Quick Study Notes
- Consists of many buyers and sellers, within a particular industry or product category, who are seeking to create or gain value through the exchange of products for money.
- A smaller and more defined sector of an overall market, which has a number of differing marketing and structural features, which may include distinct distribution channels, price elasticity, competitive sets, and effective promotional methods.
- The firm’s definition of which products and markets they will compete in, which is the key market strategy decision of ‘where to compete?’
The firm’s definition of its own market is the first step in the overall segmentation process. And remember, despite the term ‘market segmentation’, it is consumers in the market that are segmented – not markets or sub-markets themselves.
Why define market/s?
• To provide a clear definition of the business
• To aid strategy development
• To help identify market opportunities
• To clearly define direct and indirect competitors
• To focus the organization’s resources
• As a first step in the market segmentation process
Ways to define a market
• By industry classification
• By product category
• By country or major geographic area
• By Yellow Pages directory listings
Examples of sub-markets
- Community colleges
- Private schools
- Religious schools
- Vocational colleges
- Adult education (hobbies and interests)
- Tutoring services
- Online courses
- Training providers
Example of defining a product-market
- Coca-Cola starts with the generic beverage market
- They then identify key sub-markets: example, soft drinks, juice, water, and so on
- For each sub-market, they identify major geographic areas to list major product-markets: example, North America, Europe, Asia, Africa, South America