Business Strengths

Even if a segment has the right size and growth and is structurally attractive, the company must consider its objectives and resources for that segment. It is best to discard some attractive segments quickly because they do not mesh with the company's long-run objectives. Although such segments might be tempting in themselves, they might divert the company's attention and energies away from its main goals. They might be a poor choice from an environmental, political or social-responsibility viewpoint. For example, in recent years, several companies and industries have been criticized for unfairly targeting vulnerable segments -children, the aged, low-income minorities and others - with questionable products or tactics.

Even powerful companies find it hard making headway in markets where they start weak. RTZ is the world's largest mineral extraction company, but when it moved into bulk chemicals and petroleum, it found it could not compete. Before moving into a segment, a firm should consider its current position in that market. AlowmcirfeL't share indicates weakness. Has the firm the energy, will or resources to build it up to economical levels? A firm's growing market share suggests strength, while, conversely, a declining market share suggests a weakness that entering new segments may not help. If a segment uses a firm's market&ng assets, then it fits the company's strengths. If not, the segment could be costly to develop. Mars' excursion into the iced confectionery market has proved difficult. The European iced confectionery market is growing, Mars has the technology and brands that stretched well into ice-cream, but it did not have freezers in shops. Freezers are usually owned by Unilever's Walls or Nestle's Lyons Maid, both experts in frozen food, which bad no reason to let Mars in. However, Mars' unique products and valued reputation allowed it to gain market share against established competitors.

Non-marketing dimensions influence the ability of a company to succeed in a segment. Has it low costs, or has it underutilised capacity? Also, does the segment fit the firm's technology strengths? Daimler-Benz has bought high-technology businesses because it believes it will gain from them information and skills it could use in its core car and truck activities. Final considerations are the resources that the firm can bring to the market. These include appropriate marketing skills, general management strengths and the chance for forward or backward integration into the firm's other activities. IBM and Philips have huge resources, and great technology and marketing skills, but not of the type that will allow them to compete effectively in the dynamic PC market.

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Salehoo Secrets and Tips

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