Markets, sub-markets and product-markets examples
To help explain this concept of different markets, let’s look an example relating to the overall education market.
In the diagram below, the overall education market has been into seven different sub-markets.
Each of these sub-markets would have different sizes, operates quite differently, have different profitability and growth measures – yet they still form part of the overall education market.
Players in each sub-market would probably see other organizations within the same sub-market as their direct competitors, and would probably view the organizations in the other sub markets as indirect competitors.
You should note that an individual consumer could easily enter the most of the sub-markets during the course of their educational lifetime. For example, he/she could be a student at a private school and receive tutoring at night, then later that same person could attend university, use online education, attend an adult evening course, and so on.
For an example of how a firm could potentially define its product-market, let’s look at an example for Coca-Cola, as show in the following diagram:
As can be seen in this example, starting with a large generic market (the beverage market), a series of sub-markets can be identified (water, juice, and so on). Then Coca-Cola could further define by major geographic regions. This helps them identify a series of defined product-markets, such as the juice market in South America.
It is then this more defined product-market that is segmented in the STP process – not the overall generic market. As you could imagine, trying to construct market segments for the worldwide beverage market would be impractical, especially for a university assignment.