A Product Market Grid is a marketing strategy tool used in market segmentation and target marketing — which are keys to a successful marketing strategy. (The Ansoff product/ market matrix is a useful strategy tool, but used for a different purpose).
What is Market Segmentation?
Wikipedia defines a market segment as:
A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention.
A market segment is normally determined by one or a combination of consumer factors, including:
- Demographic factors – such as age, gender, religion, income, education
- Geographic factors – country, region, neighborhood
- Psychographic factors – likes, dislikes, values
- Behavioral factors – usage occasions, usage rates
A Target Market is the market segment or market segments a firm chooses as the focus of its marketing efforts for a particular product or product line. A Product Market Grid is a perfect tool to help a firm select the most appropriate target market because it helps you determine:
- Consumption of products by Market Segment
- Sizes of various market segments (if entered into the grid)
- Identify wholes suitable for product development (innovation)
How to Create a Market Segment Using the Product Market Grid.
The first step in creating a successful marketing strategy is identifying demographic, geographic, psychographic, and behavioral factors of the marketplace that might impact product choice – in this case, elements might be: price consciousness, health consciousness, mouth-feel, adults, children, male, female, etc.
Map existing products identifying who the primary market and secondary market is for each (there may also be a tertiary market).
Design marketing strategies based on who the primary consumer is for each product. Separate strategies might also be constructed for the secondary market. For instance, men are the primary consumers for larger sandwiches. The advertising message should reflect this by including other interests men have, such as sports, in advertising this sandwich.
Determine whether some products might have a profitable secondary market. For instance, the drive-through is primarily used by men. Maybe featuring the convenience or safety of not having to take kids out of the car might be used to increase the appeal of this product among women.
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