-users, ex-users or first-time users? Are they likely to be heavy or infrequent purchasers? Loyalty and Attitude - Do your customers shift from one brand to another or do they buy only one brand at a time? Or do they switch on the basis of only price? Are they enthusiastic or indifferent users? How might their attitude influence other potential customers?
From this process, draw a picture of your potential customers. Where are they? Are they young or old? What are your customers trying to be or to do? What makes them buy (or not buy) something?
Look at all these questions through the eyes of your customers. What do they think? What makes them tick? How many of them are out there? Are there enough to make an economically attractive business opportunity?