Saturday, July 7, 2007

The Market Definition Challenge

As a marketer one needs to "define" the market for the product or service which he is trying to sell. The way you define the market would decide the remaining marketing variables and the competition which you are facing. And that in turn would decide the various marketing strategies which you would adopt. Define it too broadly and the focus might be lost and too narrowly you might end up losing the next big opportunity in your own market. The seminal article ‘Marketing Myopia” by the marketing guru Theodore Levitt in the 1960's emphasized the importance of moving beyond the product and defining the market on the need it is serving.

A few examples, which would help illustrate the concept. The first one was when M S Banga was heading HLL he insisted on defining the market for soaps as a factor of people taking bath and calculate the market share from there on. So even though the company might have a market leadership position in the soaps markets but if the share were to be calculated on the share in the bathing, it would be much smaller because the market defined itself is bigger. Second was the how Jagdish Kattar looks at the markets for MUL products, he says the potential market is the people traveling on two-wheelers and how can the company make products which would be able to break into that market. In the case of MUL, cheaper auto loans did help it tap into the two wheeler market. Similar attempts to break-into other product categories can be seen chocolate manufactures positioning their product as ‘”Snacks”-Nestle Munch, or as a “Energy Bar” – Cadburys Five star. This increases the product usage opportunities, and the market definition is broadened to include other product categories


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