Understanding Markets
AS Business Studies
Aims and Objectives
Aim:
•Understand market segments and marketmapping.
Objectives:
•Define market segmentation
•Explain why markets are segmented
•Analyse market mapping
•Evaluate market mapping
Starter
•Define quantitative data
•Define qualitative data
•Give two examples of each
•Which method is better and should beused by businesses?
Marketing Challenge
•Identify groups of customers who havesimilar needs and wants.
•Find a way of offering (positioning) a productwhich is attractive to those customer groups.
Market Segmentation
Market Segments
Market Segments
•Part of a market that contains a group ofbuyers with similar buying habits.
•The way a business segments its marketdepends on the product being sold and thecustomer.
•Age
•Gender
•Geographical Area
•Ethnicity
•Religious Groups
•Socio Economic Group
Activity:
Stand in yourmarketsegment.
Activity:
Stand in yourmarketsegment.
Market Segments
Market Segments
•Why would a business want to split theirmarket into segments?
A business would want to split their marketinto segments, so that they can target theirspecific customers more easily to make salesand profit.
Market Segments
Price Sensitivity
Price Sensitivity:
•When the price is very important in thedecision about whether or not to buy aproduct/service.
Price Sensitivity
Product
Original Price
New Price
I Would StillBuy.
I Would NotBuy Anymore.
Big Mac
£2.49
£3.49
T Shirt
£14.99
£18.99
Bottle of Water
£0.99
£2.99
Jeans
£34.99
£72.99
iPad
£399.99
£549.99
Bag
£29.99
£25.99
InnocentSmoothie
£2.49
£4.20
Football Boots
£34.99
£39.99
Computer Game
£49.99
£58.99
Examples of Segments - Holidays
•Lack of information and data: some markets arepoorly researched with little info on whatcustomers want.
•Difficulty in measuring and predicting consumerbehaviour: humans don’t all behave in the sameway all of the time.
•Hard to reach customer segments onceidentified: can be difficult to target customerwith effective marketing message.
EV: Limits of Market Segmentation
Market Mapping
The market map illustrates therange of ‘positions’ that aproduct can take in a marketbased on two dimensions thatare important to customers.
Possible Dimensions
Low Price
High Price
Basic Quality
High Quality
Low Volume
High Volume
Necessity
Luxury
Light
Heavy
Simple
Complex
Low-tech
Healthy
Unhealthy
Hi-tech
Market Map of Chocolate
Gap in theMarket
Gap in the Market:
Occurs when no business is currentlyserving the needs of customers for aparticular product.
Your OwnMarket Map
High Quality
Low Quality
Low Price
High Price
Create Your Own Market Map for oneof the following markets or one ofyour choice:
1.Chocolate Bars
2.Fashion
3.Sportswear
4.Make-Up
5.Cars
6.Computers
7.Mobile Phones
8.Restaurants
Extension Task: Identify where there areany gaps in your market.
Market Mapping Analysis
Advantages
Advantages
•Helps spot gaps in themarket.
•Useful for analysingcompetitors.
•Encourages use ofmarket research.
Disadvantages
Disadvantages
•Just because there is agap in the marketdoesn’t mean there isdemand.
•Not a guarantee ofsuccess.
•What does the success of market mappingdepend on?
–The quality of the research and data.
–The opinions of entrepreneur, due tosubjective nature.
–The skills of the entrepreneur in exploiting thegap in the market.
EV: Limits of Market Mapping