Question

When entrepreneurs and corporation marketing decision makers face either (1) an opportunity to enter or (2) an attempt to increase their share of a growing market, they must get a clear assessment of the following three questions raised in Chapter Four:

• How attractive is the market we serve or propose to serve?
• How attractive is the industry in which we would compete?
• Are the right resources—in terms of people and their capabilities and connections—in place to effectively pursue the opportunity at hand?

Question #1 To assess market attractiveness at macro level, what are six major components that marketers must looked at? Explain each component briefly.

Answer 1

1. Market Potential: The company should value target markets that have a high potential of inherent growth for products and services. This target market would address the segment. Apart from this, the company can see themselves or their position having a high degree of success in resulting market share gain and obtaining differential advantage.

2. Core Competencies: The target markets that offer a solid fit with the organization’s core competencies should be valued by the company. This would enhance their capability to gain superior margins as the market is now capable to contain a good proportion of customer having a strong customer base that value the core competencies of the company.

3. Market Accessibility: The organization values the markets that are accessible in terms of geographic as well as in terms of clients which are underserved. Also, there are few barriers which exist in this segment.

4. Cost of Market Entry: The organization values the markets which do not have entry barriers or significant costs to entry particularly in terms of technology, capital, marketing, sales, and most importantly expense of channel development.

5. Level of Competitive Concentration: The organization values those target markets where the level of competition is not neck to neck or not concentrated in well-entrenched or large players in the market. In cases where the market contains several small to medium competitors can create intense price pressure and a playing field which prove to be undisciplined at most of the time.

6. Market size: The organization values those markets where the market size is more and more dense population is there to use the product. This become more helpful when the company belongs to FMCG sector, consumer durables sector or food and beverage sector. Thus, with the increase market size, the profitability increases in folds and absorbing a large mass of market becomes easier