ma r k e t ( d e f I n I n g t h e ma r k e t )

AII busInesses operate In "markets". ut what Is a market! And how can It be defIned!
t Is Important to be careful about how a market Is defIned. The followIng key marketIng processes rely
on a relevant market defInItIon:
|easurIng market share
|easurIng market sIze E growth
SpecIfyIng target customers
dentIfyIng relevant competItors
FormulatIng a marketIng strategy
A market can be defIned as follows:
A market Is the set of aII actuaI and potentIaI buyers of a product or servIce.
ThIs defInItIon suggests that a market Is the total value and/or volume of products that satIsfy the
same customer need.
For example, If the customer need Is "eat breakfast", then the relevant market could be defIned as
the "8reakfast Food |arket". |any products would be relevant to measurIng and analysIng such a
market:
8reakfast Cereals
NutrItIon 8ars
PorrIdge / Dats
SpecIalIty 8reads (e.g. croIssants)
Fastfood Dutlets servIng breakfast
n defInIng a market ,E marketIng It Is Important not to focus only on products/servIces that currently
meet the customer need.
What s marketny
There are many dIfferent defInItIons of marketIng. ConsIder some of the followIng alternatIve
defInItIons:
"The all-embracny juncton that lnks the busness wth customer needs and wants n order to
yet the ryht roduct to the ryht lace at the ryht tme"
"The achevement oj cororate yoals throuyh meetny and exceedny customer needs better than
the cometton"
"The manayement rocess that dentjes, antcates and sules customer requrements
ejjcently and rojtably"
"Marketny may be dejned as a set oj human actvtes drected at jacltatny and
consummatny exchanyes"

alternatives to a marketing orientation
The ImplIcatIons of belIevIng In the marketIng concept become clearer when the alternatIves are
examIned:
There are three maIn alternatIves to adoptIng a marketIng orIentatIon. These are:
(1) Sales orIentatIon
(2) ProductIon orIentatIon, and
(J) Product orIentatIon.


SaIes orIentatIon
Some busInesses see theIr maIn problem as sellIng more of the product or servIces whIch they already
have avaIlable. They may therefore be expected to make full use of sellIng, prIcIng, promotIon and
dIstrIbutIon skIlls (just lIke a marketIngorIentated busIness).
The dIfference Is that a saleorIentated busIness pays lIttle attentIon to customer needs and wants, and
does not try partIcularly hard to create suItable products or servIces.
ProductIon orIentatIon
A productIonorIentated busIness Is saId to be maInly concerned wIth makIng as many unIts as possIble.
8y concentratIng on producIng maxImum volumes, such a busIness aIms to maxImIse profItabIlIty by
exploItIng economIes of scale.
n a productIon orIentated busIness, the needs of customers are secondary compared wIth the need to
Increase output. Such an approach Is probably most effectIve when a busIness operates In very hIgh
growth markets or where the potentIal for economIes of scale Is sIgnIfIcant.


Product orIentatIon
ThIs Is subtly dIfferent from a productIon orIentatIon. ConsIder a busIness that Is "obsessed" wIth Its
own products - perhaps even arrogant about how good they are. TheIr products may start out as fully
uptodate and technIcal leaders.
However, by faIlIng to consIder changIng technologIcal developments or subtle changes In consumer
tastes, a productorIentated busIness may fInd that Its products start to lose ground to competItors
ma r k e t I n g ma n a g e m e n t I n a c u s t o me r - o r I e n t a t e d b u s I n e s s
The process of marketIng management Is about attractIng and retaInIng customers by offerIng them
desIrable products that satIsfy needs and meet wants.
|arketIng management In a customerorIentated busIness consIsts of fIve key tasks summarIsed In the
table below:
harketIng Task Commentary
IdentIfy target markets |anagement have to IdentIfy those customers wIth whom they want to
trade. The choIce of target markets wIll be Influenced by the wealth
consumers hold and the busIness' abIlIty to serve them
harket research |anagement have to collect InformatIon on the current and potentIal
needs of customers In the markets they have chosen to supply. Areas to
research Include how customers buy (whIch marketIng channels are used)
and what competItors are offerIng
Product deveIopment 8usInesses must develop products and servIces that meet needs and wants
suffIcIently to attract target customers to wIsh and buy
harketIng mIx HavIng IdentIfIed the target markets and developed relevant products,
management must then determIne the prIce, promotIon and dIstrIbutIon
for the product. The marketIng mIx Is taIlored to offer value to customers,
to communIcate the offer and to make It accessIble and convenIent
harket monItorIng The objectIve In marketIng Is to fIrst attract customers and then (most
Importantly) retaIn them by buIldIng a relatIonshIp. n order to do thIs
effectIvely, they need feedback on customer satIsfactIon. They also need
to feed thIs back Into product desIgn and marketIng mIx as customer needs
and the competItIve envIronment changes
p r o d u c t s - I n t r o d u c t I o n
A product Is defIned as:
nythny that s caable oj satsjyny customer needs
ThIs defInItIon Includes both physIcaI products (e.g. cars, washIng machInes, 070 players) as well as
servIces (e.g. Insurance, bankIng, prIvate health care).
The process by whIch companIes dIstInguIsh theIr product offerIngs from the competItIon Is called
brandIng.
For most companIes, brands are not developed In IsolatIon they are part of a product group.
A product group (or product lIne) Is a group of brands that are closely related In terms of theIr
functIons and the benefIts they provIde (e.g. 0ell's range of personal computers or Sony's range of
televIsIons).
There are two maIn types of product brand:
(1) hanufacturer brands
(2) Dwn-IabeI brands
|anufacturer brands are created by producers and use theIr chosen brand name. The producer has the
responsIbIlIty for marketIng the brand, by buIldIng dIstrIbutIon and gaInIng customer brand loyalty.
Cood examples Include |Icrosoft, PanasonIc and |ercedes.
Dwnlabel brands are created and owned by dIstrIbutors. Cood examples Include Tesco and SaInsbury's.
The maIn Importance of brandIng Is that, done well, It permIts a busIness to dIfferentIate Its products,
addIng extra value for consumers who value the brand, and ImprovIng profItabIlIty for the company.
8usInesses should manage theIr products carefully over tIme to ensure that they delIver products that
contInue to meet customer wants. The process of managIng groups of brands and product lInes Is called
portfoIIo pIannIng.
Two models of product portfolIo plannIng are wIdely known and used In busIness:
- The 8oston Croup CrowthShare |atrIx, and
- CE |arket AttractIveness model
These models are descrIbed In more detaIl In other tutor2u revIsIon notes.
8usInesses need to regularly look for new products and markets for future growth. A useful way of
lookIng at growth opportunItIes Is the Ansoff Crowth matrIx whIch suggests that there are four maIn
ways In whIch growth can be achIeved through a product strategy:
Market enetraton ncrease sales of an exIstIng product In an exIstIng market
Product develoment mprove present products and/or develop new products for the current
market
Market develoment Sell exIstIng products Into new markets (e.g. developIng export sales)
0versjcaton 0evelop new products for new markets