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'Market'
definition examples
As the correct definition
of the market to be segmented is essential, the following is designed
to help you develop a clearer understanding of the 'customer need' being
segmented. If necessary, you can then refine
the definition to ensure that the scope of your segmentation project is
more meaningful to your company in terms of its capabilities.
Which
of the following is a market definition?
- The pensions market:
No; simply on the grounds that it is describing a product, a product designed to satisfy a need,
and there are other products that can also satisfy this need. Try and
describe what it is most people are attempting to achieve when considering
whether or not to invest in a pension. More often than not, they are
attempting to secure a desired standard of living for when they retire. This can be achieved in a number
of ways; for example, stocks and shares, savings schemes and investing
in property are just a few in addition to pensions that can help achieve
that particular customer goal.
- The conveyance
of individuals over long distances:
Understanding a customer need in these terms would have probably enabled
the major shipping companies of the nineteenth and twentieth centuries to be the
dominant airlines of today, but they preferred to see themselves as
shipping companies. Many of today's airline companies also prefer to
see themselves as 'airlines', but how many passengers would switch to
the teleporter if, and when, it ever came into being? Beam me up Scotty!
A market definition? Yes or No?
- The ball bearings
market:
Another product description. If you were to ask customers what they
were looking for and attempted to capture it by completing the sentence
'the customer need is to . . . . . ' the sentence could well be completed
by adding, '. . . support rotation'. Ball bearings are therefore competing
against other products and technologies that also support rotation,
such as magnetic levitation. Rather than the manufacturers thinking about improving their
ball bearings, it would be better for them to think
about how to improve methods of supporting rotation, because it is this
particular functionality that customers are seeking to achieve from their
purchase.
- To communicate
verbally, remotely and in real time with anyone I choose:
Yes or No? It may benefit from adding 'whenever I choose'.
- Portable sources
of energy for powering equipment:
Yes or No? It could be improved by refining it as there are clear differences
between a consumer market and an industrial market, not only in the
energy capacity being sought but also in the appropriate distribution
channels.
- The luxury chocolate
market:
Yes or No? Probably better thought of as the 'treat' market for some purchasing motivations, which is
attractively insensitive to price!
Now try it for your
own business and arrive at a market definition. It could well be that
your company in fact operates in a number of markets. It may also be the
case that some of your products compete in more than one market.
Further help in defining
the market to be segmented can be found in Chapter 4 of Market
Segmentation - How to do it, how to profit from it (2004 edition published by Elsevier Butterworth-Heinemann, ISBN 0 7506 5981 5).
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