Market Analysis Flashcards
Market segmentation
A technique where a market is broken down into smaller sections with similar characteristics.
Types of segmentation
Demographic
Psychographic
Geographic
Demographic (Segmentation)
Age, social class, gender, income.
Psychographic (Segmentation)
Personality and emotionally based behaviour - attitudes, opinions and lifestyles.
Geographic (Segmentation)
Regions of the country - rural, urban, suburban.
What must apply when a business uses market segmentation?
Segments must:
Be recognisable
Have critical mass
Be targetable
Why must segments be recognisable?
They must be different enough from other segments to make producing for that segment worthwhile.
Why must segments have critical mass?
They must be big enough or produce enough sales value to make the production of products or services targeted at the segment worthwhile.
Why must segments be targetable?
Having their own identity means that they can be promoted to, and have marketing directed towards them.
Added value
The difference in value between the price of the finished product and the cost of materials used.
Advantages of market segmentation
Better understanding of customer needs in the segment
Less wasteful of resources when trying to sell the same product to everyone
Helps a business differentiate which may allow a higher level of added value
Disadvantages of market segmentation
Hard to reach customer segments once identified
Customers in the same segment don’t always want the same product
Requires effective and usually expensive market research to establish customer wants and needs
Features of market analysis
Knowing the size of the market
Knowing competitors market shares and strengths and weaknesses
Understanding customer habits, likes, dislikes, loyalty
Understanding attitudes of buyers of rival products towards your product/company
Market size
Measurement of the size of total sales expressed in either sales or volume.
Market share
The proportion of a total market accounted for by one product or company.
