Summary Marketing Chapter 6
6.1 Defining the market.
A market is often identified by type of customers = groups of people or organisations with needs and
wants that companies can satisfy by providing products and services.
Companies selling products that satisfy the same needs are operating in the same market area.
Some companies: generic need satisfaction (=very general, e.g. relax and leisure movies/disco’s
Just because someone needs something, doesn’t mean he has the interest, purchasing power or
willingness to buy the product.
Effective demand: total number of products currently sold.
+
Potential demand: number of products over and above current sales that suppliers could sell
between them, assuming they have developed the optimal marketing mix
=
Market potential
With durable consumer goods (like a television), consumers go through a extensive decision-making
process. These marketers are interested in both the level of demand and the structure of demand.
1. The initial demand: Consumers who have never purchased this before.
2. Replacement demand: Consumers who already own, but need to replace a product.
3. Additional demand: Consumers who already own, but buy another one.
Initial demand + additional demand = extended demand
Extended demand + replacement demand = total demand
In order to stimulate the replacement/additional demand: product differentiation (innovation)
6.2 What is market segmentation
Market segmentation: a demand-oriented approach that divides the total market for a product into
smaller subsets of customers having similar needs or behaviour, and then modifying the firm’s
products and marketing strategies to fit the needs and wants of these individual, homogeneous
market segments rather than those of the aggregate market.
6.1 Defining the market.
A market is often identified by type of customers = groups of people or organisations with needs and
wants that companies can satisfy by providing products and services.
Companies selling products that satisfy the same needs are operating in the same market area.
Some companies: generic need satisfaction (=very general, e.g. relax and leisure movies/disco’s
Just because someone needs something, doesn’t mean he has the interest, purchasing power or
willingness to buy the product.
Effective demand: total number of products currently sold.
+
Potential demand: number of products over and above current sales that suppliers could sell
between them, assuming they have developed the optimal marketing mix
=
Market potential
With durable consumer goods (like a television), consumers go through a extensive decision-making
process. These marketers are interested in both the level of demand and the structure of demand.
1. The initial demand: Consumers who have never purchased this before.
2. Replacement demand: Consumers who already own, but need to replace a product.
3. Additional demand: Consumers who already own, but buy another one.
Initial demand + additional demand = extended demand
Extended demand + replacement demand = total demand
In order to stimulate the replacement/additional demand: product differentiation (innovation)
6.2 What is market segmentation
Market segmentation: a demand-oriented approach that divides the total market for a product into
smaller subsets of customers having similar needs or behaviour, and then modifying the firm’s
products and marketing strategies to fit the needs and wants of these individual, homogeneous
market segments rather than those of the aggregate market.
