Reference no: EM132097590

SELECTING A MARKET SEGMENT

Well, the Howards opened their own business after all, deciding on a completely new operation. While formulating their business plan, Marcia thought a great deal about the type of products that should be marketed in their store. The field of women's apparel was quite broad, and Marcia felt that one of the key errors of her previous employer (an apparel shop) was to try to sell everything to everybody. To get an edge in the market, it seemed advisable to specialize in one area and offer the best range of products within that category. Marcia was attracted to three specialties. First was to concentrate on apparel for full figure women. Marcia saw this as a definite need, in that there was no such shop in the market area.

A second alternative was to specialize in up-scale high fashion apparel. Marcia thought of this as elegant rather than faddish, and suspected that there were a large number of young working women (21-35 age range, $35,000 average income) who would be willing to spend significant amounts on the right clothing. This suspicion was somewhat confirmed in that the one shop in the area that carried such a line was doing well. Marcia felt there was room for another, more exclusive shop.

Finally, she considered entering the market with low cost, lower quality apparel. It seemed as if more women than ever were price conscious and that offering products to those with average incomes of $15,000 would mean a lot of customers. Six shops catering to this clientele had been observed to have high traffic counts.

Obviously, to make a decision, Marcia would need some more information. After pouring over a number of statistical publications and trade papers, some of the facts she uncovered were very interesting.

She found a very good article in a trade magazine which stated that a full 2% of all women patronized full figure clothing stores. what is more, these women spent on an average of $800 per year on apparel, exceeding the national norm of 2% of income.

Another article focused on local demographics. Out of a regional population of approximately 14,000 (about half women), the following dispersion was apparent with regard to ages and incomes.

Age Group: Under 20 (31% of all women)

Ave Income $20,000 or less - 70%

Ave Income $20,000 to $30,000 - 25%

Ave Income $30,000 and above - 5%

Age Group: 21 - 35 (30% of all women)

Ave Income $20,000 or less - 40%

Ave Income $20,000 to $30,000 - 35%

Ave Income $30,000 and above - 25%

Age Group: Over 35 (39% of all women)

Ave Income $20,000 or less - 40%

Ave Income $20,000 to $30,000 - 30%

Ave Income $30,000 and above - 30%

Age Group: All (100%)

Ave Income $20,000 or less - 45%

Ave Income $20,000 to $30,000 - 30%

Ave Income $30,000 and above - 25%

Question: Armed with this information, Marcia comes to you for advice. What would be her projected market share for each of the ideas that she is considering?