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5/24/14 Market Definition

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Marketing > Market Definition
Market Definition
In marketing, the term market refers to the group of consumers or organizations
that is interested in the product, has the resources to purchase the product, and is
permitted by law and other regulations to acquire the product. The market definition
begins with the total population and progressively narrows as shown in the following
diagram.
Market Definition
Conceptual Diagram
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5/24/14 Market Definition
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Beginning with the total population, various terms are used to describe the market
based on the level of narrowing:
Total population
Potential market - those in the total population who have interest in
acquiring the product.
Available market - those in the potential market who have enough money to
buy the product.
Qualified available market - those in the available market who legally are
permitted to buy the product.
Target market - the segment of the qualified available market that the firm
has decided to serve (the served market).
Penetrated market - those in the target market who have purchased the
product.
In the above listing, "product" refers to both physical products and services.
The size of the market is not necessarily fixed. For example, the size of the available
market for a product can be increased by decreasing the product's price, and the
size of the qualified available market can be increased through changes in legislation
that result in fewer restrictions on who can buy the product.
Defining the market is the first step in analyzing it. Since the market is likely to be
composed of consumers whose needs differ, market segmentation is useful in order
to better understand those needs and to select the groups within the market that
the firm will serve.
Marketing > Market Definition
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