Market Analysis - CHAPTER THREE ANALYZING YOUR MARKET...

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CHAPTER THREE ANALYZING YOUR MARKET & CUSTOMERS by Kenneth N. Thompson Associate Professor of Marketing University of North Texas College of Business Administration Denton, Texas Draft Not to be reproduced or quoted without the author’s explicit consent.
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IMPORTANCE OF THE MARKET & CUSTOMER ANALYSIS WHAT IS IN THE MARKET & CUSTOMER ANALYSIS? Checksheet 2.x Major Questions for the Market & Customer Analysis 4 How is the overall market for the product or service structured? 4 Which parts of this overall market constitutes your relevant market? 4 What are the demand characteristics for the basic product category defined by the relevant market? What factors determine the level of demand? 4 What are the demand characteristics for individual brands or products/servicesof individual suppliers within the product category? What factors determine the level of demand? 4 Can the relevant market be further segmented? If so, which segment(s) offer the greatest opportunity? DEFINING THE SCOPE OF YOUR MARKET Before we can analyze a market or market segment for its potential, we must first define that market. Markets can be very broadly or narrowly defined, based primarily on the set of products or competitors the firm believes are strategically important for its survival. Indeed, how broadly (or narrowly) we define our market determines the size and nature of the firm’s competitive set. There Are Different “Levels” of Markets Figure 2.x diagrams the different levels of markets that largely reflect how broadly (or narrowly) a market can be defined. The different levels of market are a function of the similarity in characteristics, functions, usage situations, or needs served for products in each category.
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Figure 2.x. Levels of Market Generic Market Product Class Market Product Form Market Branded Market Degree of Similarity In Characteristics & Function Degree of Similarity In Needs Filled Generic Markets. The broadest markets are “generic markets.” These markets are served of different product classes, which are very divergent product categories in terms of physical characteristics and function, yet these product classes still fill the same “generic” need. For example, the generic need “fitness” can be filled by some very divergent product classes such as health clubs, home fitness equipment, organized sports, and recreational sports, to name but a few. The fitness market is a broadly defined “generic market.” Product Form Markets. Each generic market that is serviced by a product class can be further broken down into “product form markets. Each product form market consists of a series of product forms within the same product class that fill the generic need in a more similar way than did alternate product classes. For example, health clubs as a product class
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consists of multiple types of clubs. There are specialty clubs that possess limited equipment and facilities, and focus their services on specific forms of fitness. For
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