Businesses sell to customers in markets. A market is any place where buyers and sellers meet to trade products - it could be a high street shop or a web site. Any business in a marketplace is likely to be in competition with other firms offering similar products. Successful products are the ones which meet customer needs better than rival offerings.
Markets are dynamic. This means that they are always changing. A business must be aware of market trends and evolving customer requirements caused by new fashions or changing economic conditions
Marketing is about responding to consumers' needs. It is important to find out what these needs are before launching a new product.
A business conducts market research to help identify gaps in the market and business opportunities.
There is far more to marketing than selling or advertising. Put simply, marketing is about identifying and satisfying customer needs.
The first step is to gather information about customers needs, competitors and market trends. An entrepreneur can use the results of market research to produce competitive products.
The first step for a new business or product is to attract trial purchases.
A new magazine may run special offers to get customers to try the first issue, hoping that repeat sales are generated. The magazine will soon close if customers fail to buy future issues. The aim of a special offer scheme is to convert trial purchases into repeat sales.
Market research involves gathering data about customers, competitors and market trends
- Primary research (field research) involves gathering new data that has not been collected before. For example, surveys using questionnaires or interviews with groups of people in a focus group.
- Secondary research (desk research) involves gathering existing data that has already been produced. For example, researching the internet, newspapers and company reports.
Factual information is called quantitative data. Information collected about opinions and views is called qualitative data.
Accurate market research helps to reduce the risk of launching new or improved products.
Some businesses opt out of field research and rely instead on the know-how and instincts of the entrepreneur to ‘guess’ customer requirements. They do this because market research costs time and money. Existing business can make use of direct customer contact to help them identify changing fashion and market trends.
Most markets contain different groups of customers who share similar characteristics and buying habits. These collections of similar buyers make up distinct market segments.
Breaking down a market into submarkets can lead to a business opportunity.
For example, a magazine publisher can target a specialist journal at one group of customers of similar age, gender, class or income.
Another tool used to help identify a business opportunity is a market map. A market map is a diagram that identifies all the products in the market using two key features.
A competitive market has many businesses trying to win the same customers. A monopoly exists when one firm has 25% or more of the…