2020-06-29
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Main idea: The focus of marketing is to maximize sales by satisfying consumer wants and needs. Through market research, businesses can determine what products consumers are likely to buy and at what prices.
The Development of Marketing Marketing involves all of the activities needed to generate consumer demand and to move goods and services from the producer to the consumer. Some economists estimatethat about 50 percent of the price people pay for an item today is for the cost of marketing.
Today, marketing’s main purpose is to convince consumers that a certain product will add to their utility. Utility is the ability of any good or service to satisfy consumer wants. Utility can be divided into four major types: form utility, place utility, time utility, and ownership utility.
Market Research Finding out what consumers want can be difficult. It is crucialthat businesses do so, however, because many markets today are national or even global. An increase in sales of a few percentage points can result in millions of dollars in increased profits. Therefore, before a product is produced or a service is offered, businesses research their market. Market in this sense means the people who are potential buyers of the good or service.
Through market researcha company gathers, records, and analyzes data about the types of goods and services that people want. Most companies producing consumer goods invest heavily in market research. They use this research to figure out how best to promote their product. Issues they consider include what their target audience should be and what advertising method will be most effective.
How should market research be done? Market research may be done at several stages of product development. It can be done at the very beginning when the first ideas about a new product are being developed. It can be conducted again to test sample products and alternative packaging designs. Early market research has several purposes. It helps producers determine whether there is a market for their good or service and what that market is. It can also indicate any changes in quality, features, or design that should be made before a product is offered for sale.
To investigate initial consumer response, market research is often done immediately after a product is released for sale. Some companies even test their advertising to make sure it is attracting the market segment for which the product was designed. Market researchers can also gather information about a product that has been on the market for a while. They then attempt to discover what should be done to maintain or increase sales.
The first step in market research is performing a market survey,in which researchers gather information about who might be possible users of the product.
A market survey typically involves a series of carefully worded questions. The questions may be administered in the form of a written questionnaire, which is mailed to consumers. Another way to survey the market is by conducting individual interviews. Some market surveys are also done online.
As a final step before offering a product for national distribution, market researchers will often test-market a product such as a detergent or a toothpaste. Testmarketing means offering a product for sale in a small area, perhaps several cities, for two months to two years to see how well it sells.
The Four “Ps” of Marketing Through their marketing departments, companies plan a marketing strategy,which details how the company will sell the product effectively. A marketing strategy, or plan, combines the “four Ps” of marketing: product, price, place, and promotion.
Product Market research helps determine what good or service to produce. It also helps a company determine what services to offer with the product, how to package it, and what kind of product identification to use. Additional services that accompanya product often help make a sale, for example additional warranties that some manufacturers offer free or for a small charge. The “right” packaging combines size, design, and color to attract potential consumers. DVDs, books, and food are especially dependent on packaging. Product identification can involve the use of a logo or certain colors on a package.
Price Because of the laws of supply and demand, the price at which a product sells may help determine whether it is successful in attracting buyers while still being profitable to its maker. In setting a price, a company has to consider the costs of producing, advertising, selling, and distributing the product, as well as the amount of profit it hopes to make.
Place Wherethe product should be sold is another decision of the marketing department. Should it be sold through the mail, by telephone, in department stores, in specialty shops, in supermarkets, in discount stores, door-to-door, or on the Internet? Or should it be sold in a combination of many of these places? Often, the answer is obviousbecause of past experience with similar products. A cereal company, for example, would most likely market a new cereal in supermarkets.
Promotion Promotionis the use of advertising and other methods to inform consumers that a new or improved product or service is available. Promotion also
seeks to convince consumers to purchase the new items. Advertising methods may include ads in newspapers and magazines, television commercials, promoting products on the Internet, direct-mail advertising, free samples, cents-off coupons.
PART B. TASKS
Unit 1
THE FACTORS OF PRODUCTION
