A high-end market is a market in which the customers prefer and demand high quality and unique products and are always willing to pay higher to acquire such products. A high-end market is a high end at the general and industry because the customers demand high-quality products and are willing and ready to pay for it. This can be attributed to the general factors such as the level of income, the socioeconomic status, and the inability of new firms to enter the industry. Because of the high level of income, high social class, and increased barriers to entry, the customers can afford to pay for high-quality products. However, various external factors can cause a shift in the high-end market. Changes in the economy where the level of inflation goes high, and income levels reduce can cause a shift in the high-end market because the customers will no longer be able to afford high quality and expensive products (D’arpizio et al. 2015). Changes in the demographic factors such as reduced level of income and socioeconomic status can lead to a shift in the high-end market, forcing the marketers to shift the strategy. At a reduced income, the customers will no longer be able to afford highly priced products forcing the firms to shift towards a low-end market. However, as more firms enter the industry, the competition increases and firms can either shift towards a low end market or produce a unique product but remain at a high end market to cover up for the margins.
A low-end market is that which consists of the lower-priced products that are suitable for the consumers not willing or unable to spend large amounts of money. A low-end market is a low end at the general and industry levels because the consumers are not willing or unable to afford highly priced products due to either their income, socioeconomic status or poor state of the economy. Also, intense rivalry within the industry can make firms to shift towards a low-end market and target low-income customers. The major cause of a shift in the low-end market is the changes in the demographic and economic factors such as the level of income, stable state of the economy and the changes in the socioeconomic status (Agnihotri, 2015). As the income for individuals’ increases, they tend to shift their demand for high-quality products, and this forces the firms to shift from a low-end market towards a high-end market. A low-end market would exist as long as the industry and general environmental factors remain constant. A change in any of these could change the demand or force firms to shift towards a new market segment. For example, intense rivalry and competition within the industry could make firms incur more costs in rebranding the products, and this can force the firm to shift towards a high-end market to meet the profit margin.
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The traditional market segmentation involved firms considering various factors such as the age, the employment situation, the loyalty factors, and the family structure. A traditional market segment is traditional in the general and industry levels because it entails customers who have common characteristics and have a common demand. The marketers in this market consider the 4Ps of marketing while focusing on the traditional market. The price, promotion, product, and place are all considered while getting and focusing on the traditional market segment. Various external factors can, however, lead to a shift in the traditional market. Changes in the demographic factors such as age can lead to a shift from the traditional segment to the modern segment. For example, the rising number of young people as the demographics changes leads to a shift away from the traditional segment as firms focus on making products that meet the needs of the young people. Increased rivalry amongst firms and changes in the loyalty factors also leads to a shift from the traditional segment towards a low-end segment to reach out to more low-income level customers. The ever-changing sociocultural factors and the family structure, as well as the employment status, have all led to a shift away from the traditional market and towards either a low end or high end as firms seek to increase their customer base and maintain a competitive advantage.
Size market segmentation involves a firm focusing on a particular market based on the size of the population and the number of potential buyers who can be targeted by the product. While segmenting and getting into a new market, it has to be large enough to generate the required income. The factors such as the population density, the income distribution amongst the population, and market density, which is the potential customers within the unit land. The success of a firm in a sizeable market also depends on the availability of the substitute products, the ease of entry into the industry and the extent of competition in that industry (McDonald, 2015). A shift in the size market can be caused majorly by the demographic factors such as the changes in the population density and structure, if the population decreases over time due to either reduced birthrate or increased death rate, then the firms could consider shifting towards other markets because the market density would be low to generate the required revenues. Similarly, if the rivalry within the industry is intense and the rate of competition is also high, firms could shift to markets that they deem more profitable. The demand for people can also change due to a change in the sociocultural factors making them seek alternative products, thus forcing firms to change their strategy. Therefore, the behavioral factors of the customers are also necessary while targeting a specific market, whether they are regular, moderate, or light users of the product.
The firms focus on the performance market segment by considering various factors used to determine the ability of a product to perform in a particular market. A performance market segment remains so in the general and industry levels because it has the potential factors for a product to thrive. The key environmental factors that can affect the performance market include changes in the population density, change in the level of income, changes in the sociocultural factors and increased competition (Venter, Wright & Dibb, 2015). When the population density changes, the profitability of that market will reduce, and this force the firms to seek other markets. Also, changes in the income levels and sociocultural factors can make customers shift their demands towards the low end or high-end markets. Increased competition due to free entry into the industry can make a market less profitable and unsustainable for the firms. As more environmental factors change, the effects are usually seen on the market segment by either making the market stronger and lucrative or making it shift towards another segment.
References
D’arpizio, C., Levato, F., Zito, D., & de Montgolfier, J. (2015). Luxury goods worldwide market study. Bain & Company’s report .
Agnihotri, A. (2015). Low-cost innovation in emerging markets. Journal of Strategic Marketing , 23 (5), 399-411.
McDonald, M. (2015). Market segmentation. Wiley Encyclopedia of Management , 1-10.
Venter, P., Wright, A., & Dibb, S. (2015). Performing market segmentation: a performative perspective. Journal of Marketing Management , 31 (1-2), 62-83.
