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IB Syllabus 4.2
IB Syllabus 4.2
The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:
The role of marketing planning (AO2)
Segmentation, targeting (target market) and positioning (position maps) (AO2, AO4)
The difference between niche market and mass market (AO2)
The importance of having a unique selling point/proposition (USP) (AO2)
How organizations can differentiate themselves and their products from competitors (AO3)
In-Class Activities
In-Class Activities
Day 1-2: Niche and Mass Markets, USP, Position Maps
Day 1-2: Niche and Mass Markets, USP, Position Maps
Watch the Volvo commercial below and find evidence of segmentation by:
age
socioeconomic group
geography
Any other segment you can come up with
https://youtu.be/M_GBQhI1LsA?si=svxAe_J0twnAYLUx
Complete Segmentation Table - Dividing the Market Exercise
https://docs.google.com/document/d/1xS3VFuRnU_Pv7dkM_8dTHvPONr05XmhhJx1OtqbO_fs/edit?usp=sharing
IKEA Case Study:
IKEA Case Study:
IKEA is a multinational company, originating in Sweden, that has revolutionised the way in which furniture is sold. Its unique selling points are:
Product. By selling furniture in flat, easily transportable boxes – which means customers have to assemble the furniture themselves – the brand has managed to generate what is now called the ‘IKEA effect’, or the pride a person takes in assembling a piece of furniture themselves.
Price. Selling disassembled furniture in large warehouse-like stores allows for significant cost cutting and, as a result, a more affordable price.
Physical evidence. IKEA stores are laid out in a way that guides the customer through all of the aisles, which becomes an experience. In addition to this, having a mini-playground and restaurant with unique food items makes it easier to make a family day out of the shopping trip.
Question: How has IKEA's unique strategies contributed to its success?
Watch the video below about IKEA’s layout and its marketing and pricing strategies.
https://youtu.be/tkfq__rdoD0?si=UMzaoDNF-SVKb9Yw
Questions:
Using IKEA as an example, explain the importance of having a unique selling point . [2 marks]
Identify two USPs used by IKEA. [2 marks]
Complete Niche vs Mass Market Table
https://docs.google.com/document/d/1xS3VFuRnU_Pv7dkM_8dTHvPONr05XmhhJx1OtqbO_fs/edit?usp=sharing
Student Inquiry
Student Inquiry
Niche and Mass Market:
Identify one item that you think is a mass market product and one that is a niche market product.
For each product:
Target Market: Identify the segment of the population that you think the business has targeted.
Describe Target Market: Identify your own characteristics of this segment that the business has tried to target.
USP
What is the USP of your chosen products in the niche market and mass market?
Explain how this has helped them?
How have they differentiated themselves from their competitors?
Positioning Map:
Choose an industry (eg. smart phones, laptops, TVs, airlines, sports apparel, shoes, cars, restaurants etc)
Think of brands within those industries
Choose two aspects customers care about within that industry (eg. price and quality)
Create a positioning map
Share with a group when finished
Homework
Homework
Read Kognity
Complete Segmentation Table - Dividing the Market Exercise
https://docs.google.com/document/d/1xS3VFuRnU_Pv7dkM_8dTHvPONr05XmhhJx1OtqbO_fs/edit?usp=sharing
Complete Niche vs Mass Market Table
https://docs.google.com/document/d/1xS3VFuRnU_Pv7dkM_8dTHvPONr05XmhhJx1OtqbO_fs/edit?usp=sharing
Option 1: 4.2 IBDB Google Slides
Complete all practice questions in the slides as well
Option 2: 4.2 Case Study Questions
Complete all practice questions except for the 10 mark questions
What you should know
By the end of this subtopic, you should be able to:
define the following terms: (AO1)
marketing plan
segmentation
targeting
positioning
niche market
mass market
unique selling point
explain the role of marketing planning (AO2)
explain segmentation and targeting (AO2)
explain positioning and construct position maps (AO2, AO4)
distinguish between niche market and mass market (AO2)
explain the importance of having a unique selling point/proposition (USP) (AO2)
discuss and recommend how organisations can differentiate themselves and their products from competitors (AO3)
apply Porter’s Generic Strategies in a given context (HL only) (AO2)
https://quizlet.com/_da6p27?x=1qqt&i=4jrhob
https://www.gimkit.com/view/64623ccdae02ae003210973d
Bargain products
Goods or services that are those perceived by customers to be of high quality but sold at a low price.
Consumer profiles
The demographic and psychographic characteristics of consumers in different market segments.
Demographic segmentation
The process of splitting consumers according to statistical characteristics of the population, such as age, gender, family size, religion, and ethnicity.
Differentiation
The process of distinguishing an organization’s products from those of other firms in the same industry.
Economy brands
Goods or services that are perceived by customers to be of low quality and sold at a low price.
Geographic segmentation
The marketing process that involves characterising consumers according to their different geographical locations.
Market
A market is the collective term for the buyers and sellers of a particular good or service.
Market segment
A distinct group of customers with similar characteristics, tastes, and preferences.
Market segmentation
The process of dividing a market for a product into smaller or distinct groups of customers in an effort to meet their specific desired needs and wants.
Marketing mix
The key elements of a marketing strategy to ensure its success in meeting the needs and wants of the organization’s customers and the firm’s marketing objectives.
Marketing objectives
These are the goals or targets that help to give marketing teams (or marketing departments) a sense of purpose and direction.
Marketing plan
A document that shows the marketing objectives and marketing strategy of a particular business. A document that outlines a company's entire marketing process.
Marketing planning
The structured process of formulating marketing objectives and appropriate marketing strategies to achieve these goals.
Marketing strategies
The different long-term actions used by an organization to achieve its marketing goals.
Mass markets
A marketing approach that focuses on supplying to wide-ranging groups of customers in a market, without having split them into separate market segments, such as the markets for bottled water or breakfast cereal.
Niche markets
Marketing approach that focuses on supplying highly specialised products to cater for a small and select target market.
Objective
An objective is a target or goal a business organization strives to achieve.
Premium products
Goods or services that are perceived by customers to be of high quality and high price.
Product differentiation
Refers to the process by which firms attempt to make their goods and services different from those provided by other firms in the market in order to increase their own sales revenue.
Product position map
Also known as a perception map, this is a graphical illustration of customer perceptions of a business, its products, and/or brands in comparison to other firms in the industry.
Psychographic segmentation
Segmentation that involves characterising consumers according to people’s lifestyle choices and personal values.
Socio-economic segmentation
The process of splitting the market according to consumer or household income levels. This is often linked to their type of profession and/or their level of educational attainment.
Target market
The group of customers that an organization focuses on selling its products to.
Targeting
Targeting is the marketing practice of creating and using an appropriate marketing mix and marketing strategies to cater for different market segments.
Unique selling point (USP)
An exclusive feature or aspect of a business, its products or brands that makes it distinct from others in the same industry.
Competitive advantage
refers to any factor that enables a business to be more appealing to customers, such as having a unique selling point, or being able to produce goods or services better or cheaply than its rivals.
Cost leadership
is a generic strategy that aims to establish a competitive advantage by achieving the lowest operational costs in the market for a particular good or service in a broad market.
Differentiation
is a generic strategy that involves a firm making its products distinct from those of its competitors, such as through quality, functionality, packaging, or branding, in a broad/mass market.
Cost Focus
is a generic strategy that involves concentrating on being a low cost producer (cost focus) for a niche market
Differentiation focus
is a generic strategy that involves differentiation within a particular segment.
Porter's Generic strategies
is Michael Porter's model that outlines the various ways that any business of any size and operating in any industry can gain a competitive advantage, through cost leadership, differentiation, or focus.
4.2 Additional Notes
4.2 Additional Notes
The role of marketing planning (AO2)
The role of marketing planning (AO2)
Marketing planning is the process of deciding on marketing objectives and marketing strategies.
Once marketing objectives and strategies are decided, they need to be recorded in a document that could act as a guide to decision-making. This document is called a marketing plan.
Includes:
Marketing Objectives
Marketing Mix / Marketing Strategies (7 Ps)
Market Research methods
Segmentation and Targeting methods (target market)
Positioning
Market Budget
Indicators of Success (Control tools / How do you know if your marketing plan was successful?)
Marketing Planning Cycle
Segmentation, targeting (target market) and positioning (position maps) (AO2, AO4)
Segmentation, targeting (target market) and positioning (position maps) (AO2, AO4)
Segmentation
Segmentation involves splitting a population into groups of people with similar needs or characteristics
1) Demographic: a particular group of a population (example: Age, Religion, Occupation, Ethnicity, Gender, Socio-economic group, etc)
High school students in Vancouver
Young mothers
Real estate developers
2) Geographic: a location
Country: Canada
City: Vancouver
3) Psychographic
Lifestyle Choices, Hobbies, Interests
Personal Values
Segmentation Advantages
identify gaps and opportunities in markets
design suitable products for specific groups in order to increase sales and profits
reduce the waste of resources
diversify and spread risks targeting different consumer segments
Targeting (Target Market)
Targeting refers to selecting the most appropriate segment for a marketing campaign.
specific age group, or a group with a particular set of tastes
Can also be a larger group of individuals, especially when mass market products such as milk or crisps are marketed.
The segment will be much smaller for more exclusive or niche markets such as high-end fashion.
The main types of targeting:
Unidfferentiated (mass targeting)
Undifferentiated (mass) targeting is basically not targeted at all, it’s pretty much covers all human beings.
Examples: Coca-Cola, Pepsi, Kleenex could be examples of firms using undifferentiated targeting.
Differentiated (segmented targeting)
Differentiated (segmented) targeting selects a few segments and targets them differently. Examples: Nike, Dior, Toyota.
Their products might also be pretty much for everyone but different group of customers have to be approached differently.
If Dior wants to sell male perfume and female perfume, it is very much likely to approach these two target markets differently, whereas for Coke (that is non-targeted), gender (or anything else) doesn’t matter that much…
Concentrated (niche) targeting
Concentrated (niche) targeting is aimed at a very specific and narrow group of customers/consumers/users.
Billabong targets surfers
Burton targets snowboard riders
Lewwinski.com targets IB DP Business Management students
Product Position Maps
Product Position Maps
A product position map (sometimes referred to as a perception map) is a graphical illustration of customer perception of a business, its products or brands in comparison to other firms in the industry.
The contrast is based on two pre-determined criteria, such as price and quality.
It shows the perception of customers by positioning the organization, product or brand relative to the positions of rivals in the same market.
Product Position Map
Premium products (high price, high quality),
Cowboy products (high price, low quality),
Economy products (low price, low quality),
Bargain products (low price, high quality)
Car Brand Positioning Map
Chocolate Brand Positioning Map
Restaurant Positioning Map
Cola Brand Positioning Map
Fast Food Positioning Map
The difference between niche market and mass market (AO2)
The difference between niche market and mass market (AO2)
Niche Market
A niche market is a small part of a larger market
Customers for niche markets have very specialised needs or wants that are different from the larger market.
Will often use below the line promotion to directly market to their target market
Examples include
Billabong that targets surfers
Lewwinski.com that targets IB DP BM students
Yves Saint-Laurent that targets people (mostly women) interested in upscale fashion and cosmetics
dietary products – such as wheat-free bread – within the larger food market
specialist clothing store that only stocks clothing for very tall people.
luxury goods within the larger clothing market
niche sports, such as wakeboarding or horse riding
equipment designed for people who are left-handed (such as left-handed golf clubs)
local shops that have a close relationship with their customers
Mass Market
A mass market is a market for goods that are produced in very large quantities.
Because of economies of scale, products sold in mass markets are less expensive than in niche markets, and the same marketing mix is used to target all consumers.
Target markets are likely to be large and may even include an entire population.
If companies are successful, mass-market products can lead to incredibly high quantities of sales.
However, the attractiveness and size of these markets mean that competition is intense, which can lead to price competition and low profit margins.
Often use above the line promotion like television or sponsor global sporting events (Olympics, FIFA)
Examples
Coca Cola
Kleenex
Pepsi
Colgate toothpaste
Nescafé coffee
Pantene shampoo
Lay’s crisps
Dove soap
Oreo cookies
Tide detergent
Niche Markets within the IB DP Programme
Asian Arts
Astronomy
Brazilian Social Studies
Drama
Electronics
Fijian Studies
Food Science & Technology
Human Right
Marine Science
Nature of Science
Turkey in the 20th Century
World Arts & Cultures
World Religions
More Niche Market Examples
Bee’s Wrap - This firm provides plastic-free alternative to food storage and packaging, catering for those who prefer vegan, eco-friendly and cruelty-free products.
Glorious PC Gaming Race - This company has become a multi-million dollar business by offering high-quality and customizable products to computer gamers.
Jacamo - This business, launched in 2007, targets men with a larger and taller physique who struggle to find well-fitting clothes in mainstream clothes retailers such as H&M, Uniqlo, and Zara.
Lefty's - With around 10% to 12% of the planet's population being left-handed, Lefty's in San Francisco, USA, sells products specifically for this niche market, such as left-handed pens and cutlery.
Nomatic - This business produces suitcases and backpacks specifically to those who do note have an office or desk but need to bring their work with them, such as freelancers, contractors, or digital nomads.
Peace Collective - This company started in Toronto, Canada, by offering various types of clothing products that appealed only to Torontonians, such as fans of certain clubs and shows. It has since expanded to other Canadian cities, but still maintain its focus on "locals".
Untuckit - As its name suggests, this business started by creating shirts for men who like to wear them untucked - at the perfect length for casual and office wear. It now cater for women too.
Niche and Mass Marketing Advantages and Disadvantages
The importance of having a unique selling point/proposition (USP) (AO2)
The importance of having a unique selling point/proposition (USP) (AO2)
Unique Selling Point (USP)
Differentiation: the process of using the USP in such a way that customers perceive the product or organisation as unique and different from those that are offered by competitors.
A unique selling point (USP) is the feature that marks a product or brand out from its competition.
Without a USP, there is little reason for a customer to select one company’s brand over that of a competitor.
The best USPs are those that add value to the consumer and are difficult to copy.
A company’s USP can come from any part of its marketing mix (price, product, place, promotion, process, people, physical evidence)
Any feature or any strategy that can be used to help a product/organisation be special compared to competitors refers to USP and differentiation accordingly.
Advantages of differentiation
Differentiation enables businesses to charge higher prices due to the distinctive features or aspects of the products they are selling.
Differentiation creates brand awareness and can help to create customer loyalty.
Successful differentiation improves product placement (distribution channels) as more distributors (such as wholesalers and retailers) choose to sell the product.
It adds value to a good or service, creating better value for money from the perspective of customers. This can help a business to increase sales and establish customer loyalty.
It can help to hinder or prevent new entrants in the market, thereby maintaining the business’s market share as customers remain loyal to their preferred brands.
Ultimately, successful differentiation creates competitive advantages for a business, such as market leadership and dominance. Hence, successful differentiation can give the firm strategic advantages.
Disadvantages of differentiation
Differentiation, especially the ability to create a unique selling point, can be highly expensive. Furthermore, differentiation strategies are often easily copied by rivals businesses (see task below).
Similarly, it is cheaper for firms to make mass-produced goods for mass market, rather than to cater for specialised (differentiated) niche markets. This is because businesses can benefit from economies of scale from mass production, but are less likely to be able to gain cost-saving benefits by using a differentiation strategy.
Differentiation can create unnecessary or wasteful competition, such as excessive packaging and marketing clutter (such as spam advertising).
As differentiation can prevent new entrants from succeeding in the market, it can be anti-competitive. This limits the choice and price competition for customers in the market.
How organizations can differentiate themselves and their products from competitors (AO3)
How organizations can differentiate themselves and their products from competitors (AO3)
A company can differentiate it's product in some of the following ways
Example Pizza:
product differentiation
Hand made pizzas with the freshest ingredients
price differentiation
Only $0.99!
promotion differentiation
Buy one get one free
place (distribution) differentiation,
Delivering a pizza within 30 minutes or it's free
processes differentiation
We have delivery!
people differentiation
We're a family owned pizza place with the nicest Italian staff in town
physical evidence differentiation
The decor is fancy enough to take your first date
Differentation Examples (Product, Price, Place, Promotion)
Product – There are lots of ways that businesses use to differentiate their products, e.g. creating innovative products (such as Apple products), adding new special features (such as used by car manufacturers), or focusing on quality (such as Tiffany & Co. jewellery).
Price – Different pricing strategies can be used to appeal to different market segments and target markets. For example, cinemas and restaurants often charge lower prices on Tuesdays and other off-peak periods. Some businesses choose to use very low prices as part of their differentiation strategy (e.g., supermarkets such as Walmart and low-budget airlines such as Ryanair) or a high-price strategy (such as Porsche cars and Ray-Ban sunglasses).
Place – Businesses can broaden their distribution channels to attract more customers, such as Coca-Cola’s vast placement strategy (how many places can you think of where Coca-Cola is sold?) Increasingly, businesses are using the Internet as a distribution channel to promote and sell their products.
Promotion – Differentiating products by using intellectual property rights such as logos, trademarks, slogans, and brands. Businesses can also use packaging to make their products stand out, such as the McDonald's Happy Meal box.
4.2 Powerpoints
4.2 Powerpoints
4.2 Cases 2024 IB Biz.pdfCase Study 1: Airbnb
Case Study 1: Airbnb
Airbnb is a business providing a web-based platform that enables owners of apartments and houses to rent their properties out per day, per week or per month. The business was started by two friends, who began by renting out air mattresses in their apartment in San Francisco as a way of offering bed and breakfast accommodation. The founders soon saw a gap in the temporary accommodation market. The gap was the ability to rent a larger living space for a shorter period of time, at a reasonable price.
The friends then built their own platform and, in 2020, Airbnb became a publicly held company valued at 47 billion USD. Most of the rentals were initially located in urban areas and targeted ‘tech-savvy’ young travellers. By targeting this small market segment, Airbnb was able to carve out its own niche early on.
Over time, Airbnb expanded to many other countries. The business now serves urban and rural markets, from campsites for budget travellers to villas for more wealthy customers. Thus, Airbnb is segmenting the market to serve different groups of consumers by geography and income. The platform essentially serves many different niches at once.
In 2017, Airbnb attempted to expand its services to people with disabilities. The company purchased a travel startup for people with special mobility and access needs. The Airbnb story is one of seeing opportunity in underutilised existing living space. It is now one of the key businesses in the sharing economy.
Questions
Explain how Airbnb’s market could be characterised as a niche market. [2 marks]
Identify two ways in which Airbnb is now segmenting the rental market. [2 marks]
ANSWERS
Question 1
A niche market is a small part of a larger market, which usually has specialised needs or wants that are different from the larger market. Airbnb’s early market could be characterised as a niche market, as the company initially targeted young, tech-savvy, budget-conscious travellers who were looking for short-term rentals in mostly urban areas. This group was a niche market. In addition, the case study mentions the market for people with disabilities, which is also a niche market.
Explain is an AO2 level command term, requiring a detailed account including reasons or causes. Explain why, explain how.
Only one point needs to be made. Other responses are possible and would be rewarded if appropriate.
To achieve full marks, you must always include theory and application to the case study in your responses.
Question 2
Segmentation is the process of dividing a broad market group into various segments (such as age, interests, additional needs or location). Airbnb is currently segmenting the market by income (campsites to villas), by geography (urban and rural areas), and by accessibility (accommodation for individuals with mobility needs).
Identify is an AO1 level command term, requiring students to identify an answer from presented possibilities.
One mark is given for correctly identifying one type of segmentation from the text.
Two marks are given for correctly identifying two types of segmentation from the text.
To achieve full marks, you must always include theory and application to the case study in your responses.
KEA Case Study:
KEA Case Study:
IKEA is a multinational company, originating in Sweden, that has revolutionised the way in which furniture is sold. Its unique selling points are:
Product. By selling furniture in flat, easily transportable boxes – which means customers have to assemble the furniture themselves – the brand has managed to generate what is now called the ‘IKEA effect’, or the pride a person takes in assembling a piece of furniture themselves.
Price. Selling disassembled furniture in large warehouse-like stores allows for significant cost cutting and, as a result, a more affordable price.
Physical evidence. IKEA stores are laid out in a way that guides the customer through all of the aisles, which becomes an experience. In addition to this, having a mini-playground and restaurant with unique food items makes it easier to make a family day out of the shopping trip.
Question: How has IKEA's unique strategies contributed to its success?
Watch the video below about IKEA’s layout and its marketing and pricing strategies.
https://youtu.be/tkfq__rdoD0?si=UMzaoDNF-SVKb9Yw
Questions:
Using IKEA as an example, explain the importance of having a unique selling point . [2 marks]
Identify two USPs used by IKEA. [2 marks]
ANSWER
Question 1
A unique selling point is the feature that marks a product or brand out from its competitors. You should apply your answer to one of the USPs based on product, price or physical evidence listed in the case study above.
Explain is an AO2 level command term, requiring a detailed account including reasons or causes.
One mark is given for a definition of USP and a superficial application.
Two marks are given for a definition of USP and a detailed application to the case study.
To achieve full marks, you must always include theory and application to the case study in your responses to AO2 level questions.
Question 2
Potential answers may relate to pricing, physical evidence of store layout, product presentation and packaging, reference to the assembly of products or the ability to test out beds.
Identify is an AO1 level command term, requiring you to provide an answer from a number of possibilities.
One mark is given for identifying one USP.
Two marks are given for identifying two USPs.
4.2-niche-vs-mass-markets---true-or-false-quiz.pdf4.2-consumer-profiles-and-target-markets-(nikita-mota).pdfPage updated
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