THE CONCEPT OF A MARKET
The term market has more than one
meaning:
(a)
A market is a place where people gather to transact business mainly to sell and
buy commodities and other physical goods.
(b)
It can be used in respect of the network of institutions like wholesalers and
brokers dealing in a product.
(c)
It can also be used to refer to the nature of demand for the product, as when
we speak of the market for soap.
(d)
A market can be referred to as people with needs and wants, with enough
disposable income to spend on goods and services provided to satisfy their
special needs and wants and the willingness to expend their income on these
goods and services.
(e)
Stanton (1981:65) defines a market as people with needs to satisfy, money to
spend and willingness to spend it.
4.1 Market Segmentation
Market segments refer to the sub-classes
of the market reflecting sub-classes of wants and the process of conceptually
distinguishing segments is known as ‘Market Segmentation’. A market segment
consists of a large identifiable group within a market. Stanton (1981) defines
market segmentation as the process of dividing the total, heterogeneous market
for a product into several sub-markets or segments, each of which tends to be
homogeneous in all significant aspects. Akanbi (2002) defines it as the process
of dividing the consumers in a given economy into target markets.
4.1.1 Bases for Segmenting Consumer Markets
There is no single way to segment a
market. A marketer has to try different segmentation variables, alone and in
combination, to find the best way to view the market structure. Here, we
examine major variables.
i.
Geographical Segmentation:
Geographical segmentation calls for dividing the market into different
geographical units such as nations, states, regions, countries, cities or
neighborhoods. A company may decide to operate in one or a few geographical
areas, or to operate in all areas but pay attention to geographical differences
in needs and wants.
ii.
Demographic Segmentation:
This consists of dividing the market into groups based on variables such as
age, gender, family size, family life cycle, income, occupation, education,
religion, race and nationality. Demographic factors are the most popular bases
for segmenting customer groups. One reason is that consumer needs, wants, and
usage rates often vary closely with demographic variables.
iii.
Age and life cycle stage:
Consumer needs and wants change with age. Some companies, for example, use age
and life cycle segmentation, offering different products or using different
marketing approaches for different age and life cycle groups.
iv.
Psychographic Segmentation:
This involves dividing buyers into different groups based on social class, life
styles or personality characteristics. People in the same demographic group can
have very different psychographic make-ups such as:
(a)
Social Class – Many companies design products or services for specific social
classes, building in features that appeal to these classes. Wristwatches,
clothing, etc. are good examples of this.
(b)
Lifestyle – People’s interest in various goods is affected by their lifestyles
and the goods they buy express those lifestyles. Examples of this are films,
books, magazines, etc.
(c)
Personality – Marketers also use personality variables to segment markets,
giving their products personalities that correspond to consumer personalities.
Successful market segmentation strategies based on personality have been used
for products such as cosmetics, cigarettes, insurance and liquor.
v.
Behavioural Segmentation:
This involves dividing buyers into groups based on their knowledge, attitudes,
uses, or responses to a product. Many marketers believe that behavioural
variables are the best starting point for building market segments.
a)
Occasions – Buyers can be grouped according to
occasions when they get the idea to buy, actually make their purchase, or use
the purchased item.
b)
Benefits Sought – A powerful form of segmentation is to
group buyers according to the different benefits that they seek from the
product. Benefit segmentation requires finding the major benefits people look
for in the product class, and the kinds of people who look for each benefit.
c)
User Status – Markets can be segmented into groups of
non-users, ex-users, potential users, first-time users, and regular users of a
product. Note, potential and regular users may require different kinds of
marketing appeals.
d)
Usage Rate – Markets can also be segmented into
light, medium, and heavy user groups. Industrial products are easily classified
under this, such as: salt, starch, sugar, cement, roofing sheets, etc.
e)
Attitude Towards Product – People in a market can be
enthusiastic, positive, indifferent, negative or hostile about a product.
These are variables of behavioural
segmentation.
Comments
Post a Comment