Targeting and Positioning (AQA A Level Business): Revision Note

Choosing a target market

• A range of factors will determine whether a business chooses to target a particular market

Factors affecting the choice of target market

• The level and nature of demand

  • Firms review trends to see if demand is rising, flat or falling

  • E.g. The surge in vegan eating pushed Greggs to launch its Vegan Sausage Roll, meeting strong unmet demand

• The intensity of existing competition

  • Fierce rivalry can limit the amount of shelf space in popular stores available for a business to launch a product

  • E.g. Innocent moved into lightly‑sparkling fruit water because large soft drinks brands were focused on cola and energy drinks, leaving this niche open

• Company resources and capabilities

  • A target segment must match the business’s skills, technology and budget

  • E.g. Dyson sells its products to technology enthusiasts and spends significant amounts on R&D to develop high‑tech, premium‑prices products, rather than bargain ranges

• Accessibility and profit potential

  • Cheap digital adverts let firms talk directly to specific groups

  • E.g. Gymshark reaches social‑media fitness fans worldwide, turning a niche into a high‑margin customer base

Niche and mass markets

• A niche market is a narrowly‑defined part of a bigger market whose customers have specialised needs

  • e.g. gluten‑free bakery products for coeliacs

• The mass market is the broadest part of a market, where a product appeals to most people, most of the time

  • e.g. Kellogg’s Cornflakes for the average breakfast eater

Characteristics of niche and mass markets

Why target a niche?

Advantages

• Less direct rivalry, as big firms may ignore small segments, giving a small brand room to breathe

• Price power, as customers value a product that perfectly fits their needs and will often pay more

• Loyal customer base as buyers feel understood, which lifts repeat sales and word‑of‑mouth

Disadvantages

• Limited potential to grow revenue as, once the niche is saturated, new sales may be difficult to achieve

• High unit costs as specialised inputs and short production runs push costs up

• Vulnerability to mass‑market copies as their scale advantage can squeeze smaller brands out

Why target the mass market?

Advantages

• Huge sales volume – even a small profit per item multiplies into a large overall profit

• Economies of scale – bulk buying materials and components and the use of automated production lines cut unit costs sharply

• Brand visibility – national advertising campaigns that target many customers spreads risk across millions of potential buyers

Disadvantages

• Fierce competition – rivals battle on price and promotion, so profit margins may be limited

• Heavy marketing spend – TV, sponsorships and global campaigns cost millions, increasing business costs

• One‑size‑fits‑all risk – shifting consumer tastes can leave a mass product looking bland or dated

Positioning

• Once a target market is selected, a business needs to consider how it will use its marketing mix to position its product

Market mapping

• A market map is a technique managers can use to determine how the product will be perceived by customers

  • Two key product characteristics form the basis to plot the product and its main rivals

Example market map for chocolate brands

• In this example, the key characteristics of price and quality have been used to plot a business's main rivals in the chocolate market

• If there are no spaces left on the market map, it indicates that the market is saturated

  • This means that there are no opportunities to exploit a market niche in the market

  • Competition is likely to be high and profits low 

• The existence of a space on the market map may indicate the existence of a market niche

  • This needs to be researched carefully before the business commits

    • In the above example, it looks like there is a gap in the market in high price/low quality area in the map above

    • However, this gap does not represent a worthwhile market, as the business would find it difficult to build and maintain a loyal customer base

The  uses and limitations of market mapping

Influences on the positioning of a product

• The choice of positioning depends on a range of key influences

  • What the business does best

  • How the positioning fits with the business's existing products

  • The resources it can use

  • How rivals might react

  • Economic circumstances

Factors affecting the choice of positioning