Markets Flashcards
What are Markets?
A market is where buyers and sellers: • meet to exchange goods and services • usually in exchange for money
The market may be in one specific place or
not exist physically at all
• Market research helps to understand markets.
Identification of a product or market niche
•What is a niche?
•A business targets a smaller segment of a larger market, where customers have specific needs and wants
•A higher price can often be charged
•There must be a full understanding of the desires and needs of the niche
•Niche businesses can be experts in their product / service and have a strong understanding of their target customer
Mass Marketing
• Meeting the needs of a large number of customers - targeting the majority of the market
• Usually involves high volumes of production and higher capacity levels.
• Unrealistic for start-up businesses
Not all markets are physical
A virtual/electronic market
Markets can exist:
• over telephone lines • online
• in emails
As long as what happens involves buyers and sellers in a business transaction
The Market
•Do we target everyone?
•How do we work out which customers in the market are interested in our product/service?
Targeting and segmentation
•How does a business define and profile its customers?
•Within any market, different segments exist
•A market segment is a group of people with similar needs and wants
•Market research data analysis allows a business to do this
What does segmentation enable a business to do?
•When a business understands these segments within its market, it can
identify which segment(s) it wants to target
•i.e. Those customers who are most likely to purchase – aiming to meet and satisfy their needs…right product, right price etc…….and the needs of the business e.g. profit
Consumer Markets can be segmented in a number of ways
Geographic – location of your customer. E.g. split nationally or regionally, urban or rural, climate – North or South
Psychographic – lifestyle or beliefs. E.g. personality, attitude, interests, hobbies, ambition. Are your customers concerned about the environment? Are they materialistic? Are they sporty/outgoing etc
Segmentation continued…
Socio-cultural – class (may also include income, education etc) E.g. A = upper middle class, E = lowest level of subsistence. Based on your profession therefore linked to income
Social groups
Group and Description
A- Higher managerial, administrative or professional e.g. surgeon or company director
B- Intermediate managerial, administrative or professional e.g. teachers, solicitors
C1- Skilled non-manual e.g. sales assistants, shop floor supervisors
C2- Skilled manual e.g. electrician, plumber
D- Semi skilled e.g. assembly line workers, cleaners
E- Unskilled, pensioners and unemployed
Segmentation continued…
•Demographic – Age, sex, marital status, stage in the family cycle. E.g. a toy a 3 year old will play with will be very different to a 13 year old.
Why segment?
•Better understand the needs of the market.
•Makes it easier to meet the needs of target audience – more specific.
•Less wasteful – difficult to please everyone.
•Enables differentiation.
Why not?
•May be difficult to segment for a new experienced entrepreneur.
•It’s a lot of guess work – not everyone in the segment will want the same things.
•May not be needed in an already small market. •Could alienate potential customers.
Niche market
A niche market is a smaller segment of a larger market, characterised by consumers with similar needs and wants.
