World Market Scene - Essay Example

Table of Contents Table of Contents 1 Bibliography: 13 What the does the word market depict? The word market brings the scene of a public place where goods and services are traded, purchased and sold to our minds. The meaning of the word market has many dimensions. Generally speaking, a market is a site or venue where people willing to pay a price for something meet those willing to sell it. With reference to marketing, a market is the total sum of potential buyers of a product. Market in context to economics, is known as a mechanism which allows people to trade, normally governed by the theory of supply and demand, and thus allocates resources through a price mechanism. It incorporates a bid and ask process. Generally, there are two primary kinds of markets: -General markets, those where many commodities are traded -Specialised markets, those where only one commodity is traded Markets operate by gathering intrested sellers in one place, which makes it easier for them to find prospective buyers. There is a direct relationship between a market and a customer or consumer. A customer is the entity that constantly stays intact with the market for meeting his needs and requirements and the market provides these requirements. Furthermore, there are some secondary types of markets which are classified on the basis of the products they deal with. For instance: -Marketplace A marketplace is a location where goods and services are exchanged. The traditional market square is a city square where traders set up stalls and buyers buy the merchandise. This is the oldest and most kind of market. -Wholesale Markets A wholesale market is such a market whose primary function is selling to traders such as caterers and small shopkeepers, rather than the common public, however, members of the public are not necessarily excluded. -Marketspaces In the modern era, mainly after the invention of the electronic computer, the location of markets is not only in a physical space. There are virtual markets,which consist of communication paths where information exchange is easy and deals may be struck. These are often called marketspaces. A notable example of this is the international currency market. The e-Bay web site can also be considered a marketspace. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy that is based, e.g., on gifts ( Market). A customer The simple description of a customer would be ‘someone who purchases or rents something from an individual or organization’. The word ‘customer’ has been historically derived from ‘custom’ which means ‘habit’. A customer was considered to be the person who visited a particular shop and made it a habit to purchase goods of the sort the shop sold there rather than elsewhere, and with whom the shopkeeper had to maintain a relationship to keep his or her ‘custom’ which meant expected purchases in the future. The shopkeeper would remember the sizes and preferences of his or her customers. The word did not refer to those who purchased things at a fair or bazaar, or from a street vendor. A customer can be classified into two kinds : -Internal Customer An internal customer is someone who works for the organisation, but probably in another department or another branch. -External Customer External customers are essentially the general public. This catogery includes Individuals, individuals of different needs, individuals of different cultures, business people and groups (Customer). Moving towards the core elements of a market When analyzing the real meaning of a market, its place and importance in our lives, there are some core elements to be discussed as well. Without knowledge of these elements, one cannot fully grasp the concept of markets and their importance. The first and foremost element to be discussed in this context is the ‘product’. It is the entity, which is sold to the customer by the seller, which fulfills the demand of the customer and earns profit for the seller. Let us define what a product is. Defining a product The word product simply implies the meaning ‘goods and/or services’ or an object that is created, bought or sold by a business. Products are also termed as bundles of attributes (features, functions, benefits and uses) and can be either tangible as in the case of physical goods, or intangibles such as those associated with service benefits or a combination of both. These are the simple descriptions of a product in context of marketing and markets (Product). Going deeper in the explanation what a product actually is, a product is anything that can be offered to a market that might satisfy a want or need. Moreover, it is a lot more than what can be called just a physical object. It may be described as the complete package or collection of benefits or satisfactions that buyers sense they will obtain if they purchase the product. In totality, it is the sum of all physical, psychological, symbolic, and service attributes. A product is somewhat similar to a good. In accounting, goods are termed physical objects available in the marketplace. This is what distinguishes them from a service, which is a non-material product. The term product is used mostly by those that wish to examine the details and richness of a specific market Kinds of Products There are several types of products which are classified on the basis of their use by a wide range of people: -Consumer products Those products that are used by end users -Industrial products Those products that are used in the production of other goods -Convenience goods Those that are purchased frequently and with minimal effort -Emergency goods Those goods or products that are required immediately -Shopping goods some comparison with other goods -Unsought products such as cemetery plots, insurance -Perishable products Products or goods that will deteriorate quickly even without use -Durable goods Those goods that survive multiple use occasions -Capital goods Installations, equipment, and buildings -Supplies and services Those goods that facilitate production -By-products Those products that result from the manufacture of other products (Product- Kinds of Products). Product Management After having a clear concept of what a product actually is, the next thing to know about is ‘Product Management’. It is one of the four areas of marketing. Product Management defines the products in the marketing mix and the other three parts of the marketing mix are pricing, promotion, and distribution. Product Management may also illustrate how an organization approaches the vital process of managing and marketing its products and services as smaller businesses inside the larger enterprise, supported by multi-function product teams (led by product managers) and a standard product development process. In the proces of Product management the following questions are dealt with and discussed: -What products should be produced and sold? -What novel products should be introduced? -Which exsiting products should not be manufactured anymore? -How long will it take for a product to penetrate the market? -How can a product portfolio be balanced? -What are the innvative steps to be taken to introduce a product to the marke -Whether the product differentiation strategy should be used or not? -What is the best product positioning? -What brand name to use? -Whether to use individual branding or family branding -Whether to use product bundling or product lining -What logo to use? -Product Life Cycle considerations (What is product management?) The Product Life Cycle Product life cycle is an important phase and element in the development and manufacture of a product.The product life cycle demonstrates the sales of a product over a period of time. It consists of four main phases a product can be at during its life, which are: -Introduction This contains new products that have just been launched and introduced. Heavy advertising of such products is carried out until people are familiar with them. During this stage: -The product cost is high -Its sales volume is low -There is a chance of loss -Growth In this phase, the product is still new and complimentary discounts are offered. People are still purchasing the product as not many people may have one. A few competitors might exist. Therefore, during this stage -The costs are reduced due to economies of scale -The sales volume increases significantly -There is a chance of profitability -The prices tend to maximize market share -Maturity This is the first instance when sales stop increasing rapidly. The reason might be that there is more competition or other products, which are being preferred. Hence in this stage: -The costs are very low -The sales volume peaks -The prices tend to drop due to the proliferation of competing products -Decline At this phase, sales begin to decrease rapidly. The reason being that the product may have become out dated or out of fashion. Therefore in this stage: -The sales decline -The prices drop (lower prices may lead to lower value perception) -The profits decline The product life cycle is shown as a line graph and is useful to decide what marketing practices should be carried out for the product at different stages. However, it must not be forgotten that different products tend to spend different amounts of time at each stage of the life cycle ((Marketing-Product Life Cycle). Product life cycle extension and stretching policy Another important aspect while debating over the life cycle of a product is the Product life cycle extension and stretching policy. Extension and stretching strategies or policies are deployed during the saturation and decline stages to try and extend the product's defined life cycle. These policies may incorporate operations such as price reductions and other special offers. Sometimes companies may use the strategy to decide to target a new segment of the market as an extension strategy or develop an entirely new product (Marketing-Product Life Cycle). Branding-naming the product! When a product has passed through all the phases of its manufacture and is ready to be introduced into the market, it is time to name it or brand it. Branding simply means attaching a brand mark or brand name to a product in order to distinguish it from other product variants. Branding is the process by which both a brand and brand identity are developed. It is a promise and a pledge of quality. It is the real spirit of a product, which includes the reasons why it is great, and how it is better than all competiting products and these reasons are conveyed through objects and text, which include an image and a combination of words and letters, symbols, and colors (Marketing-Branding). A brand is the proprietary visual, emotional, rational, and cultural image that is associated with a company or a product. The purpose behind having people remember the brand name and have positive associations with that brand is to make their product selection easier and enhance the value and satisfaction they get from the product. A good brand name should have the following characteristics: -It should be legally protectable -It should be easy to pronounce -It should be easy to remember -It should be easily recognizable -Be capable of attracting attention -Suggest product benefits (e.g.: Easy-Off) or suggest usage -It should depict the company or product image -It differentiate the product's positioning relative to the competition (Brand Management). Promotional Planning-Devising Ways to Introduce the Product Now that the product has passed through all the stages of its manfacture and its has been branded, strategies are devised to promote it in the market. This process requires extensive knowledge of the product and its attributes and the knowledge of the market where it will be introduced first. The promotional planner group or individual must have a clear conception of the customers or consumers who are likely to use the product. This conception would alleviate him in designing the promotion strategy for the product. With a clear focus of the trends of the market where the product would be introduced, the promotional planner can successfully promote the product without many hindrances. Promotional Planing is the most crucial phase in the introduction of the product in the market and an un-planned product promotion surely generates long term negative effects on the future sale of the product. Promotional planning can be divided into three steps: -Advertising -Sales Promtions -Marketing Communications Advertising Advertising is the public promotion of some product or service; it is the business of drawing public attention to goods and services (Advertising). Advertising influences, everyone in one way or the other. A more technical definition of advertising would be ‘any paid form of non-personal presentation of ideas, goods or services by an identified sponsor’. Advertising is literally the paid promotion of goods, services, companies and ideas by an identified sponsor. Marketers consider advertising to be a part of an overall promotional strategy or promotional planning. Other components of the promotional planning process include publicity, public relations, personal selling and sales promotions (Advertising). The TV commercial advertising is considered to be the most effective mass-market advertising format and this is reflected by the high prices TV networks charge for commercial airtime during popular TV events. The obejective of marketing is to identify markets that will purchase a product (business) or support an idea and then enhance that purchase, advertising is the paid communication by which information about the product or idea is transmitted to potential consumers. Advertising, when considered in the non-commercial aspect, it is a powerful educational tool capable of reaching and motivating large audiences (Advertising). Sales Promotions In the field of marketing, sales promotion is one of the three significant aspects of promotional planning mentioned above. Sales promotions are the non-personal promotional efforts that are designed to have an immediate effect on sales. A Sales promotion is media and non-media marketing communications deployed for a defined, limited time to increase consumer demand, stimulate market demand or improve product availability. A Sales promotion refers to any activity that is designed to enhance the sales of a product or service. It may include an advertising campaign, increased PR activity, a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telephone-selling, personal letters on other methods. Sales promotions can be directed at either the customer, sales staff, or distribution channel members such as retailers. There are two kinds of sales promotions: -Consumer sales promotions Sales promotions whose main target are the consumers are called consumer sales promotions. -Trade sales promotions Sales promotions targeted at retailers and wholesale are called trade sales promotions (Sales Promotions). Marketing Communications Marketing communications or marcom comprises of the messages and related media that is used to communicate with a market. It is an important component of the promotional plannig of a product. Marketing communications comprise pf all the communications between the organization and all other parties. Marketing communications encompasses all the traditional forms of promotion planning including advertising, sales promotion, personal selling, publicity, public relations and direct marketing. However, it aims to be broader than this. It includes all points of contact between the organization and other parties (Marketing Communications). Bibliography: Advertising Retrieved on December 8th 2005 from: http://wordnet.princeton.edu/perl/webwn Advertising Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Advertising Brand Management Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Brand_management Customer. Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Customer Market. Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Market Marketing-Product Life Cycle. Retrieved on December 8th 2005 from: http://www.projectalevel.co.uk/business/index.htm Marketing-Branding. Retrieved on December 8th 2005 from: http://www.quintcareers.com/jobseeker_marketing_glossary.html Marketing Communications Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Marketing_communications Product.Retrieved on December 8th 2005 from: www.shapetomorrow.com/resources/p.html Product- Kinds of Products. Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Product_(business) Sales Promotions Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Sales_promotion What is product management?. Retrieved on December 8th 2005 from: http://en.wikipedia.org/wiki/Product_management Read More