market mapping

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3. Market mapping

 

Analysing the customer

A problem that faces any startup or small business is that customers are not all the same!

Think about how you behave as a customer. The things that you want from your mobile phone or night out are likely to be different from those wanted by someone of a different age, with other interests and so on.

 

So how does a business address these differences? In short, the challenge for a business is to:

(1) Identify groups of customers who have similar needs and wants

(2) Find a way of offering (positioning) a product which is attractive to those customer groups

 

Markets consist of customers with similar needs. For example, consider the wide variety of markets that exist to meet the need to:

• Eat (e.g. restaurants, fast food)

• Drink (e.g. coffee bars, pubs & clubs)

• Travel (for business and leisure, near or far)

• Socialise (as couples, with family, with friends)

• Be educated (as a child, adult, for work or other reasons)

 

As you can imagine, such markets (if they were not further divided into smaller parts) would be very broad and difficult for a new business to target.

The great news for any new business is that customers in any broad market are not the same. For example, within the market to provide meals, customers differ in the:

• Benefits they want (food quality, ambience, dietary health)

• Amount they are able to or willing to pay (budget, expensive)

• Quantities they buy (bulk buy or one-off purchase)

• Time and place that they buy (fast-food, up-market restaurant)

 

It therefore makes sense for businesses to divide (or “segment”) the overall market and to target specific segments of a market so that they can design and deliver more relevant products. Let’s look at segmentation in some more detail.

 

Segmenting the market

There are several important reasons why businesses should attempt to segment their markets carefully. These are:

 

Better matching of

customer needs

 

Customer needs differ. Creating separate products for each segment makes sense and provides customers with a better solution

Better opportunities

for growth

 

Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product

More effective

promotion

By segmenting markets, target customers can

Comments

davidsalter

A very useful resource for one of the trickier areas of the syllabus. Excellent notes and a useful devise for testing yourself at the end.

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