International Marketing Practices

Market Segmentation

Targeting

Positioning

Figure 8. Market customization process.

One market customization strategy that can benefit small or emerging businesses is niche marketing, which is a method for reducing competition and gaining more control over product prices. With less competition, demand for a niche market product is less elastic, and, as such, the producer has more flexibility in setting price. If the producer raises prices, there will be a less-than-proportional fall in the quantity demanded, and total revenue will increase [139]. We see this strategy successfully applied in the niche beer market, where thousands of microbreweries have sprung up across the country with specialty beers aimed at specific tastes. • Profitability. The niche has adequate size and purchase power to be profitable. • Growth. There is reasonable potential market growth. • Limited competition. There is no competition from major players. • Competitive advantage. The producer has the required resources, skills, and location to serve the market effectively, as well as better than its competitors. • Goodwill. The producer can build enough loyalty among customers to defend and survive competition. Although profitable niche markets may be discovered by accident, it is also possible for producers to systematically find and develop niche opportunities. The following steps form the framework for deciding what to sell, where to sell, to whom to sell, and at what price to sell, so as to take advantage of a profitable niche markets. 1. Analyze the existing market. Find out who the customers are, who the current players or competitors are, what products or services are being offered, what prices are being charged, and what distribution channels are used to deliver products to customers. 2. Identify neglected or underserved market segments. Determine if any segments in the existing market are not currently served by businesses. Information may be obtained through personal observations, interviews with current market participants, consultants, trade publications, government publications, market information, newspapers, or others. 3. Evaluate your strengths in serving identified segments. Determine the resources and skills needed to be effective in satisfying the needs of perceived underserved or neglected market segments. Consider the raw material, equipment, skill, financial, and managerial resources required to be competitive, as well as marketing requirements, such as sales force size and distribution channel intermediaries. In addition, determine the competition or rivalry, if any, to be expected in the market segments. The ideal niche market displays five characteristics:

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