TOPIC 4 – MARKET IDENTIFICATION AND ANALYSIS
INTRODUCTION
This section includes the discussion of types of markets, knowledge of markets,
awareness, market opportunities and analysis, and market segmentation.
Specific Learning Outcomes:
At the end of the chapter the students would be able to:
Discuss types of markets
Explain knowledge of markets, awareness, market opportunities and analysis
Explain market segmentation
MOTIVATION
Take a look at the picture. What can you say about the operation depicted on this
photograph.
CONCEPTS
TYPES OF MARKETS
1. Physical Markets – is set up where buyers can physically meet the sellers and purchase
the desired merchandise from them in exchange of money, for example shopping malls,
department stores, retail stores
2. Non Physical Markets/ Virtual Markets – buyers purchase goods and services through
internet
3. Auction Market – the seller sell his goods to one who is the highest bidder
4. Market for Intermediate goods – such markets sell raw materials (goods) required for
the final production of other goods
5. Black market – a setup where illegal goods like drugs and weapons are sold
6. Knowledge Market – a setup which deals in the exchange of information and knowledge
based products
7. Financial Market – dealing with the exchange of liquid assets or money
Types of Financial Market
Stock Market – sellers and buyers exchange shares
Bond Market – buyers and sellers are engaged in the exchanged of debt securities
usually in the form of bonds
Foreign exchange market – parties are involved in trading of currency, one party
exchanges one country’s currency with equivalent quantity of another currency
Predictive markets – is a setup where exchange of good or service takes place for
future, when the market goes up and is at a loss when the market crashes
Market size is directly proportional to two factors: number of sellers and buyers and total
money involved annually.
KNOWLEDGE OF MARKET
Cravens in 1994 mentioned that consumers nowadays have limitless choices of spending
their money on a varied range of products and services. These choices are possible due to
global competition, rapid change, and needs and wants of consumers. To be successful, a
small business must pay attention to their market. With this, they can oversee the shifting
of customers, evaluate the change in competitive position, and recognize opportunities for
new products and services.
For a small business to have a complete knowledge of their market, it is essential for them
to perform a market analysis which:
Identify business opportunities
Evaluate existing and potential competition
Guide the choice of who they should target
Indicate the customer requirements that will be satisfied by their marketing position
strategy
AWARENESS
understand the factors affecting market complexity because these factors can
explain why markets change
anticipate market change and competitive threats
mapping or diagraming of your market help you conceptualize and understand
every aspect of your market
market change because of the following reasons:
o the shifts in customers’ needs
o new technologies
o socioeconomic forces
o competitive action
MARKET OPPORTUNITY ANALYSIS
Defining product market boundaries and structure – include aspect such as markets,
market size, and composition, and the brand or categories that you will be
competing with
Describing and analyzing end – users – identify and describe the characteristics of
buyers in your consumer market
Industry analysis - develop a descriptive information of the industry and its
members, include in the analysis:
o industry growth and composition
o typical market practices
o industry changes that are anticipated
o industry strengths and weaknesses
Value added system analysis – study on supplier and distribution channels, identify
important patterns and trends in serving end – users, uncover new market
opportunities, and forecast the end – users demands
Analysis of key competitors
o Identify your key competitors, selling same products and services
o Competitors who are selling different products or services that end – users
would choose over your product
o Overall business strengths, trends
o Financial strengths and performance
o Management capabilities
o Technical and operating advantages
Market sizes estimation – know your where your small business stands in the market
o Maximum amount of product sales during a specified period of time
o A sales forecast during a specified time
o Forecast future sales based on market share
MARKET SEGMENTATION
Market segmentation is the process of identifying and analyzing the customers in a product
market with similar characteristics. It allows to match your products or services with buyers’
requirements.
The Three Major Subgroups of Market Characteristics
Demographic Characteristics
o Age
o Sex
o Income
o Education
o Stages in the life cycle
o Social class
o Occupation
o Religion
o Race
Psychological Characteristics
o Personality
o Lifestyle
Geographic Characteristics
o Rural
o Urban, Suburban
o Region
o Climate
o City size
o Population
TIME TO SHINE
Who says your small business needs to stay small?
How businesses identify target markets?
References:
Cravens D. W. (1994). Strategic Marketing. Boston, Massachusettes: Irwin
