Market mapping
| Market mapping |
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| See also |
Market mapping is a helpful way to identify areas where competition, product and service decisions are taken. Market maps indicate the distribution and value-added chain between end-users and suppliers of products or services, included within the scope of segmentation project. When creating market maps, account should be taken of the different purchasing mechanisms that exist in a given market, including the role played by 'influencing factors'. It is worth beginning the market map by outlining the different stages that occur at different levels of distribution and the value-added chain between end-users and all suppliers of products or services competing with each of them in a specific market. At the same time, the specific routes through which the products are marketed should be indicated, as not all of them will have to cover all of these stages[1].
Another suitable way to solve the complex problem of market segmentation is to start by making a market map as a precursor to a more detailed analysis of who is buying what. In most cases, if an organisation's products or services pass through the same channels to similar end-users, one complex market map can be drawn up. However, if some products or services pass through completely different channels or reach completely different markets, more than one market map is needed. It is very important that the market map keeps track of products and services along with competitors' products and services all the way to end users, even if this is not directly related to selling to them[2].
6Ps approach in segmentation
Market mapping requires different dimensions of segmentation to be taken into account. One of the approaches is to consider 6Ps[3]:
- products,
- purpose,
- periods,
- places,
- people,
- price.
Each of these aspects can be analysed in turn to define which of them are the main conditions of consumer choice and preference.
The use of market mapping
"Weiss (1994) uses market mapping to highlight various consumer markets in the United States, usually in terms of markets that purchase an item well above or below the U.S. average. He then summarizes the markets"[4].
To make sure that the market map presents a complete picture of the market, it is necessary to take into account, including the following factors[5]:
- contractors or agencies that carry out work on behalf of the final customer and therefore appear to consume the product on their behalf,
- third parties who purchase on behalf of the end user, such as parents on behalf of their children or the company's purchasing departments on behalf of employees,
- purchasing procedures, such as those that can be observed in relations between companies in the markets,
- influencing factors and sources of advice, such as consultants, expert reports and websites set up to provide feedback from users.
Examples of Market mapping
- Business-to-Business (B2B): Most B2B markets are divided into two main stages: the production stage and the distribution stage. At the production stage, the manufacturer produces the product and then distributes it to retailers and distributors. At the distribution stage, the retailers and distributors further distribute the product to the end-users. In order to map out the B2B market, it is important to identify the different players in each stage of the production and distribution process, as well as the channels through which the products are distributed.
- Business-to-Consumer (B2C): The B2C market consists of two stages: the production stage and the retailing stage. At the production stage, the manufacturer produces the product and then distributes it to retailers. At the retailing stage, the retailers then further distribute the product to the end-users. In order to map out the B2C market, it is important to identify the different players in each stage of the production and retailing process, as well as the channels through which the products are distributed.
- Online Marketplaces: Online marketplaces are often used to facilitate the sale of products and services, and are usually divided into two stages: the production stage and the distribution stage. At the production stage, the manufacturer produces the product and then distributes it to online marketplaces. At the distribution stage, the online marketplaces then further distribute the product to the end-users. In order to map out the online marketplace, it is important to identify the different players in each stage of the production and distribution process, as well as the channels through which the products are distributed.
Advantages of Market mapping
Market mapping offers many advantages, including:
- A better understanding of the competitive environment, as all the players in the market are identified, including their respective strengths and weaknesses.
- Increased visibility of the entire value chain, from end-users to suppliers.
- Better strategic decisions based on a comprehensive overview of the market and its players.
- Improved market segmentation, as the different levels of distribution and value-added chains are identified.
- Improved customer targeting, as the different routes through which products are marketed are identified.
- Improved product and service decisions, as the different influencing factors are identified.
- Greater clarity regarding the competitive landscape and the different routes through which products are marketed.
Limitations of Market mapping
Market mapping can be a useful tool in understanding a market, but it is not without its limitations. The following are some of the key limitations of market mapping:
- Market mapping does not provide insights into the motivations, preferences and needs of customers. It is difficult to identify the reasons behind customers’ behaviour or to map out their journey from first contact to purchase.
- Market mapping does not capture the complexity of a market. It does not provide sufficient detail or a complete picture of the competitive landscape or the industry players.
- Market mapping can be difficult to interpret. It can be difficult to understand the relationships between different elements of the market map, and it can be hard to identify which elements are most important.
- Market mapping is not always up-to-date. It can be difficult to keep the map up-to-date as markets evolve and change. This can mean that the insights gained from the map become outdated quickly.
- Segmentation: Segmentation entails breaking down a market into subsets of customers who share common characteristics and needs. It allows companies to better target their products and services, making them more attractive to customers.
- Competitor Analysis: Competitor analysis is the practice of analyzing a company's competitors and their products or services to gain a competitive advantage. It can be used to identify opportunities to differentiate one's own products and services, enabling companies to gain market share and increase their profits.
- Pricing Strategies: Pricing strategies are used by companies to determine how much to charge for their products and services. They involve analyzing market conditions and trends, competitor pricing, and customer preferences in order to determine the most appropriate price that will maximize profits and achieve marketing objectives.
- Marketing Mix: The marketing mix is a set of tools used by companies to plan and execute their marketing strategies. It includes four main elements: product, price, place, and promotion. Companies use these elements to create a comprehensive marketing plan that will help them reach their goals.
In summary, market mapping is a useful tool that can help companies analyze the competitive landscape, identify opportunities, and create effective marketing strategies. Other related approaches include segmentation, competitor analysis, pricing strategies, and the marketing mix. All of these approaches should be taken into account when creating a comprehensive market map.
Footnotes
References
- Albu M. (2010), The Emergency Market Mapping and Analysis Toolkit, Practical Action Publishing
- McDonald M. (2007), Marketing Plans: How to Prepare Them, how to Use Them, Butterworth-Heinemann
- McDonald M., Dunbar I. (2004), Market Segmentation: How to Do It, how to Profit from it , Butterworth-Heinemann
- McDonald M., Keegan W. (2002), Marketing Plans That Work, Butterworth-Heinemann
- Taylor D. (2003), The Brandgym: A Practical Workout for Boosting Brand and Business, John Wiley & Sons
- Weinstein A., Cahill D.J. (2014), Lifestyle Market Segmentation, Routledge
Author: Dominika Kania
