A market is an industry made up of customers and competitors that a business wishes to operate in and target its products and services towards and compete in. For example, Cineworld operates in the cinema market and competes with Odeon and Vue.
Remember for the exam:
Target Customers
Businesses will try to segment the market they compete in, this means dividing it up into different demographic groups, and finding their target customers. This allows the business to target its marketing efforts toward groups who have similar interests or tastes.
Below is a list of different demographics that businesses may wish to target their marketing and products towards. By focusing on a specific group, businesses are less likely to waste resources targeting people that will be difficult to convert into customers.
 | Location is where a person lives. This could be a country (UK), or a more specific region (London). Businesses will need to consider different regional tastes, for example, McDonald’s doesn’t serve beef in India as nearly half of Indians are vegetarian. |
 | Lifestyle is grouping people by how they live, e.g. participation in sports and leisure to their views on the environment, taste in music and even things such as a passion for trains. |
 | Income is how much people earn. Businesses may target people with higher income who have more disposable income with Luxury or high-quality items. In contrast, people with a lower disposable income may be targeted for budget or essential items. |
 | Age is a common demographic to segment markets with products that are targeted at different age groups. For example, Zimmer frames and commodes will be targeted to those over 70s whereas fidget toys for under 10s. What age group do you think plays the most video games? 16–24, 25–45 or 45–65?
16–24 23%, 25–45 44%, 45–65 33%
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 | Gender-segmented products may include toiletries and clothes. |
 | Race-segmented products may include cosmetics and music. |
 | Religion segmented products may include food, books and entertainment. |
Competitive Environment
The competitive environment is the way businesses compete using a range of methods outlined below:
 | Competitors’ prices – businesses will be vulnerable to other businesses’ prices in the same industry. If a competitor is charging less for exactly the same Product, this will lead to customers choosing the competitor’s business over yours. This will lead to the business’s sales revenue decreasing. This is why it is important for a business to add value if they wish to charge more. This could be through having a USP or better quality product. |
 | Competitors’ Quality – High-quality products can fetch a higher selling Price per unit sold, this is likely to increase the amount of sales revenue a business receives if they sell the same quantity. Therefore, when competing in a market, it stands to reason that the highest quality product will sell more, however, taking into account supply and demand, it is important to remember that sales decrease as price increases. Businesses will calculate the Break-even point, take into account the pricing strategies they wish to use and with Market research, conduct a supply and demand analysis. The business can then make a decision based on all the available information to calculate the best quality-to-profit ratio. |
 | Competitors’ Range of Products – Would you go to a store that only offered one type of bread, milk, and beans? Due to online shopping and eCommerce, customers are becoming more and more used to having a large range of products available. In order to properly compete, a business will need to ensure that its product range matches that of its competitors. Even Aldi and Lidl which came to success with just essential items now offer ‘Finest’ and ‘The Best’ product ranges and even some branded items too to help them compete with the likes of the big supermarkets. |
Demand
Demand refers to the amount of want for a product. A product with high demand will sell lots of products, whereas a product with low demand will find it difficult to achieve the same amount of sales and will have to invest heavier in marketing tactics to accomplish similar sales.
Did you know that life insurance is an undesirable product and is renowned for being incredibly hard to sell? This is because people don’t like to talk about their own death and it also doesn’t give customers a feel-good feeling when making a purchase. Life insurance salespeople are known for using emotional marketing and known for their heavy use of call centres.
 | Product trends refer to the constant changing and evolving tastes of customers. With the advent of the internet, short-term and viral trends have become more and more popular. For example, Little moons sales rocketed due to a TikTok trend that went viral and caused a short-term rapid rise in sales. If a business is quick to jump onto emerging trends, it has the possibility to be very lucrative. However, if a business is unresponsive, it could be left with surplus (extra) stock. |
 | It is important that a business researches if there is actually a demand for its products or services. For example, if customers are unwilling to pay a set price for a certain product, it is unlikely to succeed and the business will have to go back and adapt aspects of the Marketing mix to make it successful. Also, it is important to consider if a market is growing or shrinking. A business operating in a growing market will find it easier to capture new customers entering the market. However, a shrinking or stagnant market (staying the same) means that the business will have to use more resources to market and acquire customers from competitors which may be more difficult to change their existing purchasing habits. |
