Marketing defined What is a market

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Marketing defined What is a market Powered By Docstoc
By David Leigh

I've been reading Mike Mindel's excellent blog for the 30 Day Challenge and one of the things that
struck me was how he struggled to define a niche market. Now Mike doesn't seem like he's overly
mentally challenged and in fact understanding what a market is - and even what marketing really is
- are concepts that many marketers struggle with too.

Marketing defined
The Chartered Institute of Marketing defines marketing as "the management process responsible for
identifying, anticipating and satisfying customer requirements profitably".
That's quite good, although maybe satisfying customer requirements needs some explanation; it
means fulfilling the specific wants or needs of people.
Fulfilling wants is better because it is things people want to buy and will save if necessary; if you're
fulfilling needs those same people may be looking for the cheapest option.
Let me give you an example of this. Say a couple want to visit Barcelona and they don't have
enough money to spash on luxury travel; they will pay what it takes to visit the museums, take the
tour bus, eat out, drink, go and watch the football - those are wants. But what about hotel and
flights? They don't necessarily want to fly to Barcelona; rather, they want to be in Barcelona
therefore need to fly there and so look for a good deal on Easyjet or Ryanair.

What is a market?
Okay, so I've defined what I think marketing is, but what about defining a market?
Part of the confusion is because different people mean different things when they talk about a
market. On the news for example you'll hear about the mobile phone market or the housing market.
But those aren't markets as understood by a marketer.
Remember the definition of marketing given above? Well from this we can conclude that a market
can be defined as a group of people with the same wants or needs. Sp when we talk about the
mobile phone market in this context, we mean people who want to buy a mobile phone or mobile
phone accessory.
This is where you can get into market segmentation; for example some segments could be:
1. People who want a mobile phone because they like to be able to keep in contact because it makes
them feel secure
2. People who want to buy the iPhone because it's Apple and it makes them feel cool
3. People who want to buy the iPhone because they'll benefit from its unique features.
4. People who want to buy a Nokia because it's reliable, safe and small.
Notice something above; the wants or needs of different market segments may be fulfilled with the
same product. And in fact, although segments 2 and 3 have different requirements, you may also
find that there is also a large overlap between them too; it doesn't matter that some people will
respond to marketing aimed at the iPhone as being cool and they'll respond to the benefits too, they
are still different segments.
Industrial marketing
Now you'll notice that I've talked about people, and as we all know companies buy things too. But
what you have got to remember is that those purchase decisions aren't made by "the company"; they
are made by people too. The problem is that there are different inputs into the decision making
process which make it harder to identify the segments.
Those inputs may not be dissimilar if the need being fulfilled is the purchase of a widget making
machine and the customer knows what throughput and other factors are needed. If there is one
supplier of a widget making machine with that throughput then it's a done deal.
However, if a company wants to buy a single model of mobile phone for its staff, various
departments may be involved in reaching a decision; the head of sales wants his staff to have
something that is reliable and knows that travelling around size can be a factor and wants a Nokia;
the head of marketing wants the coolest thing on the market and so wants the iPhone although he'll
try and justify it in some other way; the head of IT also wants the iPhone because he likes it's nerdy
chic but can justify it also because of its video capabilities; and the head of finance doesn't care as
long as it is cheap.
A lot of inputs into the decision there, there is no single message to market here, which makes it
more difficult; don't worry about this though as we're not really concerned with marketing to
decision making groups.

An explanation of niche markets
A niche market is simply a market segment that is too small to be viable to a big company. It is
often characterised by specialist knowledge and uses its own terminology; an example of this could
be collectors of Star Wars trading cards or to express it another way people who want to collect
Star Wars trading cards - I don't know if this is a true niche market as I know nothing about it, but
it seems like it should be; too few people involved for a big company to go after profitably, but with
a tightly defined want.
So, what do people who want to collect Star Wars trading cards search for on Google do you think?
Lets try "Star Wars trading cards" in the Wordtracker GTrends tool:
Yep, that seems to confirm that it is a niche market that we can reach using our phrase. With 22,100
competing web pages there is not too much competition, although it would be better if there were
more that 45 searches a day. The question now comes; can we find an affiliate product and will they
For those you'd better head back to the 30 Day Challenge or Mike Mindel's blog. And sorry if I've
revealed anyone's niche market.

Is there a difference between a niche and a niche market?
Now that's a good question and one that Mike tried to answer. My answer is yes. And no.
Remember at the beginning of this post when I was saying that different people use market to
mean different things? Well it's the same with niche too.
If we talk about the diamond encrusted mobile phone niche we could, as marketers, mean the
diamond encrusted mobile phone market by which we mean the diamond encrusted mobile
phone niche market - it must be pretty small, by which we really mean people who want a
diamond encrusted mobile phone - probably there aren't too many people who actually need one,
although they may express themselves as such :-).
On the other hand we could mean something slightly more abstract, such as when we talk about the
housing market. When the housing market is discussed, usually it's in terms of the market slowing,
or collapsing, or something similar; we're not talking about a market in the way a marketer means
it; people who want or need to buy a house aren't slowing or collapsing, what is happening is that
the number of sales that estate agents are making has collapsed; we're talking about part of the sales
process, rather than the market as we define it.
And it's the same when we talk about a niche - if we say that the diamond encrusted mobile phone
niche is a great one to be in we are talking about it in the same way we are talking about the
housing market; we mean that marketing the product is being profitable for us, rather than any
particular aspect of people who want to own a diamond encrusted mobile phone.
Agree or disagree?
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