It's important for us to understand the basics of Marketing so that we can go further on Marketing subjects later on. Here are some of the basic concepts we will go through to build on the basis of our Marketing knowledge:
Needs and Wants;
Customer base;
Markets (consumer and industrial);
Target market;
Consumer vs. Customer;
The business environment.
Let's start by reminding ourselves of needs and wants:
- Needs are essential items we need in order to live (e.g. food, water, shelter, air);
- Wants are not essential for us to live but are nice to have.
Needs | Wants |
Food | I need food (I'm hungry) but I want to eat a hamburger |
Water (something to drink) | I need something to drink but I want to drink Coke |
Shelter (somewhere to sleep and protect us from cold, heat, etc.) | I need a place to protect me from rain, heat, cold, but I want to live in a penthouse in Manhattan |
Let's get some more concepts and definitions out of the way:
Marketing is the business field responsible for turning a want (something unessential into a need (something essential).
It aims to convince/persuade customers that their products are essential so that sales, revenues, and profits increase.
Customer Base:
The group of customers that the business is able to sell its products to regularly.
Businesses strive to build strong relationships with such customers through marketing.
Building Customers Relationships:
To develop a strong customer base businesses need to first understand their customers at a higher level. Such understanding would enable them to serve customers better (products, services, information, etc.).
Another important concept we need to be fully aware is the one of Markets. Do you know what is a market?
Not this:
Also not this:
Definitely not this:
So what is a market?
A Market is made out of all the potential customers who are interested in a product, have access to the product, and are financially enabled to buy the product.
Example: The Market for cars in Mongolia is made of customers who:
Are older than 18 years-old;
Interested in buying a car;
Have the financial resources to afford a car;
And can physically go and buy a car.
Markets can be of two types:
Industrial Markets: when products are sold from one business to another, usually in large quantities, and with the intention of being further processed (e.g. a restaurant business purchasing groceries);
Consumer Markets: when products are sold to final consumers (e.g. customers like us groceries-shopping at the supermarket).
Alongside Market we have the concept of Target Market: the specific group of customers identified by the business as the 'right' customers for their products.
Take the Ferrari brand as an example:
This is a very luxurious, sporty, fast car that costs at around $2 million. The Ferrari target-market is a very specific group-type of customer who are interested in such cars, have access, and the financial means for the product.
Lastly, we should now understand the different elements of the business environment (constantly changing) which can influence a business' success. Such elements include:
- Price: usually the higher the price, the lower the sales;
- Price of Competition: the availability and price of competing products influence the business' sales and profits;
- Customers' Income: non-essential goods thrive on 'booming' economies and less so on declining economies, for example;
- Population Size, Structure, and Changes: growing or declining population, younger or older population, all factors that can impact the success of a product/business in a market;
- Changes in Customers Preferences: customers oftentimes change their tastes, fashion, and preferences for products (e.g. fitness craze, health eating, apparel, etc.);
- Spending on Advertising and Promotion: the amount spend by the business and its competitors in marketing will impact on the amount of sales and profits (price premium) a business will make.
To-Do-List:
Case Study - Developing Customer Loyalty in the African Mobile (Cell) Phone Market (p. 140)
Chapter 10 - Marketing, Competition, and The Customer
Session 35
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