A market is any venue where buyers and sellers can interact, whether physically like in a shopping mall, or virtually like on amazon.co.uk. Different markets exhibit different characteristics and are affected differently by various factors. For instance, a change in regulatory policies might affect a pharmaceutical market differently than a clothing market. Marketing aims to identify, anticipate, and satisfy consumer needs and wants profitably. Needs are essential requirements such as food or shelter, whereas wants are desires for non-essential items, like a pair of Nike trainers. Understanding the difference between needs and wants is crucial for effective market segmentation and targeting.
Market research is a vital tool for businesses to understand and respond to consumer needs and wants. It involves systematically gathering data from consumers to guide business decisions. For instance, market surveys, focus groups, and data analysis are methods employed to understand consumer preferences. By analyzing consumer behavior, businesses can develop products or services that meet consumer demands, ensuring a profitable operation.
| Aspect | Mass Markets | Niche Markets |
|---|---|---|
| Target Audience | Broad market segments | Narrow market segments |
| Scale of Production | Large scale | Small scale |
| Examples | Kellogg's Corn Flakes | Gluten-free products |
| Pricing | Lower prices due to economies of scale | Higher prices due to specialized offerings |
| Profit Margins | Lower profit margins | Higher profit margins |
Mass and niche markets cater to different segments of the population. Mass markets aim at broader segments with large-scale production, leading to lower prices but lower profit margins. Conversely, niche markets target narrow segments, offering specialized products, usually at higher prices but with potentially higher profit margins.
Market size can be measured through sales volume or sales value, providing insight into the market's potential. Market share represents a business's portion of the total market sales. For example, if Tesco has a 26% market share in the UK grocery market, it means Tesco's sales constitute 26% of the total grocery sales in the UK.
Brands serve as a distinguishing factor for products or services, often reflected through a name, logo, or image. Branding facilitates product differentiation, enabling businesses to stand out in competitive markets. A strong brand can command higher prices due to perceived quality and consumer trust. For instance, Apple's brand is associated with quality, innovation, and prestige, allowing it to price its products premiumly.
Dynamic markets are characterized by rapid or continuous changes driven by various factors like technological advancements, consumer preferences, or competitive actions. For example, the mobile phone market is highly dynamic due to continuous technological innovations. Businesses need to adapt to these changes to remain competitive and sustainable.