Marketing topic 4 - the market

Question 1

Market definition

Answer 1

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

Question 2

Capacity in marketing definition

Answer 2

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)

Question 3

As the concept of market is too abstract what are the qualifications you can limit it with?

Answer 3

1. Product use (potato, travel etc)
2. Consumer characteristics
3. physical or geographic
4. Type of competition
5. Types of customers
6. Type of exchange relationship

Question 4

Latent market definition

Answer 4

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

Question 5

General market definition

Answer 5

It is the market in which we operate in

Question 6

Potential market definition

Answer 6

The part of the market that contains the customers that we want, and that interests us

Question 7

Is the market homogeneous

Answer 7

No not all clients want the same thing, they all have different interests

Question 8

Segmentation definition

Answer 8

Identify and characterise subgroups of consumers within the market with their own characteristics, needs and expectations

Question 9

Why segment?

Answer 9

• 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

Question 10

For good segmentation what do the groups have to be like?

Answer 10

They have to be easily identifiable measurable and accessible

Question 11

The same market can be segmented in several different ways

Answer 11

1. General criteria (they are independent of the product or service. They serve to divide any population, whether or not it is a market)
2. Specific criteria (They only make sense when they refer to a certain product)
3. Objective criteria (they are the simplest to measure, they do not give rise to misunderstandings and that is why they are the most used)
4. Subjective criteria (They are the most difficult to quantify, but the most relevant when segmenting in many cases)

Question 12

What must segmentation variables do?

Answer 12

Segmentation variables must be able to establish differences between different individuals.

Question 13

Objective criteria example

Answer 13

General = Geographic - country & Demographic - sex, age
Specific = behaviour - frequency of purchase

Question 14

Subjective criteria example

Answer 14

General criteria = personality (ambitious, introverted) & Lifestyle (liberal, healthy)
Specific criteria = Sensitivity to market & attitudes

Question 15

How do companies respond to this segmented market?

Answer 15

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

Question 16

Undifferentiated strategy definition

Answer 16

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

Question 17

Differentiated strategy definition

Answer 17

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

Question 18

Concentrated strategy Definition

Answer 18

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)

Question 19

Personalised strategy definition

Answer 19

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

Question 20

Evolution of market segmentation from least to most diversified

Answer 20

1. Mass marketing
2. Segment marketing
3. Micromarketing
4. One to one marketing

Question 21

Levels of segmentation

Answer 21

1. Segment (of the total market it is the largest group in which we can place potential clients)
2. Niche (It is just a part of the segment, a specific group within the segment)
3. Cell (Even smaller than niche markets. It is a powerful point within the focus)

Question 22

Example of the evolution of the relationship between companies and the market

Answer 22

1. Segment (consumers of dietary products)
2. Niche (Consumers of dietary products for health)
3. Market cells (consumers of dietary products for health/diabetes)

Question 23

Counter-segmentation definition

Answer 23

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