Understanding Markets

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Presentation transcript:

Understanding Markets AS Business Studies

Aims and Objectives Aim: Understand market segments and market mapping. 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 be used by businesses?

Marketing Challenge Identify groups of customers who have similar needs and wants. Find a way of offering (positioning) a product which is attractive to those customer groups.

Market Segmentation

Market Segments Market Segments Part of a market that contains a group of buyers with similar buying habits. The way a business segments its market depends on the product being sold and the customer.

Stand in your market segment. Market Segments Age Gender Geographical Area Ethnicity Religious Groups Socio Economic Group Activity: Stand in your market segment.

Market Segments

Market Segments Why would a business want to split their market into segments? A business would want to split their market into segments, so that they can target their specific customers more easily to make sales and profit.

Price Sensitivity Price Sensitivity: When the price is very important in the decision about whether or not to buy a product/service.

Price Sensitivity Product Original Price New Price I Would Still Buy. I Would Not Buy 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 Innocent Smoothie £4.20 Football Boots £39.99 Computer Game £49.99 £58.99

Examples of Segments - Holidays

EV: Limits of Market Segmentation Lack of information and data: some markets are poorly researched with little info on what customers want. Difficulty in measuring and predicting consumer behaviour: humans don’t all behave in the same way all of the time. Hard to reach customer segments once identified: can be difficult to target customer with effective marketing message.

Market Mapping The market map illustrates the range of ‘positions’ that a product can take in a market based on two dimensions that are 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 the Market: Occurs when no business is currently serving the needs of customers for a particular product. Gap in the Market

Extension Task: Identify where there are any gaps in your market. Your Own Market Map Create Your Own Market Map for one of the following markets or one of your choice: Chocolate Bars Fashion Sportswear Make-Up Cars Computers Mobile Phones Restaurants High Quality Low Price High Price Extension Task: Identify where there are any gaps in your market. Low Quality

Market Mapping Analysis Advantages Disadvantages Helps spot gaps in the market. Useful for analysing competitors. Encourages use of market research. Just because there is a gap in the market doesn’t mean there is demand. Not a guarantee of success.

EV: Limits of Market Mapping What does the success of market mapping depend on? The quality of the research and data. The opinions of entrepreneur, due to subjective nature. The skills of the entrepreneur in exploiting the gap in the market.