Market structure, types and segmentation

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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

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