Market structure, types and segmentation
- Created by: Rubie Hubbard
- Created on: 24-04-18 09:26
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- Market Structure
- There are a variety of differing market structures which are separated by the levels of competition that exist within each market and the market conditions in which the businesses operate.
- Competition increases as the number of businesses in the market increases.
- Perfect Competition
- Large number of businesses competing
- Price takers
- The goods sold are homogenous
- Businesses have equal access to technology
- No barriers to entry or exit
- Monopoly
- A single producer within a market
- Likely to erect barriers to prevent others from entering the market
- Price makers
- Oligopoly
- Many businesses but only a few dominate the market
- Strong brand identity
- Brand loyalty
- Short price wars do occur
- When businesses in an oligopolistic market act together (collude), a cartel is formed
- Monopolistic competition
- Large number of relatively small businesses
- Few barriers to entry
- Products are similar, but differentiated
- Brand identity is relatively weak
- Limited control over price
- Mass Marketing
- This is when a business targets its advertising and promotional spending at the whole market, not at a particular segment.
- Benefit from economies of scale
- Very high start up costs
- Competition can be fierce
- Low cost operations
- Heavy promotion
- Widespread distribution
- Niche Marketing
- Where a business targets a smaller segment of a larger market, where customers have specific needs and wants.
- One or more specific segments of the market are targeted
- Higher price is charged
- Must be a full understanding of the desires and needs of the niche
- Concentrates on their strengths
- Lower start up costs
- Market niches can disappear
- Mass market businesses may target the niche
- Market Segmentation
- A market segment is any subgroup of a larger market
- Mass market businesses divide their target markets into sub groups that have common features or characteristics
- Types of segmentation
- Demographic: age, social class, gender, income
- Psychographic: allows targeting of groups on personality and emotionally based behaviour; attitudes, opinions and lifestyles
- Geographic: regions of the country; global marketing often requires different products for different countries
- What rules must apply to market segmentation?
- Segments must be recognisable
- Segments must have critical mass
- Segments have to be targetable
- Once segments have been identified, businesses can use a segment orientated marketing approach
- Global Markets
- Selling goods or services to overseas markets
- Advantages of global markets
- Higher earnings
- Spreads risks
- Saturation of the home market
- Economies of scale
- Survival
- Trade markets (B2B)
- Trade marketing is the marketing role that focuses on selling and supplying to distributors, retailers, wholesalers etc instead of the consumer
- Trade marketing will include price discounts, promotional support, special offers and point of sale display provisions
- Seasonal Markets
- Businesses in a seasonal market will have a critical sales period
- Lines of stock are adapted and changed
- There are a variety of differing market structures which are separated by the levels of competition that exist within each market and the market conditions in which the businesses operate.
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