Market

A set of buyers (consumers) and sellers (businesses) for a broad need e.g. the fast food market, the banking market, the financial market.

Sub Market

A smaller part of an overall market, but with specific operating characteristics.

They can be of differing sizes with distinct distribution channels, varying profitability and growth measures. For example some of the Sub Markets in the overall Retail Market are department stores, discount stores, supermarkets, service retailers and speciality stores.

Companies within each Sub Market would see each other as direct competition and those in other Sub Markets as indirect competition.

Product Market

A company will identify and map out which products they want to offer in their chosen sub markets. For example, in the overall beverage market, there is soft drinks, water, juice, energy drinks, sports drinks and so on.

Market Segmentation

Segmentation is a concept that emerged in the late 1950’s and is still practiced in marketing today. It does not have a simple or accepted definition but this one by Geoff Frip, Sydney Marketing Professor sums it up really well:

“A market segmentation is the process of splitting a market into smaller groups with similar product needs or identifiable characteristic, for the purpose of selecting appropriate target markets”

Segmentation Base

The factors used to define the way an overall market can be divided into individual Market Segments. These include descriptions of the consumer (B2C) or business (B2B) such as purchase behaviours, goals, lifestyle. The main factors that can be used are:

For B2C:

• Geographic (location)
• Demographic (population characteristics)
• Psychographic (lifestyle, interests, opinions)
• Behavioral (relationship with product) and;
• Benefits sought (such as convenience, status, value)

For B2B:

• Geographic (location)
• Description (size, revenue, industry)
• Operating practices (behaviour, decision making, purchase strategy)
• Culture/personality (leader, follower, environmentally conscious);
• Organisational goals (growth, brand equity, market leader)
• Benefits sought (same products, different uses)

Market Segments

We can extract what they are from the explanation for market Segmentation:

“A smaller group with similar product needs or identifiable characteristic.”

There can be many Market Segments to a market. Examples for the banking market are small business, government departments, large corporations, home owners, insurance companies.

Target Market

Once a business has segmented it’s market into Market Segments (many), it would chose the segments (fewer) to pursue – its Target Market(s).

A new or small business would probably concentrate on only one because of limited resources. Some large companies may have as many as thirty.

Defining and understanding a Target Market allows a business to improve its unique positioning by moving from a mass marketing approach to a more focused and defined approach that serves these valuable customers more.

Buyer Persona

This is a detailed description of someone that sits within your Target Market. They are your idea and most valuable customer.

You can hypothesize about them but to gain insights on their motivations, challenges, problems or the things that would delight them, you need to interview to them.

A well-defined Buyer Persona helps you to innovate your offering and marketing content to address their top priority needs or wants.

STP Model

A core marketing methodology, that demonstrates the link between an overall Market and how a business chooses to compete in that Market. It stands for:

• Segmentation (of an overall Market into smaller Sub-Markets)
• Targeting (selecting target markets i.e. most valuable group of customers leading to Buyer Persona) and;
• Positioning (of brand/products for Sub Market and development of Marketing Mix)

Marketing Mix
(the 4 P’s)

A set of actions, or tactics a business uses to promote its brand or product. The most common are Price, Product, Promotion and Place but there are other ones used today such as Packaging, Positioning, People and even Politics.

The eCourse does not cover each one specifically as it is about defining your Brand Foundations but it does touch on product and promotion. Here is a brief description of the main 4 P’s:

Price – The value put on a product. Many factors affect this such as supply and demand and cost of production. Pricing can be used to differentiate and enhance a products image

Product – The item or service being sold, which must perform at a minimum level that a Target Market expects. Without a great product the other three P’s are useless.

Place – The point of sale to catch attention and make it easy for someone to buy. The aim is to create a good distribution strategy. For example, a retail store would need to think very carefully about where to locate.

Promotion – All activities that make the product known to the consumer or business. This can include advertising, trade shows, contests, word-of-mouth, social media engagement, PR, promotions on website landing pages, product demonstrations… etc

For these elements to work together well, there needs to be a lot of understanding in terms of market research, consultation with users, manufacturers and trade. If handled right, they can bring marked success to a business.

Marketing Mix
(SAVE)

The 4 P’s have been used in marketing for many years to help differentiate an offering in a particular offering. In 2013 Harvard Business Review magazine published an article on the SAVE framework which is a shift from the traditional 4 P’s marketing model.

The SAVE framework takes into account that people today have far more say in the business to customer relationship. It’s designed to help you adopt a more “customer needs” focus and shifts the emphasis from the 4 P’s model.

Instead of Product, focus on Solution.
Define offerings by the needs they meet, not by their features, functions, or technological superiority.

Instead of Place, focus on Access.
Your content should be accessible where your prospects/customers hang out.

Instead of Price, focus on Value.
Articulate the benefits relative to price, rather than stressing how price relates to production costs, profit margins, or competitor’s prices.

Instead of Promotion, focus on Education.
Provide information relevant to customers’ specific needs at each point in the purchase cycle, rather than relying on advertising, PR

For more background reading on the SAVE Framework check out Helpscout.

B2B

Business to Business – marketing products/services to businesses for use within it’s operation or for resale to other consumers such as a wholesaler to a retailer.

B2C

Business to Consumer – marketing products/services to individuals for their own personal use or consumption.

Direct Competition

A business that produces virtually identical goods or services offered within the same market as those produced by one or more other companies.

Indirect Competition

Competition among suppliers of different types of products, to satisfy the same needs. For example, a pizza shop competes indirectly with a fried chicken shop, but directly with another pizza shop.

Undifferentiated Marketing

A strategy used mainly by large corporations, for markets, where the product is a commodity. This approach does not take into account the needs of different segments in the market.

Concentrated Marketing

Adopted by small businesses starting out or those with limited capabilities or skills. The offering is concentrated on the needs of one well-defined Target Market.

Differentiated Marketing

Ideal for businesses wishing to grow, or those wishing to protect market share. Used when there is a separate and distinct sets of needs of two or more Market Segments.

Niche Marketing

Competing in a narrowly defined Market Segment with a specialised offering. A ‘big fish in a small pond’ scenario. Competitive advantage comes from expertise and high market share (of a relatively small Market Segment). It is a fairly rare strategy. Most small businesses have a small share of a large Market Segment.

Market Research

The process used for collecting, analysing and interpreting information from various sources to make informed business decisions related to their customer offering and future prosperity.