Based on Chapter 7 Kotler Marketing Management : A South Asian Perspective 14th Edition (English) 14th Edition How should a company choose the most attractive target markets?

1. Choosing most attractive Target
markets
By
Sanchit Aggarwal
Bits Pilani K.K Birla Goa Campus

2. Porter’s five forces analysis
Analysis scheme developed
by Harvard Business School
professor: Michael E. Porter
•It allows business managers to
gauge the intrinsic long-run
attractiveness of a market segment
and thus assess current and potential
lines of business.
•3 out of 5 forces relate to industry
participants
•The other 2 relate to the vertical
participants: SUPPLIER and
CONSUMER

3. • PORTER’S FIVE
FORCES
ANAYLSIS

4. Threat of new entrants
• Analyses the
ease of entry for
new participants
in the market
place
• If it is easy- Level
of competition is
HIGH

5. Threat of intense segment rivalry
• It evaluates the
number and activity
of a company's
rivals
• Numerous, strong
and aggressive
competitors:
Segment
unattractive

6. Threat of substitute product
• A new good or
service coming to
the market erodes
sales of established
products.

7. Bargaining power of suppliers
• Scarcity of supplier
resources can
increase competition
among
manufacturers, thus
increasing costs
• Segment is
unattractive is
bargaining power of
suppliers is high

8. Bargaining power of Buyer
• If consumer has
good bargaining
position then it can
reduce finished
good prices and
hence reduce
profitability

10. Combining the 2 factors
Segment's
attractiveness
measured
using porter’s
analysis
Company’s
objectives and
resources
Most
attractive
target
market