Three questions to define the market

When I taught Principles of Marketing many years ago, I used to draw on Abell’s framework to define the market that a business was operating in. The reference is Defining the business: the starting point of strategic planning written by Derek F. Abell and published by Prentice Hall in 
1980.

 

Abell’s framework states that an organisation’s business may be defined by answering three questions:

  1. Who is being satisfied?
  2. What is being satisfied?
  3. How are customer needs being satisfied?

 

Each of these questions focuses on one dimension of the market:

  1. Who => focuses on the customers served
  2. What => focuses on the value proposition
  3. How => focuses on the resources used

 

While all questions are valuable in stimulating the thinking process about a company’s positioning in the market, I would argue that the second question is the trickiest and, yet, the most valuable of all.

 

As consumers we don’t really care about things. Rather, we care about how those things make us feel. The products that best and/or most consistently meet those feelings are the ones that we buy over and over, again.

 

The value of these three questions in general, and the second question in particular, is very well illustrated in an article that I came across recently. A short piece recently published on Bloomberg reported that sales of items traditionally displayed on checkout lines are falling – this includes items such as magazines and chewing gum.

 

The decline in sales is not because the buyers of such items suddenly disappeared – e.g., because they moved elsewhere, or because they aged and no longer need the product. Nor is it because the technology has become obsolete. Rather, it is because the need satisfied by those products is now best served by another proposition. By and large, we did not buy all those magazines and chewing gum at the checkout lines because of the magazines and gums in themselves. Instead, we bought them because they helped fill the time while we were waiting for our turn to pay for the items in our trolley. The need being satisfied was entertainment.

 

As the article points out, that function is now performed by the applications in the smartphones that we carry in our pockets. We no longer browse the shelves in the checkout lines to keep us entertained while we wait for our turn to pay. Instead, we browse the social networks, the blogs or the games accessible through our mobile devices. From the point of view of the idle shopper, getting up to date with gossip or the news, or going up one level in a game, is a better value proposition than buying a magazine or a packet of chewing gum.

 

I wonder how many marketing managers in publishing houses or confectionery manufacturers ever thought of Facebook or 4 Pics 1 Word as a competitor.

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