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Market Mapping
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Teaching Business
Market Mapping
A clear guide to market mapping, covering how businesses position products against competitors, identify gaps in the market and make better marketing decisions.
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Created by an experienced Head of Business and examiner
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KEY POINTS
Market mapping is a visual tool that shows how products or brands are positioned in a market.
A market map usually uses two axes, such as high price to low price or basic quality to premium quality.
Businesses use market maps to compare competitors and understand customer perceptions.
Market maps can help identify gaps in the market where customer needs may not be fully met.
A gap in the market is only useful if enough customers want the product and are willing to pay for it.
Market mapping can support decisions about targeting, positioning, branding and the marketing mix.
The position of a product on a market map is often based on customer perception rather than objective fact.
Market maps have limitations because they simplify complex markets and depend on accurate research.
KEY DEFINITION
Market Mapping
Market mapping is a visual method used to show how products or brands are positioned in a market based on two factors, such as price, quality, convenience or customer perception.
Main Explanation
Market mapping is a visual tool used by businesses to understand how products or brands are positioned in a market. It usually uses two axes, with each axis showing a different factor that customers may consider when making a purchase. Common examples include high price to low price, basic quality to premium quality, traditional to modern, or niche to mass market.
A market map helps a business compare its position with competitors. For example, a business might want to know whether its product is seen as high quality, low cost, convenient, premium, ethical or innovative. This can help managers understand how customers may view different options in the market.
Market mapping is closely linked to positioning. Positioning is about how a business wants customers to see its product or brand compared with competitors. If a business wants to position itself as premium, it may need higher quality materials, stronger branding, more selective distribution and a price that supports that image.
Market maps can also help identify gaps in the market. A gap may exist where few or no competitors are currently positioned. For example, a map of the trainer market may show many low-price basic options and several high-price premium options, but fewer mid-price sustainable trainers. This could suggest a possible opportunity.
However, a gap in the market does not automatically mean there is demand. A space may be empty because customers do not want that type of product or because it would be too costly to produce. Businesses should therefore combine market mapping with market research before launching a new product.
The choice of axes is important. A poor choice of axes may make the map less useful. For example, if all competitors are positioned very close together, the map may not reveal much. Stronger maps use factors that matter to customers and help the business make a clear judgement.
Market mapping can support marketing mix decisions. If a business wants to move to a more premium position, it may need to improve product quality, increase prices, use more selective distribution and change its promotional message. If it wants to compete as a value brand, it may focus on lower prices, simple features and wide availability.
Market maps also have limitations. They are simplified and usually show only two factors, even though customers may consider many things when buying. The positions on the map may also be subjective if they are based on opinion rather than reliable research. This means market mapping should support decision-making, not replace detailed analysis.
Overall, market mapping is useful because it helps businesses understand competition, customer perception and possible positioning opportunities. Strong exam answers explain how the map helps a business make decisions, but also consider whether the gap is genuinely attractive and whether the data behind the map is reliable.
✎ EXAMINER TIP
Students often say a business should enter a gap in the market without questioning whether customers actually want that product. Strong answers explain that a market gap only becomes a real opportunity if there is enough demand and the business can serve it profitably.
KEY FORMULAS(s)
Profit and Profitability Formulas
These key formulas help you calculate different profit measures and profitability ratios used in business.
Gross Profit
Gross profit = Revenue − Cost of sales
The profit made after deducting direct costs.
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Remember: profit shows how much money has been made, while profitability shows how efficiently revenue is being turned into profit.
DATA TABLE
Income Statement for North Coast Coffee Ltd
This statement shows how revenue is converted into gross profit, operating profit and net profit.
Revenue
£250,000
Output
Fixed Costs
Variable Costs
Total Costs
Revenue
Profit / Loss
0 candles £1,200 £0 £1,200 £0 -£1,200
Net profit is the final profit remaining after all costs and expenses have been deducted from revenue.
Example Market Map
This chart shows an example market map using price and style as the two axes. It helps students see how a business might identify a possible gap for a mid-priced, stylish product.
WORKED EXAMPLE
Worked Example: North Coast Coffee
How many coffees must be sold to break even?
Fixed Costs
£1,800
equity + long-term debt
Break-even output = Fixed costs ÷ Contribution per unit
Contribution per unit = Selling price − Variable cost
£3.50 − £1.10 = £2.40
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Step 1: Calculate contribution
£3.50 − £1.10 = £2.40
Contribution per unit is the amount each coffee contributes towards fixed costs.
BREAK-EVEN OUTPUT:
750 coffees per month
EXAM TIP
Always explain what the number means for the business. Do not just calculate the break-even point.
How Market Mapping Works
This diagram shows how businesses use two customer-relevant axes to position competitors, identify gaps and consider whether a new product could meet customer needs.
APPLICATION
SummitStep Trainers
SummitStep Trainers sells casual trainers aimed at students and young professionals. Managers want to understand where the brand fits in a competitive trainer market before launching a new range.
The business could create a market map using price on one axis and sustainability on the other. Some competitors may offer low-price trainers with basic materials, while others may sell premium trainers with stronger environmental claims. Plotting these competitors visually could help SummitStep see how crowded each part of the market is.
If the map shows few brands offering mid-priced sustainable trainers, this may suggest a possible gap in the market. SummitStep could use this information to position its new range as affordable but more environmentally responsible than basic alternatives.
This could affect the marketing mix. The product may need recycled materials, clear sustainability information and comfortable design. The price would need to be affordable enough for students and young professionals, while still supporting the brand’s responsible positioning. Promotion could focus on value, comfort and reduced environmental impact.
However, the market map would not prove that the idea will succeed. SummitStep would still need market research to check whether customers care enough about sustainability and whether they are willing to pay for it. The map is useful as a starting point, but it should not be the only evidence used for the decision.
This independent educational case study is not affiliated with, endorsed by or sponsored by Greggs plc. Any financial figures used alongside this example should be treated as simplified or hypothetical estimates created for teaching purposes.
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ANALYSIS
EXAM FOCUS
Analysis questions require you to examine a business concept or issue in detail, breaking it down into its component parts. You should explain how and why something happens and consider its impact on the business.
How to Approach Analysis Questions
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Identify the key issue or concept
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Break it down
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Explain how and why
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Reach a reasoned conclusion
Read the question carefully and highlight the focus of the analysis.
Consider the different factors, causes or impacts related to the issue.
Provide clear explanations using business terms and links points to context.
Evaluate the overall implications for the business.
Example Analysis Question
North Coast Coffee is considering using break-even analysis before opening a second café.
Advantages
• Sales forecasts may be inaccurate.
• Assumes costs and revenue remain constant.
• External factors may reduce reliability.
• Ignores qualitative business factors.
Disadvantages
• Sales forecasts may be inaccurate.
• Assumes costs and revenue remain constant.
• External factors may reduce reliability.
• Ignores qualitative business factors.
Key Exam Tip
If you find it difficult to expand your answer and show the type of depth that an examiner is looking for in a top response, consider using the 'so what' approach.
Tesco carry out market research - so what? - this allows them to better understand customer needs - so what? as a result Tesco can provide goods more likely to sell - so what? - this will increase Tesco profit and ensure higher levels of customer satisfaction - so what? this means that customers are likely to become more loyal to Tesco.
Avoid These Exam Traps
Students often lose marks on calculation and analysis questions by making these mistakes. Watch out for them in your exam!
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Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Tip:
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
2
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Tip:
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
3
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Tip:
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Be precise. Read the question carefully. Show your working.
Small mistakes can cost big marks.
EXAM PRACTICE
Practice Question
Apply your knowledge of profit and profitability to answer this exam-style question.
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MINI CASE STUDY
North Coast Coffee Ltd is a premium coffee business which sells freshly roasted coffee beans through its online store and a small chain of independent cafés. The business has experienced strong sales growth due to increasing demand for high-quality speciality coffee products.
The business generates annual revenue of £250,000. Its cost of sales, including coffee beans, packaging and direct production costs, totals £100,000. North Coast Coffee Ltd also faces operating expenses of £80,000, including marketing, employee wages, rent and administration costs. In addition, the business pays £20,000 in interest and taxation each year.
The owner, Mia Thompson, is reviewing the company’s profitability because rising wage costs and increased competition in the premium coffee market have started to place pressure on operating profit margins. She is considering increasing prices slightly in order to protect profitability while still maintaining customer demand.
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EXAM QUESTION
Analyse the possible reasons for BrightBite’s falling profit margins and evaluate strategies it could use to improve profitability.
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HOW TO ANSWER
P
Point
E
Explain
A
Apply
C
Consequence
H
However...
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MODEL ANSWER
P
Point
Increasing prices could improve the profitability of North Coast Coffee Ltd because each sale would generate a larger amount of revenue and potentially increase profit margins.
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EXAMINER TIP
For full marks, make sure you analyse causes rather than just listing them, and evaluate realistic strategies with clear judgement. THINK: Which strategy would have the biggest impact and why?
CALCULATOR
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