MODULE 4:

Identification of Target Market and Preparing a

Marketing Plan

Module Review:
This module will prepare the learners identify the possible target market in
their proposed business plan. It will also teach them how to properly prepare
marketing plan which will be a great help for them if they will venture into their own
business in the near future.

Lesson 1: Identification of Target Market

Introduction:
Identifying the target market of your business is essential in every business
because it is the buyer of the product or service. It will determine which is the
potential market. Factors that comprise the target market are the size,
demographics, growth prospects, trends and sales potential market and the total
sale of the competitors. It will be a great help if an entrepreneur have identified not
only products or services to be offered but the market of these as well.

Learning Outcomes:
1.Identify the target market.
2. Determine the types of product: goods or services, consumer or industrial.
3. Analyze the market needs and the barriers to entry.
4. Learn the concept of marketing plan
5. Prepare a marketing plan

Discussion:
Target market according to Philip Kotler (p.d). is a well- defined set of
customers in which every entrepreneur need to satisfy. They are the ultimate and
final user of the product or service. It also describes the potential customer such as
where, how and why they are likely to be found.
Description of the Target Market:
1. Distinguish or determine the consumer from the customer.
2. Explore the benefits of proposed product to the target market.
3. How and why would the target market buy the product or service?
4. Is there a potential to increase the target market?

Business – to – business markets include:

1.Target market
2. Frequency of product purchase
3. Reasons for replacement needs versus expansion purchasing process.
4. Estimates of market size, initial targeted geographic area, enterprise’s targeted
market share.

Business- to – consumer markets include:

1.Demographic factors such as income level, age range, gender, educational level,
ethnicity of the target market.
2. Psychographic factors of the market
3. Behavioural factors of the market such as product purchase and shopping
behavior of the target market.

Categories of Consumer
1.Price Shoppers: This market are those who are interested in best deal of a
product. They are price conscious and praktikal.
2. Brand Loyal: This group of market believes that their current brands are better
or superior than the brands or known brand. They are willing to pay fair prices for
products just to buy it.
3. Status Seeker: These are people who are interested in prestigious or “signature”
brands or known brand or product categories. They are willing to pay for the price
no matter how costly it may seem.
4. Service or Feature Shoppers: This group of market seek a high value on customer
service and product features and will pay for them.
5. Convenience Shoppers: people who value nearby locations, long store hours and
are willing to pay for easier shopping.

Seamless Sensation:
The online and offline are both choices of market in terms of their
preferences. Both physical and digital realms are being used and supported by
consumers. Culture has changed. Language changed. Both the physical and digital
worlds are seamlessly intertwined. Authenticity should be determined critically in
this era of digitization and learn the own version of truth.
Identify the Market Problem:
The following are the factors to be considered in identifying market problems:

1.Existing customers are those who have already purchased the product you are
selling.
2. Target market users are the people in your target market who are recently looking
for solution.
3. Prospects are the people who have not yet purchased your product but have an
intention to purchase.

Tips in Identifying Market Problem

1.Focusing only on innovation and the competition.
2. Focus on the customers
3. Focus on revenue or profit.

How to Evaluate Market Problems?

1.Consider if the market problem is urgent, If it is, consider necessary actions by

getting the alternative courses of action(ACA) then determine the advantages and
disadvantages.
2. Evaluate if the market problem is unescapable or can easily be diffused, if yes
think of alternative or temporary solutions.
3. Determine if the customers/ consumers will pay to have this problem solved.

Problem – Identification Research:

Market research projects can help discover problem or opportunities.
1.Brand image is the impression in the consumer’s mind of brand’s total package.
2. Market characteristics describes attributes of the buyers in making decision
related to purchasing of the product.
3. Market potential is the estimated maximum total sales revenue of all suppliers of a
product in a market during a certain period.
4. Market share is a percentage of total sales volume in a market by a brand, product
or company.

Problem – Solving Research:

1.Distribution Research: It is knowing how the product is being transferred from
the manufacturer to the ultimate user.
2. Market Segmentation: It is the group of customers with similar characteristics
or similar purchase behavior.
3. Pricing Research: It determines the ideal price for the product. One of the most
important marketing step is setting the price for the product or service
4. Product Research: It is the test for the new or modified product or completing
test marketing.
5. Promotional Research: It determines the best research in the area of
disseminating information.

Market Need Analysis:

Ask the following questions in analyzing the market:
1.Who will get interested in my product/ service?
2. What does the market need or want?
3. Who is buying the product? What and how much? How? Where and why are they
buying or availing the goods/ service?

Studying and determining the marketability of the business is being done in

creating a business plan and to determine the performance of the competitor. It
should be studied if business offers new solutions to a problem or complements to
emerging trends. It should focus on benefits that the product or service can offer.
nd of business operation.

Market Analysis:
It is a quantitative and qualitative assessment of a market ability to respond
positively. It identifies the size of the market both in volume and in value. It also
covers the different customer segments and buying patterns, the competition and
the economic environment in terms of barriers to entry and regulation in the
industry.

Activities Recommended in doing Market Analysis

1.Demogaphics and Segmentation
Demographics is the statistical characteristics of population in terms of age
or income. It is used to identify markets.
Segmentation: it is the process of dividing into segments market with similar
characteristics. Markets need to be divided into different segments. This is very
important if the business is focus only on certain segments. A market can be
segmented through its size such as potential customers and the value of the market.

2. Target Market
It is the type of customers which focuses within the market. It is the
qualitative side of the market because it looks on what drives the demand rather
than who is the market.

3. Market Need
Entrepreneurs and investors must know the needs of the market by focusing
on their needs. They must identify what the customer wants to classify their needs.
4.Competition:
One must determine the strengths and weaknesses of their competitor
through analyzing their angle in the market. This way they can find the weaknesses
so that they can position their own market. Benchmarking the competitor can help
them analyze. Develop their key drivers of demand for market. These are price,
quality, add- on services and other.

Barriers to Entry:
Barriers are hindrances that block or intend to block passage.

Examples of Barriers to Entry:

1.Investment that requires huge investment
2. Technology application which needs the combination of scientific and engineering
knowledge.
3. Brand needs huge marketing cost to promote such products or services.
4. Regulation such as licenses and permits.
5. Access to resources like exclusivity with suppliers and its accessibility.
6. Access to distribution channels which is the exclusivity with distributors and
availability of intermediaries.
7. Location such as the place or venue where the business will be situated.

Preparing a Marketing Plan

Marketing plan studies the characteristics of the buyer and their competitor
in the market. It also presents the basis of the pricing policy, the promotional
strategies and the channel of distribution or place where the goods or services will
be sold.

Questions that need to be answered when you are new in the business:
1.What are the unique features of your products?
2. Who are your target buyers? How many will they buy?
3. Where will you sell your products?
4. How will you sell your products?
5. How do you create awareness for your product?
6. How much will you charge your buyers? Same price? Higher? Lower?
Business Organization:

Small businesses like those that can provide direct services like restaurants, salon,
tailoring shops and others are formed in sole proprietorship. Those that need
pooling of resources such as clinic, law offices and accounting firms are organized as
partnership. And those businesses like manufacturing, schools, hospitals, hotels
and others are example of corporate form.

Table 1.
Summary of Criteria and Features of Each Organization

Criteria Sole Partnership Corporation

Proprietorship
Number of owners One Two or more More than five
Ease of formation Very easy Easy Complicated process
Degree of control/ Direct Limited Board of Directors
power decide
Capitalization Very low start up Low start up cost Huge amount is
needed cost required
Ability to raise funds Difficult Larger pool of funds Easier to raise funds
available
Liability Unlimited, liability Limited/ unlimited Limited, liability
extends to personal confined to invested
assets capital
Division of profit/ Assumes all profit/ Shared by partners Divided among
loss loss owners
Stability of existence Lacks continuity Lacks continuity Divided among
owners
Government Least regulated Regulated by the Closely regulated
regulation Law of Agency
Examples Boutiques, salons, Accounting firm, Manufacturing
pre- school, others Law firm, others firms, banks,
universities,
department stores,
others
Self- Check:
1.If you were to put up a business what type of business organization will you
choose? Explain.
Activity 1:
Class will be divided into three (3) groups representing each organization. Interview
owner/ manager that represents each. State the name of their organization, nature
of business and their business organization; (sole, partnership or corporation). Give
brief background about their business.
Present this in the class.