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.
