Marketing Dynamics, 4th Edition Page 162 (180 of 640)

162 Marketing Dynamics Copyright Goodheart-Willcox Co., Inc. Market share is useful for comparing the companies within a market to each other and showing the relationships among the companies, as shown in Figure 9-7. Market-share leaders are the companies with the largest combined market share. Some research shows that market- share leaders are more profitable and successful than companies with smaller market shares. For example, the two market-share leaders in the previous example, General Foods and Country Choice, have a 95 percent market share when combined. A business goal of many companies is to increase market share, which makes it a marketing goal as well. Goodheart-Willcox Publisher Figure 9-7 Market share can be shown as tables or charts that illustrate the competitive relationship of companies within a market. Comparison of Market Share Pie Chart Market Share of Granola Bars Market Rank Company Annual Sales Share 1 General Foods $ 75 million 75% 2 Country Choice $ 20 million 20% 3 Grainy Snacks $ 5 million 5% Total $100 million 100% (market size) Table Market Share of Granola Bars General Foods 75% Country Choice 20% Grainy Snacks 5% Section 9.2 Review Check Your Understanding 1. What is nonprice competition? 2. What is a unique selling proposition (USP)? 3. List examples of information that is evaluated for a competitive analysis. 4. How does a SWOT analysis contribute to a market analysis? 5. State the market share formula. Build Your Vocabulary As you progress through this text, develop a personal glossary of key terms. This will help you build your vocabulary and prepare you for a career. Write a definition for each of the following terms and add them to your personal glossary. benefit competitive advantage direct competitor feature indirect competitor market-share leader repositioning trade show unique selling proposition (USP)

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162 Marketing Dynamics Copyright Goodheart-Willcox Co., Inc. Market share is useful for comparing the companies within a market to each other and showing the relationships among the companies, as shown in Figure 9-7. Market-share leaders are the companies with the largest combined market share. Some research shows that market- share leaders are more profitable and successful than companies with smaller market shares. For example, the two market-share leaders in the previous example, General Foods and Country Choice, have a 95 percent market share when combined. A business goal of many companies is to increase market share, which makes it a marketing goal as well. Goodheart-Willcox Publisher Figure 9-7 Market share can be shown as tables or charts that illustrate the competitive relationship of companies within a market. Comparison of Market Share Pie Chart Market Share of Granola Bars Market Rank Company Annual Sales Share 1 General Foods $ 75 million 75% 2 Country Choice $ 20 million 20% 3 Grainy Snacks $ 5 million 5% Total $100 million 100% (market size) Table Market Share of Granola Bars General Foods 75% Country Choice 20% Grainy Snacks 5% Section 9.2 Review Check Your Understanding 1. What is nonprice competition? 2. What is a unique selling proposition (USP)? 3. List examples of information that is evaluated for a competitive analysis. 4. How does a SWOT analysis contribute to a market analysis? 5. State the market share formula. Build Your Vocabulary As you progress through this text, develop a personal glossary of key terms. This will help you build your vocabulary and prepare you for a career. Write a definition for each of the following terms and add them to your personal glossary. benefit competitive advantage direct competitor feature indirect competitor market-share leader repositioning trade show unique selling proposition (USP)

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Chapter 9 Targeting a Market 161 Copyright Goodheart-Willcox Co., Inc. LO 9.2-4 Sales Analysis After the market segment has been identified and market analysis completed, a sales analysis can be performed. A sales analysis helps a busi- ness forecast future sales. The sales analysis begins with reviewing current and past sales. A business typically evalu- ates number of units sold and dollars generated in sales for the current year and up to five previous years. By evaluating current and past sales, conclusions can be made about whether sales are increasing or decreasing. Businesses can identify any trends that may affect the profitability of the company. This helps the sales team create sales goals for the current year. An important part of analyzing sales is to determine what market potential is available in the current environment. Market potential is the l maximum number of customers and amount of sales that can be generated from a specific segment in a defined time period. Determining the market potential will confirm that sales can be generated from the group of customers in the iden- tified market segment. It must be verified that the marketing decisions made will be profitable before moving forward with the marketing plan. If market potential exists, the business will forecast its portion of the market share in comparison to its competitors. Market share is the e percentage of the total sales that one business has in a specific market. Market share is based on the size of the market. Market size is the total sales per e year for a specific product held by all the competi- tion. Sales can be measured in a number of ways, such as in dollars or number of items sold. Most businesses look at market share in terms of total sales dollars. The market share formula is as follows. (company sales ÷ total sales in market) × 100 = percent market share An example of calculating market share is shown in Figure 9-6. For example, assume the market size for granola bars is $100 million. This means that in one year, total sales of granola bars equal $100 million. Three companies make them. • General Foods, a big company, sells $75 million of granola bars each year its market share is 75 percent. • Country Choice, a medium company, sells $20 million its market share is 20 percent. • Grainy Snacks, a small company, sells $5 million its market share is 5 percent. Radu Razvan/Shutterstock.com A feature of this road bicycle is its titanium frame, which provides the benefit of a lighter weight for faster speed. When have you purchased a product to obtain the benefits of owning it? Goodheart-Willcox Publisher Figure 9-6 This simplified example shows how market share is calculated. Calculating Market Share Data Total Sales in Market = $100 million General Foods Sales = $75 million Country Choice Sales = $20 million Grainy Snacks Sales = $5 million General Foods Formula company sales total sales in market × 100 = percent market share $75 million $100 million × 100 = 75% Country Choice $20 million $100 million × 100 = 20% Grainy Snacks $5 million $100 million × 100 = 5%

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Review and Assessment CHAPTER 9 163 Copyright Goodheart-Willcox Co., Inc. Chapter Summary Section 9.1 Identify the Market LO 9.1-1 Differentiate between mass marketing and target marketing. A mass market is the overall market or group of people who might buy a good or service. A target market is the specific group of customers at which a company aims its goods and services. LO 9.1-2 Define variables used for market segmentation. Market segmentation is the process of dividing a large market into smaller groups, which can help in accurately selecting a target market. Segmenting a market based on where customers live is geographic segmentation. Demographic segmentation is dividing the market of potential customers by their personal statistics. Psychographic segmentation is dividing the market by certain preferences or lifestyle choices. Behavioral segmentation divides a market by the relationships between customers and a good or service. LO 9.1-3 Explain the importance of a customer profile. A customer profile is a detailed description of the typical consumer in a market segment. Accurate customer profiles help determine the best promotional strategies. This allows goods or services to be promoted specifically to those within the target markets. Section 9.2 Evaluate the Competition LO 9.2-1 Identify types of competition that a business encounters. Direct competitors are companies that sell identical or very similar goods or services. Indirect competitors offer different, but similar, goods or services that meet customer needs. Price competition occurs when a lower price is the main reason for customers to buy from one business over another. Nonprice competition is a competitive advantage based on factors other than price. LO 9.2-2 Identify components of a market analysis. A market analysis is the process of gathering information on the market in which a business is competing and is completed as a part of the process of developing a marketing plan. Market analysis includes a competitive analysis, SWOT analysis, and environmental scan. LO 9.2-3 Define product positioning.g Product positioning is the process used to influence the customer’s perception of a brand or product in relation to the competition. It is a marketing strategy that focuses on influencing the perception of a product in the minds of consumers. LO 9.2-4 Discuss steps taken to create a sales analysis. The sales analysis begins with reviewing current and past sales and determines the market potential. Determining the market potential will confirm that sales can be generated from the group of customers in the identified market segment. If the market potential exists, the business will forecast its portion of the market share in comparison to its competitors. Check Your Marketing IQ Now that you have completed the chapter, see what you have learned about marketing by taking the chapter posttest. The posttest is available at www.g-wlearning.com/marketing/./

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Page 2Unit 1 Marketing Dynamics click to expand contents

Page 68Unit 2 Economics click to expand contents

Page 124Unit 3 Marketing-Information Management click to expand contents

Page 190Unit 4 Product click to expand contents

Page 230Unit 5 Price click to expand contents

Page 262Unit 6 Place click to expand contents

Page 304Unit 7 Promotion click to expand contents

Page 388Unit 8 Management click to expand contents

Page 446Unit 9 Entrepreneurship click to expand contents

Page 498Unit 10 Preparing for a Career click to expand contents

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