Conducting the market segmentation to determine the

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conducting the market segmentation to determine the factors likely to affect a firm’s overall attractiveness. The evaluation criteria may include market size and growth rate, profitability, cyclicality, the price sensitivity of customers, amount of regulation, degree of unionization, and entry and exit barriers. The second step entails continuously subdividing industries and the markets within these industries and analyzing the overall attractiveness of these markets in terms of the evaluation criteria. For each market, the evaluation criteria are given a numerical weight reflecting the firm’s perception of the relative importance of each criterion applied to that market to determine overall attractiveness. Higher numbers imply greater perceived significance. Note that some criteria may be given a zero weight. The evaluation criteria then are ranked from 1 to 5, with 5 indicating that the firm finds a market to be highly favorable in terms of a specific evaluation criterion. In the third step, a weighted average score is calculated for each market and the markets are ranked according to their respective scores. The market with the highest score is considered to be the most attractive. This three-step procedure is illustrated in the following table.. Such a matrix is constructed for each market evaluated.
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  • Fall '09
  • WELKER
  • Finance, Trade union, Weighted mean

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