Marketing topic 4 - the market Flashcards
Market definition
The market is a group of people or organisations that need a certain product or service, want or may want to buy it and they have the capacity to satisfy that desire
Capacity in marketing definition
With capacity we are not referring only to their purchasing capacity (money) but to the fact that they do not have any serious inconvenience that hinders their power to acquire or enjoy that product or service (time, psychological issues etc)
As the concept of market is too abstract what are the qualifications you can limit it with?
- Product use (potato, travel etc)
- Consumer characteristics
- physical or geographic
- Type of competition
- Types of customers
- Type of exchange relationship
Latent market definition
Part of the market that we do not reach but we may be interested in getting there. In that case we analyse the barriers that prevent us from reaching
General market definition
It is the market in which we operate in
Potential market definition
The part of the market that contains the customers that we want, and that interests us
Is the market homogeneous
No not all clients want the same thing, they all have different interests
Segmentation definition
Identify and characterise subgroups of consumers within the market with their own characteristics, needs and expectations
Why segment?
- Helps us to identify market gaps
- Helps us to analyse and detect where the real competition is
- Helps us to detect dissatisfied customers
- Helps us to select profitable audiences and set priorities
For good segmentation what do the groups have to be like?
They have to be easily identifiable measurable and accessible
The same market can be segmented in several different ways
- General criteria (they are independent of the product or service. They serve to divide any population, whether or not it is a market)
- Specific criteria (They only make sense when they refer to a certain product)
- Objective criteria (they are the simplest to measure, they do not give rise to misunderstandings and that is why they are the most used)
- Subjective criteria (They are the most difficult to quantify, but the most relevant when segmenting in many cases)
What must segmentation variables do?
Segmentation variables must be able to establish differences between different individuals.
Objective criteria example
General = Geographic - country & Demographic - sex, age
Specific = behaviour - frequency of purchase
Subjective criteria example
General criteria = personality (ambitious, introverted) & Lifestyle (liberal, healthy)
Specific criteria = Sensitivity to market & attitudes
How do companies respond to this segmented market?
Once the different market segments have been determined, the company can choose between different types of basic segmentation strategies
- Undifferentiated strategy
- Differentiated strategy
- Concentrated strategy
Undifferentiated strategy definition
It means ignoring the existence of different market segments. The company addresses all of them with the same strategy (product, price, distribution etc)
Advantages: Cost advantages
Disadvantages: The needs of all consumers are not adequately met
Differentiated strategy definition
Differentiated strategy offers products adapted to he needs of each of the different target segments, also using commercial instruments differently (product, price, distribution and/or communication)
Advantages: Increases total market demand (needs are better satisfied and more effective marketing is achieved)
Disadvantages: The coast are very high as economies of scale are reduced
Concentrated strategy Definition
The company concentrates on one or a few segments in which it can have some competitive advantage (in quality, price, distribution)
Advantages: Possibility of being profitable with a reduced market share. Possibility of finding fewer competitors
Disadvantages: The supply is not diversified (weakening demand, changes in preference and entry of new competitors)
Personalised strategy definition
To target a part of part of the customers or all of them with a personalised commercial offer
Advantages: You serve your client in a unique way
Disadvantages: it can be expensive
Example is Netlix
Evolution of market segmentation from least to most diversified
- Mass marketing
- Segment marketing
- Micromarketing
- One to one marketing
Levels of segmentation
- Segment (of the total market it is the largest group in which we can place potential clients)
- Niche (It is just a part of the segment, a specific group within the segment)
- Cell (Even smaller than niche markets. It is a powerful point within the focus)
Example of the evolution of the relationship between companies and the market
- Segment (consumers of dietary products)
- Niche (Consumers of dietary products for health)
- Market cells (consumers of dietary products for health/diabetes)
Counter-segmentation definition
The company may reconsider the convenience of targeting some market segments that are no longer profitable.
Counter-segmentation is done by:
- Abandonment of production of some models
- Regrouping segments into larger ones and identifying their common needs
Use: in times of crisis
