In this article we will discuss about the substitutability of market in relation to market segments. 

Marketing comprises the following three major activities:

1. The assessment and examination of market for existing products or those under, consideration for development. The collection of accurate market intelligence is essential for effective business forecasting and production planning. It also influences design and packaging, pricing and promotional policies of the firm.

2. The stimulation of the market by advertising, sales promotion and other devices.


3. The satisfaction of the market; that means the distribution of products to the individual consumers or industrial consumers through a network of sales organisation and intermediaries.

For any firm to survive and to maintain a steady and continuing market, it has to provide a well-established range of products and/or services. An efficient marketing manager must, therefore, concentrate on the issues like provision of a sound product, minimisation of marketing costs, and introduction of modern marketing methods.

In any marketing situation, two contrasting strategies such as market segmentation and product differentiation are used.

While the first strategy is concerned with the segmentation of the markets by grouping of consumers according to the factors like income, age, degree of urbanisation, race or religion, geographic location, or education; the second strategy deals with the modification of the characteristics of the product so that the differences and varieties of a product can satisfy the requirements of a part of the market.


Market segmentation is a logical extension of jobbing for an individual customer in a mass market situation. A business firm, faced with a largely diffused and heterogeneous market, attempts to break-down the whole market into smaller, uniform, and homogeneous sub-markets or segments. The firm produces varieties of the product for same an all of these market segments.

The application of segmentation strategy, however, creates problems. The problem is to identify market segments by relevant and measurable cha­racteristics. One of these might be by a particular socio-economic group in society, another one might be by occupation or profession, yet another a particular age group.

Combining such characteristics together, one poss­ible market segment may be defined for a consumer product far fairly well- to-do middle-aged professional men. Another market for relatively unskilled working teenagers with a fairly large disposable income. Yet another market for elderly low-income pensioners, and so on.

If a business firm has a clear idea of the tastes and income level of particular market segments, it can then vary the quality or price appro­priately. It can even produce essentially the same quality product but sell at different prices, provided it can keep the various market segments from overlapping.


This is one of the essential conditions of-price discrimi­nation. The more precisely the market segments are identified and the pro­ducts are modified to each, the less will be the promotional expenses. In this case, promotional efforts can be directed very accurately through the best media for that market segment.

If market segmentation draws a clear distinction between one type of customer and another, product differentiation draws the distinction between the product and rival products, and claims superior qualities for it.

The quality differences as to superiority claim are further accentuated by the use of a brand name, distinctive packaging and heavy advertising. In a real life situation, marketing policy requires consideration of both market segmentation and product differentiation but with one or the other predominating.

In substitutability of market, market positioning is of crucial impor­tance. It is established by examining the size of the market segment, the potential of future growth, the ease of market penetration and the competi­tive advantages possessed by a firm.


The choice between the home market and the overseas market is another criterion to be considered in substitutability of markets. The firms having large-scale operations and high R&D costs nay engage in exports when domestic market is too small to sustain their existence.

If there is inflation, exports appear to be unprofitable. Domestic sales appear to be more attractive. This is exactly what is happening in India. Most manufacturers of consumer goods are expressing their preference for home sales in a rising market.

What is most important in the content of substitutability of market is an analysis of the existing source of supply for the market. The degree of competition from domestic suppliers and other foreign competitors will indicate the size of the effort required to capture and hold a significant share of the market.

Where, home producers are finally entrenched, or where the market is subject to fierce international competition, the expenses on advertising and sales promotion nay be out of proportion to the return In this case, the substitution of overseas market for domestic market may appear to be feasible.