what is the market

8/10/2019 What is the Market

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What is the market?

Any structure which may be a place or may not be can be defined as the market that allows buyers and sellers to exchange any type

of goods, services and information. It can also be called as an arrangement constructed by buyers and sellers. It facilitates trade and

enables the distribution of resources in a society. Thus a market:

1. It establishes the prices of goods and services.

2. It consists of systems, institutions, procedures, social relations and infrastructure.

3. It brings a sense of competition.

4. It works on a basic force of demand and supply.

Types of market On the basis of place

1. Local market

2. National market

3. International market

Types of market On the basis of time

1. Very short period market

2. Short period market

3. Long period market

4. Very long period market

Types of market On the basis of competition

1. Perfectly competitive- It consists many sellers. e.g. Mobile market, internet providers etc.

2. Imperfectly competitive- (a) Monopoly one seller. e.g. Indian Railway. (b) Duopoly two sellers. (c) Oligopoly few sellers. e.g.

petroleum product market. (d) Monopolistic many sellers.

Types of market On the basis of product

1. Consumer market - These are the markets where products and services bought by consumers for their own and family use. Types:

(a) Fast moving consumers goods (FMCG)- High volume. Low unit cost. Fast and frequent purchase. e.g. Biscuits, soaps,

detergents, newspapers etc. (b) Consumer durables- Low volume. High unit cost. e.g. Freeze, TV, computers, motorbikes, laptops

etc. (c) Soft goods- It is like consumer durable. Low/high volume. High/low unit cost. Frequently purchased. e.g. Clothes, shoes,

specs etc. (d) Services- Targeted consumers. Brand name more important. Intangible. e.g. Health insurance, beauty parlours,

insurance etc.

2. Industrial market- These markets are not intended directly to consumers but among businessmen. Finished goods market. Raw

material market. Services. e.g. accountancy, legal advice, security services, waste disposal services etc.

What is a market economy?

It is an economy system in which economic decisions regarding monetary control, products and their production and methods andcontrol over distribution are based on supply and demand. These a re decided solely by the aggregate interaction of a countrys

citizens as consumers and businesses and there is very little government intervention or central planning.

Since in market economy, markets are governed by the law of supply and demand, the market itself will determine the price of

goods and services.

Businesses can decide which goods to produce and in what quantity and consumers can decide what they want to purchase and at

what price. The prices of goods and services are determined in a free price system. In such economy, the government allows and

protects ownership of property and exchange. Government plays an important role as the protector of property rights and

individual liberty.

In theory, market economy is completely different from practical market economy. However most developed nations today can be

classified as mixed economies, they are often said as market economies because they allow market forces to drive most of their

activities, typically engaging in government intervention only to the extent that it is needed to provide stability. It can be

contrasted with planned economy or centrally planned economy, in which government decisions drive most aspects of a country's

economic activity.

What do you understand by Market Penetration?

Market Penetration is basically a strategy to increase the base or market share of the existing product. It is one of the four growth

strategies of the product market growth matrix defined by Ansoff. It occurs when a company penetrates a market in which cur rent

or similar products already exist. Market Penetration can be done by the following means:

(a) Attracting non-users of the product

(b) Encouraging existing users to use more quantity of products.

(c) Advertisement

(d) Mega sales

(e) Lowering prices

(f) Bundling

Market Penetration can also be mathematically calculated using following formula

Market Penetration = (sales volume of the product 100) total sales volume of all competing products.

What is a product?

A product can be defined as anything which can be offered to a market to satisfy a need or want. goods, idea, method,

information, object or service that is the end result of a process and serves as a need or want satisfier. It is a bundle of tangible and

intangible attributes like benefits, features, functions, uses etc. that a seller offers to buyers for purchase. Here want or need can


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be different from different angles. For example if a product biscuit is sold in a market, it is satisfying the need of stom ach of a

person and same time maximizing profit of the company selling the biscuit. In retail product are called as merchandise. Product can

be classified as:

1. TangibleVehicle, cloth, gadget etc.

2. Intangible Cannot be perceived by touch. E.g. sad songs, action movies etc.

3. BrandedIt carries a brand name.

4. UnbrandedIt does not carry any brand name.

What is a good?

It can be defined as something that is intended to satisfy some wants or needs of a customer with some economic utility.

Types of Good On the basis of tangibility

(a) Tangible goods However in economics, all goods are considered tangible but in reality certain classes are not tangible like

information. All tangible goods occupy physical space.

(b) Intangible goods - Cannot be perceived by touch. E.g. information (it is different from services because final in goods can be

transferrable and traded but not services)

Types of Good On the basis of elasticity

(a) Elastic goods It is one for which there is a relatively large change in quantity due to a relatively small change in the price.

(b) Inelastic goods It is one for which there is very little change in quantity due to relative change in the price.

1. Normal goods Elasticity is greater than zero.

2. Inferior goods Elasticity is smaller than zero.

3. Luxury goods Elasticity is greater than one.

4. Necessary goods Elasticity is less than one.

Other types of Good:

(a) Convenience goods These are easily available to consumers without any extra efforts. It mostly comprises non-durable goods.

e.g. fast foods, sweets, cigarettes, etc.

(b) Staple convenience goods This type comprises basic demands like breed, sugar, milk etc.

(c) Impulse convenience goods These are goods which are bought without any prior planning with impulse. E.g. Candies,

chocolates, wafers.

(d) Consumer goods These are final goods that are brought from retail stores to meet the needs and wants.

(e) Emergency goods These are goods that are bought quickly when they are urgently needed in the time of the crisis. These are

typically distributed at the stores. e.g. Tents, flashlights, lighters, shovels, umbrellas etc.

(f) Specialty goods These goods are unique or special enough to persuade the consumer to exert unusual effort to obtain them. It

means that they are bought after extensive research. E.g. Designer clothes, painting, perfumes, limited edition cars, stunning

design, typically expensive, antiques, diamonds, wedding gowns etc.

What is a customer?

Customer can be defined as the recipient of a good, service, product or idea obtained from a seller, vendor or supplier for a

monetary or their valuable consideration. Types:

(a) Intermediate customer These are who purchases goods for resale.

(b)Ultimate customer These are consumers.

What is a Captive Market?

Captive markets are markets where the potential consumers face a severely limited amount of competitive suppliers; Their only

choices are to purchase what is available or to make no purchase at all. Captive markets result in higher prices and less diversity for

consumers. The term therefore applies to any market where there is a monopoly or oligopoly.

Examples of captive market environments include the food markets in cinemas, airports, and

sports arenas and food in jails prisons.

What is Marketing?

Marketing is the activity, set of institutions and process for creating, communicating, delivering and exchanging offerings that have

value for customers, clients, partners and society at large. It is a function that links consumers, public to the marketer of a product

through information. Here the information addresses the issues regarding all aspects of the products. Products can be tangible or

intangible. It differs from selling because in selling, the main motive remains the maximization of profit by way of selling a product

but with absence of value but in marketing value is also considered at the par with profit. So marketing is a integrated effort to

discover, create, raise and satisfy customer needs with values. It is one of the competing concepts which can be looked as an

organizational umbrella function to benefit the organization with superior customer value.

What is niche marketing?

Niche marketing is a type of marketing in which a narrowly defined customer group is targeted. It focuses on small segment of

consumers who have unique and similar needs.

The market in which this marketing technique is applied is called niche market. E.g. Blackberry application or Android application,sports car, luxury cars, internet based marketing etc.

This technique of marketing can be contrasted with mass marketing.

What is Relationship Marketing?


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Relationship Marketing is a technique of marketing which involves creating and maintaining strong ties with customers and other

parties like dealers, suppliers, contractors, shareholders, stakeholders, employees etc.

This technique revolves around a concentric chain of long term relationship. It also includes Partner Relationship Management

(PRM) apart from Customer Relationship Management (CRM). Its main objective is to find, maintain and enhance the customer base

and mutually long term satisfying relationship.In Relationship Management buyer and seller continuously improves their

understanding and thus they build up more loyalty towards each other. The final product of this system is a unique asset that is

marketing network.This marketing technique includes following steps:

Step I- Creating a customer database

Step II- Identifying key customers

Step III- Creating details

Step IV- Getting closer through different channels

Step V- Maintaining relationship

Step VI- Advantages of Relationship Management

Step VII- Consistency of business within the marketing network

Step VIII- Long term brand recognition

Step IX- Easy redressal of customer grievances

What is marketing process?

This is the process, which is performed by marketing managers using all marketing mixes as and when required. The marketing

process involves the following variables:

(a) The product itself

(b) Place for selling

(c) Marketing channel

(d) Price

These variables combine in a market offering which the consumers may decide to buy if it provides satisfaction as per their needs.

The marketing process seems to be very easy in theoryHowever it is very complex one to perform. If any small change occurs in the

marketing environment, the whole concept of marketing offering and strategy changes drastically.

What is cross selling?

Cross selling is the practice of selling an additional product or service to an existing customer. The objectives of cross selling can be

either to increase the income derived from the client or clients or to protect the relationship with the client or clients. The approach

to the process of cross selling can be varied. Unlike the acquiring of new business, cross selling involves an element of risk that

existing relationships with the client could be disrupted. For that reason, it is important to ensure that the additional product or

service being sold to the client or clients enhances the value the client or clients get from the organization. In practice, large

businesses usually combine cross selling and upselling techniques to enhance the value that the client or clients gets from the

organization (and vice versa).

For the cross selling there can be substantial barriers.

Let us see some of them:

1. Presence of multiple vendors.

2. Different purchasing points within an account, which reduce the ability to treat the customer like a single account.

3. The fear of the incumbent business unit that its colleagues would spoil their work at the client, resulting with the loss of the

account for all units of the firm.

Let us see some forms of cross selling:

Selling addon services--- is another form of cross selling. That happens when a supplier shows a customer that it can enhance the

value of its service by buying another from a different part of the supplier's company. When one buys an appliance, the salesperson

will offer to sell insurance beyond the terms of the warranty. Though common, that kind of cross selling can leave a customerfeeling poorly used. The customer might ask the appliance salesperson why he needs insurance on a brand new refrigerator, "Is it

really likely to break in just nine months?"

The kind of cross selling can be called selling a solution. In this case, the customer purchasing a TV is provided with Direct to home

inbuilt set top box. In this case customer can be relived from purchasing a set top box to watch different channels.

Examples of cross selling

1. A CDMA mobile

2. A Life Insurance company suggesting its customer sign up for car or health insurance.

3. A television brand suggesting its customers go for a set top box of its or another's brand.

4. A laptop seller offering a customer a mouse, pen drive, and or accessories.

5. A shampoo seller suggesting conditioner of its own company for better result.

What is SWOT analysis?

It is a structured planning method proposed by Albert Humphrey. It is used to analyse the following factors of an organization:

(a) Strengths It includes all the characteristics of a company which is not with other companies. It needs to be exploited.

(b) Weakness It gives a inside look of the areas where there is scope for improvement

(c) Opportunities It includes external chances that can be used to improve performance of the company.


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(d) Threats It includes external as well as internal elements that could cause trouble for a project. It can be looming or

sleeping.What is USP in marketing?

USP stands for Unique Selling Proposition. The unique selling proposition (USP) is a marketing concept that was first proposed as a

theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made

unique propositions to the customer and that this convinced them to switch brands.

The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to

any aspect of an object that differentiates it from similar objects.

So, USP basically provides uniqueness to a particular product. It impresses a viewer/audience so much that the voice or view of the

Ads buzzes into their ears. For example for this site that you are using now, I can propose USP tuition till your service.

So, through USP, a seller tries to present his product as a unique one and better than all other competitive products. It provides an

instant theme for the buyer to purchase the product.

What is Upselling?

Upselling is a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons

in an attempt to make a more profitable sale.

Upselling usually involves marketing more profitable services or products but can also be simply exposing the customer to other

options that were perhaps not considered previously.

Upselling implies selling something that is more profitable or otherwise preferable for theseller instead of, or in addition to, the original sale.

In a restaurant and other similar settings, upselling is commonplace and an accepted form of business. In other businesses, such as

car sales, the customers perception of the attempted upsell can be viewed negatively and thereby affect the desired result.

Some examples of upsales include:

(a) Suggesting a premium brand of alcohol when a brand is not specified by a customer

(b) Selling an extended service contract for an appliance

(c) Suggesting a customer purchase more RAM or a larger hard drive when servicing his or her computer

(d) Selling luxury finishing on a vehicle

(e) Suggesting a brand of watch that the customer hasn't previously heard of as an alternative to the one being considered.

(f) Suggesting a customer purchase a more extensive car wash package.

(g) Asking the customer to super-size a meal or add cheese at a fast food restaurant.

Techniques

A common technique for successful upsellers is becoming aware of a customer's background and budget, allowing the upsellers to

understand better what that particular purchaser might need.Another way of upselling is creating fear over the durability of the

purchase, particularly effective on expensive items such as electronics, where an extended warranty can offer peace of mind. The

vendor can tell that you are only investing not so much money so, this particular thing cannot be so durable. Upselling also works

with items like cars, where the seller suggests doing rubber paint inside the chassis to make the car more durable.

What is product life cycle management?

This management is a process of managing a product throughout its lifecycle. It starts from its introduction, growth, maturity and

disposal.

This management integrates people, data, processes and business systems. It works in the following areas:

(a) Product system engineering

(b) Product and portfolio management

(c) Product design

(d) Manufacturing process management

(e) Product data management

This management process basically involves:

(a) Conceive Imagine, specify, plan, innovate

(b) Design Describe, define, develop, test, validate

(c) Realize Make, procure, produce, deliver, launch

(d) Service Maintain, support, sustain

(e) Dispose Recycle, disposal, retire

What is product life cycle?In the same fashion of our life cycle i.e. birth, growth, maturity and finally death, a product also goes through a life cycle which

consists of following stages:


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(a) Product introduction/market development this is the stage when a new product is first brought to market. It can be on the

basis of demand or innovation of a company. In this stage sales are low and slow. However, thanks to our communication channels

and modern management techniques that at this stage also sales goes up.

(b) Market growth at this stage the demand begins to accelerate and it takes off.

(c) Maturity

(d) Disposal

What is marketing management?

It is a business discipline which applies different type of marketing techniques, resources, and trends. The application of this

discipline can vary significantly based on businesss size, culture and environment.

Marketing management employs various tools like SWOT analysis, product positioning, product differentiation, value chain

analysis, strategic group analysis, statistical surveys, ethnographic observations, competitive intelligence, environment scanning etc.

So, this discipline is very broad one and to create an effective marketing management, it is very necessary for a company to have its

elaborated and objective understanding of its own business model and markets.

What is marketing environment?

It is an umbrella term used for forces and variables inside as well outside the organization which influence the decision of marketing

managers.

Marketing environment comprises trends that appear and disappear and determine the success of the organization marketing

efforts. For better marketing and formulation of a marketing strategy, it is necessary to scan internal and external marketing

environment variables.

Marketing environment can be classified into three groups:

(a) Micro (internal) Objective of the company Finance Resources like man power, raw material, capital etc.

(b)Macro (external) Technology Economic Social Physical National/international

(c) Market (just outside) Competitors Intermediaries Suppliers Threats Opportunities

What is marketing mix?

Marketing mix is a tool in the hand of marketer, which is a mixture of several ideas and plans, to promote a particular product.

Different models of marketing mix:

Four P model--

This is also known as producer oriented model. It was proposed by EJ McCarthy in 1960.

Elements:

(a) Product The thing which is offered

(b) Price High/low, stable/fluctuating

(c) Promotion Brand recognition and positioning

(d) Place Convenient for consumers

Seven P model

It was proposed by Booms and Bitner in 1981.

Elements:

(a) Physical evidence Interior

(b) People Human resources

(c) Process Quality

Four C model

It is a consumer oriented model. It was proposed by Lauterborn in 1993.

Elements:

(a) Product Consumer

(b) Price Cost

(c) Promotion Communication

(d) Place Convenience/channel for consumers

Seven C model Elements:(a) Consumers

(b) Cost

(c) Communication

(d) Convenience/channel


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(e) Corporation

(f) Commodity

(g) Circumstances

Compass model Elements:

(a) N National and international

(b) W Weather

(c) S Social

(d) E Economic

What is Demarketing?

Demarketing is a type of marketing which discourages certain customers on a temporary or a permanent basis. This marketing is

mainly applied on such products which are either harmful or very rare. Example: Tobacco, petroleum products, water, electricity

etc.

This marketing process is generally supported by government or international organization with a sole aim of humankind welfare. It

is also done for the sake of conservation of resources, controlling inflation, eliminating the factor of over competition and over

demand.

This technique is applied by following methods:

Bringing substituteSuppress demand

Increase the cost of the product itself manifold

Through government legislation

What is Remarketing?

Remarketing is a marketing process by which the demand of such product is renewed which has witnessed declining trend of

demand. It is done by spreading awareness in general, introducing new and interesting use of the existing product, resale of second

hand well fabricated products.

This concept of marketing is opposite to the Demarketing concept.

What is Synchro Marketing?

Synchro Marketing is marketing process which solves the problem of irregular demand pattern of a product. For example a Beachside hotel is overcrowded during evening time, whereas it is almost like desert during morning hours. A cotton shop is crowded

during summer season whereas during winter it is not.So, Synchro Marketing finds a way to solve the problem of inconsistent

demand pattern by the following methods:

(a) Keeping high price during season

(b) Offers lucrative options during offseason

(c) Using the stores with many varieties of item

(d) Promotion and incentives

What is differentiated marketing?

This is a type of marketing in which customers are divided into groups on the basis of some common characteristics like religion,

income, age, sex, caste, education etc. Thus the customer base is segmented. This is why this marketing is also known as market

segmentation. This technique is customer oriented with higher customer satisfaction and profits.

It has following advantages:

(a) Increased sales and profits

(b) Large number of customers from all segments

(c) Quality products manufacturing can be accurate

(d) Customer oriented

It has following disadvantages:

(a) Chances of cost rise due to small quantity manufacturing. So, it is opposite to mass

marketing.

(b) Huge amount of work for R & D for customer segmentation.

(c) Wastage of money for separate advertisements for different segments

What is market segmentation?

It is a marketing strategy which involves the following criteria:(a) Divides the target consumer/market as per their common want/need/relevant goods.

(b) It is internally homogenous and externally heterogeneous.

(c) Cost effective

(d) Profit maximization


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(e) Responsiveness

(f) Sustainable

(g) Measurable

(h) Needs can be satisfied by particular product category

So, through this strategy, within a market, a market segment is created which is a subgroup of people or organization. Sharing one

or more characteristics that cause them to have similar needs. So, this strategy is a process of enabling the marketer to tailor

marketing mixes to meet the need of one or more specific segments.


(a) It helps decision makers to more accurately define marketing objectives and better allotment of resources.

(b) Performance evaluation is also more precise.

(c) Better marketing results.

What is undifferentiated marketing?

It is just opposite to differentiated marketing and similar to mass marketing. Under this technique company identifies the entire

consumers as one with common head. This strategy does not consider segmented demand pattern. It involves same product, same

brand, same price, same marketing program, same advertising media with mass production and distribution.


(a) Large scale production is possible.

(b) Cheap products

(c) One type of advertisement, so, less expense

(d) One marketing mix(e) Single brand name

It has following disadvantages:

(a) It is product oriented rather than consumer oriented.

(b) Reduces profits due to product competition.

what is the market

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