10. Analysing Market and Identifying Target Consumer Flashcards
What must a product provide to be successful in the market
A product that doesn’t provide something different, cheaper or better than a product that is already on the market is likely to have limited success
What must be carried out when preparing a market strategy
Another important activity when preparing to create a market strategy is to identify and analyse the factors (both internal and external) which affect the product, the company and the market in which it operates. This should be an objective analysis of the health of the business, its current and potential customers, trends within the particular market and the position of the business within it.
What does SWOT stand for
Strengths, Weaknesses, Opportunities and Threats
Examples of a SWOT analysis
Taking a sheet of paper and dividing it into four quarters as in the diagram below. The diagram highlights examples of what might be included under the various headings by a wine producer.
In simple terms, strengths and weaknesses are those of the particular product or company, whereas opportunities and threats are external factors which affect the market as a whole
STRENGTHS examples
- The wine is competitively priced
- The wine is high quality
- The wine is in a unique style
- Strong customer base
- Broad market coverage (to cushion against issues in any one particular market/sector)
- Highly skilled/knowledgeable workforce
WEAKNESSES examples
- High production cost
- Limited marketing activity
- The wine not widely known outside its region of production
- Poor brand image
- Limited resources
OPPORTUNITIES examples
- New and growing markets
- Gaps in the market for new products or products at a different price point
- Market trends such as premiumisation, interest in lower alcohol wines
- Weak local currency, making wine more competitive on export markets
THREATS examples
- Competitors
- Possible changes in legislation (e.g. minimum unit pricing)
- Changing consumer tastes
- Concerns over the social or health impact of alcohol
- Increases in duty/taxation
- Strong local currency, making wine less competitive on export markets rates
What is the next step after identification in a SWOT analysis
Once they have been identified, strengths and opportunities can be exploited; where possible, these should be highlighted in the marketing campaign. Steps should also be taken to eliminate weaknesses and mitigate threats as far as possible. It may be possible to achieve some of this through marketing (e.g. improving a poor brand image, lowering prices to compensate for exchange rate rises).
What is the process called by which target consumers are identified
Segmentation
It is not profitable to design and produce a product to cater to every consumer
How do we understand the needs and wants of target consumers
Market research
What are the aims of consumer segmentation?
The aim is to choose a group who have sufficiently similar preferences and needs to create a meaningful segment that can be targeted by companies.
On the other hand, the segment should not be so small, with so few potential customers, as to make it unprofitable.
(Because everyone is different, the consumers in a particular segment will never be identical.)
What variables is segmentation often based on (4)
A segment will usually be a combination of these variables:
- geographic,
- demographic,
- psychographic
- behavioural.
Explain geographic segmentation variables
These relate simply to where the consumers live (e.g. a country, region or city) and whether they live in an urban or rural area. Usually, these are too broad and cover too wide a range of people to be meaningful on their own.
Explain demographic segmentation variables
These include:
1. age;
2. gender;
3. ethnicity;
4. family status (e.g. are they single? Do they have children?);
5. income;
6. level of education (e.g. are they university-educated?);
occupation;
7. socioeconomic status: this is an individual or family’s position in society relative to others based on their income, level of education and occupation.
Explain psychographic segmentation variables
These are psychological characteristics, such as:
- lifestyle (e.g. people who like to go out to eat and drink, the health-conscious);
- personality (e.g. people who like to show off their wealth or knowledge of wine);
- values and beliefs (e.g. vegetarians, people who prefer products that are organic, environmentally-friendly or Fairtrade);
- interests (e.g. those who are interested in wines from a particular country or region).
Explain behavioural segmentation variables
- what benefit do they want from wine (e.g. quality, value for money, prestige)?
- when do they buy wine (e.g. regularly, only on special occasions)?
- where do they buy wine (e.g. supermarkets, specialist wine retailers)?
- how often do they buy wine and in what volume?
- what is their level of brand loyalty?
- what is their level of interest in wine (e.g. enthusiast, moderate interest, indifferent)?
- are they early adopters (i.e. people who are keen to buy new products when they come on to the market) or late adopters?
Explain why behavioural and psychographic segementation are a better indication of similarity than geographic or demographic
People who share psychological or behavioural characteristics are more likely to behave in a similar way than those who live in the same area or are in the same age group.
There is no global model of consumer segmentation; each country is different - even countries as geographically close as the UK and the Republic of Ireland. The closest the wine industry has got to creating global segments is to separate high- and low-involvement consumers, although even this division is not valid in all countries and the grouping is too broad to be useful without further segmentation. High-involvement consumers have a deep interest in the wine they drink, are keen to try new products and tend to spend more on wine. In contrast, low-involvement consumers have little interest in the detail of what they drink, stick to a few products which they know and are unlikely to spend much on the wine they buy.
Explain Halls wine consumer groups
wine lovers – those with a great interest in, and knowledge of, wine; high income and high level of education;
wine-interested – those with a great interest in wine, moderate wine knowledge, university-educated with moderate income;
wine curious – those with a moderate interest in wine but limited knowledge, moderate income and medium level of education; they see wine as an opportunity to maintain social relations.
What are Wine Intelligence’s “US portrait” consumer groups
- Experienced Explorers
- Millenial Treaters
- Premium Brand Suburbans
- Bargain Hunters
- Senior Sippers
- Kitchen Casuals
What are Wine Intelligence “portraits” for consumer segmentation
However, more recently, a number of specialist market research companies have created their own consumer segmentation models based on much more detailed data. For example, Wine Intelligence has created a series of models (known as ‘Portraits’) for various markets, including the UK, the USA and China.
Wine Intelligence provides a range of additional information to help companies understand these segments, breaking each down into demographic groups, level of involvement and their wine-buying habits, motivations and behaviour.
Although companies have to pay to access this information, it can be invaluable in helping them work out how to target specific types of wine consumer successfully.
What are the disadvantages of other wine consumer segmentation models
Other wine consumer segmentation models have been proposed, each with their advantages and disadvantages. One common disadvantage is that, because these models tend to be the result of academic studies with a relatively small sample size, they do not readily extend to the market as a whole.
Experienced Explorers - Who Why What?
Who - Aged primarily 35-54, higher spenders who are confident in their wine knowledge
Why - Wine allows them to relax or socialise with friends and family, it’s a regular treat for them
What - Large repertoire, and enjoy trying new styles and regions
Millenial Treaters - Who Why What?
Who - Frequent and adventurous wine drinkers, highest spenders
Why - Wine is a part of their social lives, they enjoy it as part of their lifestyle and it’s good for their image
What - Open to a large repertoire, enjoy trying new styles and regions, yet with limited awareness of brands
Premium Brand Suburbans - Who Why What?
Who - Frequent, ‘core’ wine drinkers from across the US and across all age groups
Why - A glass of wine at the end of the day is a frequent treat
What - Looking for good value everyday wine and know their brands
Bargain Hunters - Who Why What?
Who - Older drinkers, more preoccupied with price and looking for a cheap deal
Why - Drink wine infrequently, mostly at home
What - Tend to stick to ‘easy choices’ in terms of brands and varietals
Senior Sippers - Who Why What?
Who - Older, less frequent wine drinkers, low spenders, unconfident and unknowledgeable
Why - A relatively affordable and healthy choice for an occasional drink
What - Consume from a narrow repertoire that is driven by low prices
Kitchen Casuals - Who Why What?
Who - Middle-aged or older and infrequent wine drinkers, typically disengaged with the category
Why - To relax at home with an informal meal
What - Like Senior Sippers, consume from a narrow repertoire that is driven by low prices
Benefits of a segmentation model when many consumers do not fit into one segment
However, even with such a sophisticated segmentation model, there will still be plenty of consumers who do not fit into any one particular segment. Nevertheless, a successful segmentation exercise will help to identify the type of consumer who might buy a particular product. Armed with that information, a company can make a realistic estimate of how much that consumers may be willing to pay for it, where the product is likely to sell and how best to market it.
What is market research
gathering and analysis of data about a particular market segment in order to understand what that segment wants or needs.
When can market research be conducted
Prior to starting work on a new product, a company can use market research to understand whether there is a need in the market, what features people would like, how much they would pay for it.
How is market research used when creating the marketing strategy
It can confirm whether the approach suggested by the segmentation exercise is accurate or not, before the company embarks on a potentially expensive and time-consuming marketing campaign.
What is considered when setting up a market research strategy (3)
- What information is needed: e.g. (what price are consumers prepared to pay)?
- Whom will the researchers gather data from: (a small group of consumers from a particular segment or a cross-section of the public)
- How will the research be carried out
What options are there for carrying out market research (5)
- Survey – series of questions designed to investigate the opinions, feelings, actions or behaviours of a large group of people
- Focus group – a group of people from the relevant consumer segment, discussing and commenting together on the topic being researched;
- Interviews – one-to-one discussion of the topic being researched
- Observing consumer behaviour
- Secondary research – using data already available in the public domain or available as a report from a market research company.
What happens once the market research has been conducted
The data is analysed and acted upon
What is “observing consumer behaviour” research and when is it used.
Another form of research involves observing and analysing the behaviour of target consumers. This may be to find out the needs and wants of these consumers, or it may be used later in the marketing process to monitor the success of a campaign and possibly make adjustments to make it more successful.
Marketing influences consumer behaviour so understanding what appeals to the target consumer, their lifestyle (where they live, where they shop, what they read or watch, etc.) and what influences their decision making can be very useful data to ensure the marketing strategy is as effective as possible.
How does marketing influence consumer behaviour
- Bring to the attention of the consumer something that they need or want.
- Some marketing (e.g. an advert for a local wine shop) can direct consumers to where they can buy the product, reducing the effort needed to buy that product. * Marketing will also highlights the selling points of the product (whether that be a luxury status, the fact that the grapes were organically grown or a competitive price) and thus can influence the evaluation of the alternatives available and the final purchase decision.
How is consumer behaviour observed (5)
Includes:
- Watching how consumers move around a shop
- Interacting with consumers (e.g. retail or hospitality staff may build up a profile of the preferences of regular customers),
- Loyalty cards (records of purchases),
- Web analytics (information recorded about what web pages you have visited, how long you spent on the page, etc.).
- Passive factors that can influence consumer behaviour, such as the lighting, music or decor in a shop or restaurant (Academically researched).
