Let's have a session on market mapping. So market mapping is a tool you can use to analyse competition in a specific market. That market could be the airline market, or the chocolate bar market, or any market. The key is, the market mapping gives you an output, and that output is a market map. And the market map will have two variables. Quite commonly, it will have price as one of those variables, but it doesn't have to be. It could be price versus quality, or price versus customer age. Let's take the... variables of price and quality for the specific market that is the airline market. Well, you would plot that onto your market map and you can see it here. So we've got price on this axis and quality on this axis. On this side we've got high price and at the other end of the scale we've got low price and here we've got high quality and here we've got low quality. So this is our market map for the specific market that is the airline market, aeroplanes. And these red dots here in this quadrant that is high price, high quality are the competition, in this case the airline companies. So you can see that we've got A, B, C, D, E that are all in high price, high quality. which kind of intuitively makes sense. But what we learn from this is that this area here, this quadrant, is quite saturated. There's lots of competition all doing the same thing. They're providing a high-quality service for a high price. So high price, high quality, you can see it looks here overcrowded. It looks saturated. So maybe you could have used a market map. to decide that you don't want to enter the market and be in this quadrant because there's lots of competition. Lots of competition mean you may have a lot of sales. So what else can you learn from doing this market map? Well, you could see that. There seems to be gaps in the market. There's a gap in the market here for high quality, low price. There's a gap in the market here for high price, low quality. And there's a gap in the market here, number three, for low quality, low price. Let's take a look at each of these gaps in the market, which is exactly what you do when you're using market mapping to make decisions. So number one. High quality, low price. Well, that seems like a customer's dream to have high quality at a low price. But maybe it doesn't make financial sense if you're the business, because high quality suggests high costs and low price might mean low revenue. So maybe this is an area that you can enter because your costs might outweigh your revenue. It might be impossible to make a profit. So you could analyze another gap in the market. Maybe you analyze the quadrant here, number two, which is where there's a clear gap in the market of high price, low quality. And then you might do market research, which is the important thing about market maps, is you try and validate the gaps in the market through market research. You do some market research here, and probably you're going to find out that customers are not willing to pay a high price to get low quality. So maybe you've got no demand here, but your market research you've done, because you kind of intuitively thought this, you've used market research to back that up, and it's come back that there's no demand. So then you look at number three, gap in the market number three, no one seems to be in the low quality, low price end of the market. you do some market research because you've done your market map and found your gap in the market and off the back of that you find there is actually high demand in the airline market for low price flights which provide not the greatest quality but low quality maybe they just get you from a to b But you've done your market map, you've found your gap in the market, and then you've decided you need to go in and this is the area that you want to enter. And this is exactly what Ryanair, EasyJet have done. They've entered the low price and the kind of the budget end of the airline industry and been very successful at it. And the reason potentially that they've been successful at it is that if you find the gap and you enter it, well, You can develop your product, but then it's likely you're going to have low competition because you've already mapped it onto a market. Not much competition here. Less competition, you're probably going to get higher sales as a consequence. And so therefore, you're going to get more revenues and hopefully more profit. So you might not be just using market maps to decide where you're going to enter a market. It might be that you're an existing business in a market and you're trying to work out if you want to move. to a different quadrant. Maybe you've decided that you're not being so successful providing in this area and you want to move elsewhere. So you could use market maps to change your product range and you could find a new segment that you want to target your goods at. Maybe it could be a different market map in this case. Maybe it could be price versus customer age and you've decided that you want to go towards older or younger segments of the market and you might hopefully get more sales as a consequence of that. Now let's look at the pros and cons of using market mapping. So in terms of the pros of market mapping, well firstly, it helps you identify potential gaps in the market. If you're a new business, if you're a start-up business, then it will help you to get initial sales. If you're an existing business, then it might allow you to work out how you can reposition your brand and reposition your product within a particular market. Number two is that you identify areas in the market that are overcrowded or saturated. As we saw in the previous example with high price. high quality, and that allows you to avoid making poor decisions. Number three is that using market mapping is just a simple tool that you can use to analyse your competition, analyse the market as it stands right now, and so you can make good decisions. And it encourages you to use market research, and basically, if you're using more market research, it's very likely you are reducing your risk. Now let's take a look at the cons. First con is that if there's a gap in the market, it doesn't mean you're guaranteed to have a success because there's a gap in the market. As we saw on the previous slide where you had low quality, high price. There's a reason why low quality, high price exists. It's because no one wants to produce goods like that because there's no demand. So gaps in the market, no guarantee of success. The second thing is that there's only two variables involved in market mapping. Maybe there should be three variables and maybe that could take it further. Maybe we should have looked at price versus quality versus. The fact that your product is ethical, but you can't take into account with market mapping because you only have two variables, because it's very simplistic. So it can't handle potentially complex markets. And ethics is a great example here because many ethical consumers are looking for more than just price and more than just quality. Number three is that it depends on who did the market map, because what do they know? they might be doing it based on opinion. It might be biased. There might be no data or statistics used to produce where the competitors should actually be in the grid. And where they are is showing you where you derive from with the gaps in the market. And if you put the dots in the wrong place, then everything's wrong from there. So poor accuracy of market maps will very likely lead to poor decisions. And then that's going to be wasted cash in terms of investments. So I hope that helps with market mapping. And I'll see you at the next video.