Contents

Markets, sub-markets and product-markets examples

Markets, sub-markets and product-markets examples

1. Introduction

In marketing, there is often confusion over the terms market, sub-market, and product-market. Students and practitioners alike can mistakenly use them interchangeably or fail to distinguish their roles in strategy. Yet, being precise about these concepts can vastly improve how a firm identifies competitors, allocates resources, and breaks down large, complex markets into more manageable and focused parts.

This article:

Defines markets, sub-markets, and product-markets,
Demonstrates why these distinctions matter,
Illustrates the concepts through five examples in total—covering education, beverages (Coca-Cola), plus three new industries (automotive, technology, and banking)—and
Explains how these clarifications support effective segmentation and strategic decision-making.

By the end, you should have a robust understanding of how organizations conceptualize “where to compete,” how sub-markets differ from the broader market, and how product-markets guide targeted marketing actions.

2. Defining Key Terms

2.1 What Is a Market?

A market is the broad, overarching space of exchange between buyers (consumers, end users) and sellers (firms, producers, service providers) for a given need or want. For instance, the “education market” encompasses all providers (schools, tutors, universities, online learning platforms, etc.) and all consumers of education (students, parents, adult learners, corporate trainees, and more).

From a marketing perspective, a market involves:

Demand: The desire and willingness of buyers to purchase particular solutions,
Supply: All organizations offering products or services that solve related needs or wants,
Competitive Interactions: A set of direct and indirect competitors contending to satisfy these consumer needs.

2.2 What Is a Sub-Market?

A sub-market is a smaller slice of the overall market where the products, competitive environment, or customer usage differ significantly from the rest of the market. Each sub-market usually has:

Unique offerings or product categories (e.g., an after-school tutoring sub-market within “education”),
Specialist players or unique distribution channels,
Different pricing dynamics, cost structures, or promotional approaches.

Hence, a sub-market represents a distinct part of the broader market, although it still shares an overarching need or theme. In the beverage market, for example, “juice” is a sub-market separate from “carbonated soft drinks,” each with specialized competitors and consumer expectations.

2.3 What Is a Product-Market?

A product-market is a more targeted definition of “where a firm competes,” pinpointing both a specific product type (or product line) and the particular market (or sub-market) in which it’s sold. Think of it as the intersection between the sub-market chosen and the firm’s specific offerings. For example, if a company decides to market organic juice in South America, that intersection (“organic juice” + “South America beverage market”) is a defined product-market.

This concept matters greatly for practical marketing, because it shapes:

Which consumers or segment the firm will pursue in that region/product space,
What marketing mix or brand approach is used there,
Which local or specialized competitors the firm must face.

Example 1: The Education Market

3.1 The Overall Education Market

The education market is vast—ranging from preschool to adult learning. In the diagram (as mentioned in the original text), the education market is broken into seven sub-markets, potentially including:

Public schooling (K–12),
Private schooling (K–12),
Tutoring services,
Universities/colleges,
Corporate training,
Online education platforms,
Adult continuing education or evening courses.

Each sub-market differs in size, operational models, and competitive players. For instance, private K–12 schools rely heavily on tuition fees and philanthropic funding, while public universities often rely on government funding plus tuition. Online education (e.g., Coursera, edX) thrives on digital delivery and global reach, whereas local tutoring might rely on face-to-face sessions and smaller local footprints.

In the diagram below, the overall education market has been into seven different sub-markets. Each of these sub-markets would have different sizes, operates quite differently, have different profitability and growth measures – yet they still form part of the overall education market.

3.2 Distinguishing Sub-Markets and Market Segments

Within a sub-market, you can segment further by consumer group. For instance, within online education:

Test Preparation (e.g., students preparing for standardized exams),
Professional Upskilling (e.g., adults needing new certifications),
Casual Learners (e.g., retirees exploring new hobbies).

These segments differ not by product categories, but by consumer usage, motivations, and goals.

3.3 Lifetime Customer Journey

An important note is that an individual consumer may tap into multiple sub-markets over time—attending a private school as a teen, a university later, then using online platforms for professional training. This highlights how sub-markets remain linked under the umbrella of a single overarching market.

4. Example 2: Coca-Cola in the Beverage Market

4.1 Defining the Overall Beverage Market

The beverage market includes all drinkable liquids offered commercially, from water and juice to energy drinks, tea, carbonated soft drinks, and alcoholic beverages. Coca-Cola recognizes this broad scope but also identifies sub-markets like:

Juice (Minute Maid, Del Valle),
Bottled Water (Dasani, BonAqua),
Carbonated Soft Drinks (Coke, Fanta, Sprite),
Tea (e.g., Fuze Tea),
Sports Drinks (Powerade).

4.2 Regional or Geographic Dimension

Coca-Cola can further define product-markets by geography (e.g., “juice market in South America,” “bottled water market in Asia”). Hence, each product-market might be narrower, like “Coca-Cola’s juice offerings in South America.” This approach helps them align with local consumer tastes, distribution networks, and competitor sets.

4.3 Why Sub-Market and Product-Market Definitions Matter for Coca-Cola

Without subdividing the beverage market into water, juice, carbonated drinks, etc., it would be impractical to do a single segmentation of the entire global beverage market. Breaking it down allows more focused strategies (e.g., different packaging, flavors, marketing campaigns) that reflect local preferences and sub-market attributes.

5. Example 3: The Automotive Market

5.1 Overall Automotive Market

The automotive market is one of the largest globally, encompassing:

Passenger cars (compact, mid-size, luxury),
SUVs and crossovers,
Trucks and commercial vehicles,
Electric vehicles and hybrids,
Buses, motorcycles, etc.

5.2 Sub-Markets in Automotive

Electric Vehicles (EV): Tesla, Rivian, and legacy automakers’ EV lines—distinct distribution models (online reservations, specialized showrooms), unique consumer concerns (range anxiety, charging infrastructure), plus advanced technology.
Luxury Vehicles: BMW, Mercedes, Lexus—compete on prestige, brand heritage, advanced features, with higher price points and specialized dealerships.
Commercial Trucks: Serve B2B customers, focusing on reliability, total cost of ownership, often sold via specialized fleet management channels.

Each sub-market has specialized players (e.g., Tesla primarily in EV), unique marketing priorities, and typically different media channels (e.g., EV makers might rely heavily on digital marketing, while commercial truck sellers partner with logistic associations).

5.3 Product-Market Choices

A carmaker like Toyota might define product-markets such as:

Hybrid sedans for eco-conscious families in North America,
Compact budget-friendly cars for emerging markets in Asia,
Luxury crossover SUVs in Europe.

Each product-market combination has unique consumer expectations, regulatory environments, and competition, guiding distinct marketing mixes.

6. Example 4: Technology (Software) Market

6.1 Overall Tech/Software Market

The technology/software market includes:

Operating systems,
Cloud computing platforms,
Business applications (CRM, ERP, HR software),
Consumer-facing apps (gaming, streaming, productivity tools),
Cybersecurity solutions, and more.

6.2 Sub-Markets in Software

CRM Software: Focuses on sales force automation, customer support modules, lead tracking (Salesforce, HubSpot, Microsoft Dynamics).
ERP Solutions: Larger end-to-end business systems that handle finance, HR, supply chain (SAP, Oracle, etc.).
Project Management Tools: Trello, Asana, Monday.com—target teams needing collaborative task tracking and agile workflows.
Cybersecurity: Encompasses antivirus, firewall, intrusion detection, specialized enterprise solutions.

Each sub-market often has specialized channels—like direct enterprise sales, subscription-based models, or channel partnerships—and distinct competitor sets.

6.3 Defining Product-Markets

A company like Oracle might define product-markets such as:

Cloud-based ERP solutions for mid-sized manufacturers in the U.S.,
Database-as-a-Service targeting large retail corporations globally,
HR modules (payroll, recruiting) for small businesses in Asia-Pacific.

Such specificity helps them tailor messaging, product features, and channel strategies, rather than lumping everything under “we sell software.”

7. Example 5: Banking Market

7.1 Overall Banking Market

As partly mentioned before, the banking market includes:

Consumer banking: Checking accounts, savings, credit cards, personal loans, mortgages.
Corporate banking: Loans, cash management, foreign exchange for businesses.
Investment/wealth management: Hedge funds, advisory services, brokerage.
Specialized finance: Microfinance, niche lending to particular sectors.

7.2 Sub-Markets in Banking

Credit Cards: Focuses on consumer revolving credit, marketing alliances with retailers, direct mail promotions. Competitors might be specialized (American Express, Discover) or part of large banks (Chase, Citi).
Home Mortgage: Involves real estate brokers, mortgage refinancing, specialized interest rates, targeted promotional channels (like home shows, real estate websites).
Corporate Lending: Typically bigger ticket deals, relationship-based sales, specialized risk models.
Private Banking: Exclusive wealth management services for high-net-worth individuals, with personalized offerings like estate planning, tax advice.

7.3 Product-Market Definitions

A mid-sized bank might define product-markets like:

Low-interest credit cards for middle-income families,
Fixed-rate home loans for first-time buyers,
Online checking accounts geared to millennial customers.

These narrower product-markets guide how each line markets itself and stands out from broad “banking” offerings.

8. Why These Distinctions Are Crucial

8.1 Avoiding Product-Centric “Segments”

One major lesson is not to confuse a sub-market (like “credit cards”) with a true “market segment.” Sub-markets revolve around product categories, whereas market segments revolve around customer needs or behaviors within that product category. For instance, “frequent flyer rewards seekers” is a real market segment inside the credit card sub-market.

8.2 Effective Resource Deployment

When a firm recognizes how each sub-market is different—be it consumer priorities, margins, or competitor profiles—they can allocate marketing budgets or R&D resources more effectively. For instance:

Coca-Cola invests differently in the “water sub-market” (bottled water distribution, brand building around purity) vs. the “juice sub-market” (fruit sourcing, nutritional marketing) even though both are beverages.

8.3 Enhanced Strategic Clarity

Understanding markets, sub-markets, and product-markets helps a firm clarify:

Which sub-markets are strategic priorities (due to growth or synergy with existing capabilities)?
Which product-markets they plan to compete in, across which geographies, with which product lines?
How they can design subsequent segmentation and targeting processes (STP) to account for actual consumer differences.

9. Integrating Market, Sub-Market, and Product-Market with STP

9.1 Segmentation (S)

You cannot do meaningful segmentation on the entire “beverage market” worldwide without losing practical insights. Instead, you first identify sub-markets (e.g., juice, carbonated soft drinks), then you define where you plan to compete (e.g., the “juice sub-market in South America”), and then segment that sub-market into consumer groups (health-focused, budget-friendly, flavor adventurers, etc.).

9.2 Targeting (T)

Once the segments in a sub-market are established, you decide which are large or profitable enough or which align best with your brand. If you produce premium juices, you might target “health-conscious, higher-income families,” ignoring the bargain-seeking or kids’ flavors segments.

9.3 Positioning (P)

Finally, in each sub-market (and for each product-market you define), you craft a positioning message—“Our premium juice is the #1 choice for families seeking organic, ethically sourced fruit juice” or “Our budget-friendly line is perfect for everyday use.”

10. Final Thoughts

Markets are broad sets of buyers and sellers fulfilling a core need (education, automotive, banking, beverages, etc.).
Sub-markets break that large market into product-driven categories, each with unique competitive sets, distribution methods, and consumer usage scenarios.
Product-markets define a firm’s strategic scope more precisely, answering, “Which product do we offer in which sub-market (and perhaps in which geography)?”

By distinguishing these levels, organizations can avoid the pitfall of conflating product categories with consumer-based market segments. This clarity fuels better resource allocation, competitor analysis, and dynamic segmentation strategies that genuinely resonate with different consumer needs within each sub-market.

Through real-world examples spanning education, Coca-Cola beverages, automotive, technology, and banking, it is evident that sub-markets create specialized environments, each with varied consumer priorities and specialized marketing tactics. Meanwhile, defining product-markets narrows the focus further, specifying how a firm’s product lines align with each sub-market and region.

Ultimately, this layered approach—market → sub-market → product-market → actual consumer segments—provides the fundamental structure for any solid marketing strategy. Once understood and applied, it streamlines how firms compete, innovate, and form lasting consumer relationships in an often crowded marketplace.