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Download 4. Market Profile Instructions
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2.3 MARKET PROFILE You’ve described the product in detail, now describe the market in detail Learning Objectives • Students must… • Understand that businesses focus their marketing effort by clearly identifying their target market and by segmenting the market, e.g. aiming the marketing of a new model skateboard to teenage boys (and not girls or older men and women) • Students should… • Explain the process of market segmentation as one of identifying the “dimensions” of a market (e.g. demographic dimensions, geographic dimensions, and behavioural dimensions) that are most likely to be influenced by the product and marketing effort • Students could… • Put a monetary dimension to the size of a market by estimating its total population, percentage of population likely to buy the product, the amount they could buy, and the price Target Marketing and Market Segmentation • Target marketing involves identifying a specific group of consumers or businesses who will purchase a product, and directing the marketing effort towards this group, e.g. young males for computer games • Market segmentation is the process of dividing a market into distinct groups of consumers, such as by gender, age or income, e.g. banks often target first year university students as new customers • A market segment is a group of consumers who are likely to react in a similar way to the marketing effort (marketing mix), e.g. young women shopping for business clothing want high quality clothing at a low price Market Dimensions • Markets are divided into three dimensions: • Demographic dimension • Age (young adults) • Ethnicity (Italian) • Education (high school, university, graduate) • Family size, class, income, family type and occupation • Geographic dimension • City, city size, urban, rural • Country, region, state • Behavioural dimensions • Rate using the product • Frequency of purchasing the product • Loyalty to the product • Type of shopper Dimensions define the target market • A clothing store may target 18 to 24 year old female university students living in the UK who are familiar with UK brands and are regular purchasers. • Auto repair shops may survey car owners in their trading area to find the make, model and year of their vehicles and offer specials that might appeal to the needs of the vehicle owners. • A bank may offer free services to customers over 60 years of age because their income from employment is smaller in retirement than when younger Niche Marketing • USA says “nitch” as in itch • French, others, say “knee shh” (French word for corner) • Niche markets are small, well defined markets that exist within a larger undifferentiated markets and which can be a target market for a business, e.g. niche markets include delicatessens, specialty food stores, auto parts stores, stringed musical instrument stores - each serving a small group of consumers by offering specialized products. • Niche markets can be highly profitable because the business can obtain higher prices, such as by providing expert advice for which consumers will pay more Try it – define the market segment for… • (Market segments are defined by demographic, behavioural and geographic market dimensions) • Jewelry – high income, specialty shoppers, living in cities • Costume jewelry (fake jewels) – low income, impulsive, everywhere • New homes - • University education – • Continuing education courses • Blood sugar measuring equipment • Frozen pizzas • IKEA furniture • Sports Utility Vehicles (SUV) • Travel vacations • Toys Write 2.3 Marketing Profile section of the Marketing Plan • Describe the market for your product using demographic, geographic and behavioural marketing dimensions • To extend this activity and learn more try to include an estimation of the size of the market for your product in your trading area (Dubai/Sharjah) by using the population of the region (including expatriate workers), the proportion of the population who might purchase your product, the frequency they might purchase, the amount they might purchase and the price of the good! • The population of the UAE is around 8 million people. Extension activity (going for an “A”) • Calculating the size of the market for skateboards in the UAE • Estimates: UAE Population (8 million), half are male (0.5 x population), boys 10 to 20 years old are consumers of skateboards • If population of males are assumed to be equally distributed over an average 80 year life span, then [8 million x 0.5 men] ÷ 80 years = 50 000 males are in each of 80 age groups (from 1 to 80 years old) • The number of boys between 10 and 20 years old is about [50 000 boys per age group x 10 age groups = 500 000 boys] • If boys buy two skateboards in their life in the UAE then the number of skateboard sales are [500 000 boys x 2 skateboards per boy = 1 000 000 skateboards] • If skateboards cost an average of 300 Dirhams, the initial size of the skateboard market in the UAE can be estimated to be [1 million x 300 Dhs] = 300 million Dhs • Each year, 50 000 old boys leave and 50 000 new boys enter the market