Transcript What is a market?

Explain the concept of
Market and Market
Identification
1.02B
Have We Met?
What is a market?
 The group of all potential
customers who have similar needs
and wants and are willing and able
to buy the product
Target Market
 A group of consumers within a market
that have something in common
 The customers a business desires to
have
Importance of Target Markets
 Accurate marketing—everyone belongs to a
number of markets
 Consumers AND businesses are targeted
 Consumers in the consumer market
 Businesses in the industrial market
 Markets change so categories need to be updated
 Consumer Market—consumers who purchase
items for personal use
 Ex: Stan buys a computer to pay bills on-line at
home
 Industrial Market—businesses that buy
products to use in their own business---AKA
business-to-business market (B2B)
 Ex: CPAs Are Us buys a computer to process client
tax returns
Two ways to Reach Markets
Mass Marketing
Designing and marketing products to reach
the WHOLE market
 For example: Light Bulbs
 Advantages:
 Reaches the largest possible audience
 Cost-effective
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Can price and distribute one type of product
One promotional campaign
Mass Marketing
(con’t)
 Disadvantages:
 Diverse audience—everyone—’the masses’
 Only small percentage of the whole will purchase
Market segmentation
Narrowing markets, by identifying very specific
characteristics, into a more specific group of
people.
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For example: Aquatic Pet Stores offers aquarium
maintenance and leasing to physician’s offices
Advantages:
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More precise than mass marketing
Meets specific wants and needs
More effective communication
Efficient way for smaller firms to compete with
larger companies
Market segmentation
(con’t)
 Disadvantages:
 Requires more resources than mass marketing
 The more complex the product the more difficult
to produce
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Requires creativity
Requires more money
Why Segment?
 More efficient in the long run
 Customers are discerning with product purchases;
they want specific features that will benefit them
directly
 Educated customers are not influenced by mass
marketing tactics
 Communication can be segment specific
Market Segmentation
 4 common ways to segment a market:
 Demographic
 Geographic
 Psychographic
 Behavioral
Demographic segmentation is…
 Dividing the market based on personal
characteristics such as age, gender,
income, ethnic background, education,
occupation, marital status etc.
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For example, Teen Vogue is marketed to
females between the ages of 12 and 17
Demographic
Characteristics
1. GENDER
1. FEMALE
2. ORIGIN/HERITAGE
2. CHINESE
3. RELIGION
3. HINDU
4. SOCIO-ECONOMIC
4. MIDDLE CLASS
STATUS
5. MID5. LIFE STAGE
6. OCCUPATION
TWENTIES
6. GEISHA
Geographic Segmentation
 Dividing a market based on where
a person lives (local, regional,
state, national, or global markets).
 For example, swimwear and body
boards sell best…
Psychographic Segmentation
 Dividing the market based on values
(ethics, morals, standards), attitudes
(personality), and lifestyles (how
people spend their time--hobbies)
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For example: Schwinn Bicycle Company
should advertise their new line of bikes
in “Cyclist” magazine
Behavioral Segmentation
 Dividing the market into groups based on
what they are looking for in a product
and why they buy the product—based on
response of customers
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Crest toothpaste products—Crest Whitening
toothpaste for people who want to brighten their
teeth, regular Crest for people who want cavity
protection, Crest with Scope for people who wants
really fresh breath
Buying flowers and candy around St. Valentine’s Day