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Concept of market

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The term market is derived from Latin word -
Means Merchandise, ware, traffic, trade or
place where business is conducted.

Olden days buying and selling was done by

coming together at a periodical fairs held at
specific places on particular dates- barter

Invention of money as a means

revolutionized the market system.
Market is responsible for making the economy
strong and stable.

Market is a dynamic concept.

It has grown and changed over the period of time

and still the process is in progress.
Classification of market

Traditional Market of 70s Emerging

market &80s Markets E-
Relates to early modernized commerce
production version
Every business Market means
phase. activity is people.
Scarcity of oriented. People have
manufactured money and the
goods in the Has no desire to spend
market. geographical it.
Was termed as Ignores the
pre industrial Modern thinkers place of activity.
revolution treated market as
coming together
Characterized of buyers and
as sellers living
agriculture anywhere and
cum-handicraft transacting
economy. purchase and
Traditional Markets: According to the American Market Association:-

"At every point where a specific commodity is

concentrated for sale a market is found".

The definition gives the traditional meaning of

The emphasis is on:
1) Place: The goods available for sale are bought to a
specific place and the buyers of those goods reach those
places for buying them.
(2) Different markets for different commodities such
as vegetable market, food grains market etc. Traditional
concept focuses that market means
a place" only, where actual buying and selling
takes place.
A new concept, a more scientific approach emerged
reunite/reconstruct because of industrial revolution.

In the words of Carnot:- "The term market is not any

particular place in which things are bought and sold but
the whole of any region where buyers and sellers are in
such free intercourse with one another that the price of
the same goods tend to equality easily and quickly.

This definition widens the area of a market by advocating:

Market is not restricted to a particular place but to a
The buyers and sellers of the whole region have free
access to one

This accessibility enables the forces of demand and
supply to operate and determine competitive prices
To support the wider view of market,
Clark and Clark defined a market as:
In fact, for most commodities, the market must
not be thought
as a geographical meeting place but as any
getting together of buyers and sellers in person
by mail, telephone, telegraph or by any other
means of communication.".
'A market is the atmosphere of a region in
which the forces of demand and supply operate
directly or by means of any kind of
communication that are sufficient to bring
transfer in the title of the goods and it does not
necessarily mean only a place where actual
buying and selling in conducted.
A market is an arrangement of establishing
effective relationship between buyers and
sellers of the commodities.

Market environment refers to factors and

forces that affect a firms ability to build and
successful relationship with customers.
Features of market
A market is thus an arrangement of establishing
effective relationship between buyers and sellers of the

It consist of all the potential customers sharing a

particular need or want

They might be willing and able to engage in exchange to

satisfy that need or want.

It is the forces of demand and supply which represents

the combined influence of self-interested buyers and
sellers on price and quantity of the goods and services
offered in the market.
Analyzing the Market Environment
Opportunities and threats keep constantly spinning around.

Those enterprises that ignore or resist market forces bear the


Excellent companies take an outside-inside view of the market

and its forces.

The network of "key institutions" interact to supply final

markets with needed
goods and services, collectively form the 'environment' of the

The market environment refers to factors and forces that

affect a firm's ability to build and maintain successful
relationships with customers.
The various factors and forces governing or at play in the market
can be categorized as:

a) Micro (Internal) Environment Primary forces

b) Macro (External) Environment - Secondary forces.

The Internal Environment refers to the forces operating in the

market that are close or within the organization and affect its
ability to serve its customers directly

Macro forces refer to all forces that are part of the larger society
are the "uncontrollable" to which companies adapt through setting
the "controllable" factors.

These secondary factors too have bearing on the market.

The goals, objectives, policies, strategies
etc. of the organization are the foremost forces
which govern the market.

Successful companies are those that can

recognize and respond profitably to unmet
needs and trends in the society. Unmet needs
always exist.

Those enterprises rule the market, who are

capable of:

Keeping itself aware of market needs and


Giving market a solution for their 'unmet'

Catering to social responsibility If
more is the number of producers, harder
and healthier would be the competition.

Ethics, values, principles, creativity,

innovativeness of the seller helps in
setting trends for market.

It is the "producer" and his/her abilities

that can create a 'market'.

Imagine, today we have markets for

things like Yoga, Pranic healing,
Astrology etc, all credit goes to sellers.
The most influential force which rules
the market is the 'Consumer',
Consumer Satisfaction is the
foundation stone of a successful
Business has to produce goods
according to
the needs of the customers.

But knowing customers is never

Enterprises have to take into
consideration the following features to
create, maintain and retain this
(a) Tradition, customs, beliefs, values of society
and customers
(b) Lifestyle, standard of living, consuming
(c) Propensity to consume and save
(d) Education level, thinking behavior
(e) Income level
(f) Demographic characteristics etc.

Consumer demand is the most important

element as it directly affects enterprises:-

Competitors are such factors in the micro

environment that provide similar offerings for
goods and services.
Normally, it would seem a simple task for a
company to identify its competitors but it is not
Coca-Cola knows, its "Pepsi-Cola" while 'Sony'
knows, its "Matsushita".

But the range of a company's actual and

potential competitors is much broader.
To remain competitive, an enterprise must
consider who their biggest competitors are.
With LPG, the level of competition is no more
local or national, but international.
In the market, a correct assessment needs to be
(a) Who are our competitors?
(b) Level/size of competitors
(c) The areas of strengths/weaknesses of competitors
(d) The financial standing of competitors
(e) Overall image of competitors products in the
(f) Operational capacity of the competitors.

The company should develop a strategic advantage

over their competitors else if its otherwise the fate
of the enterprise is doomed.
Edmund Burke believes "an opponent is our
Suppliers are another key component in the core
system of Market.
The company is essentially a resource conversion
that converts material, machines, labor and funds into
useful products.
The necessary resources are obtained from suppliers and how
well the company buys depends on:-
how well it grasps the working of the various supply
markets and
how well it applies business principles in conducting
relations with
Lack or non-availability of suppliers can ruin the market for a
Macro Environment -
External Forces
These macro forces refer to all forces
that are part of the larger society and
are the "uncontrollable" to which
companies adapt through setting the
"controllable" factors.

These secondary factors too have

bearing on the market.
They are very important factors of the market as they
help to divide the population into market segments
An example of demography is classifying groups of
people according to the year they were born
Each classification has different characteristics and causes
they find important.
Economic Factors:
These refer to the purchasing power
of potential customers and the ways
in which people spend their money.

Under conditions of economic

growth, buyer behavior is different
than his/her behavior during

thus affecting the market.

Technological Forces

The technological environment is

perhaps one of the fastest changing
factors in the macro environment.
This includes all developments
from :-
antibiotics and surgery to
nuclear missiles
chemical weapons to automobiles and
credit cards.

Advances in technology have provided

opportunities to new products, new ways
Political Forces

The political environment includes all

laws, government agencies, and groups
that influence or limit other
organizations and individuals within a

Market is regulated by these restrictions as

they can be complex.
It varies from place to place time to time.
To a large extent, the fate of companies and
markets depend upon the political conditions
in areas where they are situated.
As laws and regulations change often, this is
a very important aspect for a marketer to
Cultural Forces

The cultural environment, which consists of institutions

and basic values and beliefs of a group of people.
The values can also be further categorized into
core beliefs, which passed on from generation to
generation and very difficult to change, and
secondary beliefs, which tend to be easier to
influence. Market reflects the values of a target
Every organization and industry is in a delicate balance
with the forces in its environment.
As the environment changes, it calls for a creative
adaptation or response on the part of the organisms
interacting with it.
Nations (Assyria), Species (dinosaurs), industries
(Kingfisher) have collapsed because they failed to
meet environmental challenges with creative
Natural Factors

These include the natural resources that a company

uses as inputs and affects their marketing activities.
The concern in this area is the
increased pollution,
shortages of raw materials and
increased governmental intervention.
As raw materials become increasingly scarcer, the
ability to create a company's product gets much harder.

Also, pollution can go as far as negatively affecting a

company's reputation if they are known for damaging
the environment.

The last concern, government intervention can make it

increasingly harder for a company to fulfill their goals
as requirements get more strict.
Market Research

Market Research is referred as the

systematic study and evaluation of
all factors bearing on any business
operations which involves the transfer of
goods from a producer to a consumer.
Market research is a systematic
gathering , recording and analyzing of
data about problems which is a
continuous process
Researching the Market

Manufacturers, retailers, suppliers of all kinds of

services and many other organizations, need
information in order to:-
=satisfy their customers' wants and needs,
=to design effective marketing programs
=to deal with recurring decisions.

Given the diversity in consumers'

characteristics, a firm should be able to determine
the most appropriate market/ product/
information so to choose a combination of
marketing programmes which could satisfy the
All decisions are based upon either information or
Any information, so received, tends to be seen and
interpreted in the light of our existing knowledge
and past experience.

Before committing time and energy to preparing a

business plan, the entrepreneur should do:-
a quick feasibility study of the business
concept to see whether there are any possible barriers
to success.
Marketing Research is thus that versatile activity used
for decision making
Important elements of information needed by the
entrepreneur is the "market potential" for the
product or service.

Market research is the function which --

links the consumers, customer and public to
the marketer through information that is use

Identify and define marketing

opportunities and problems.
Generate refine and evaluate marketing
Monitor marketing performance;
Improve understanding of marketing as
a process.
Marketing research is the systematic and objective search
for an analysis of information relevant to the identification
and solution of any problem in the field of marketing.

Thus, the value and usefulness of information depends on

the extent to which it possesses the essential characteristics
of good marketing information.
An information is characterize as 'good' if it is:
Marketing research is the systematic and
objective search for an analysis of
information relevant for the identification and
solution of any problem in the field of

Thus, the value and usefulness of

information depends on the extent to which
it possesses the essential characteristics
of good marketing information.

An information is characterize as 'good' if it is

The Marketing Research Process:
Research is not restricted to only finding out
information about the market for a product,
instead it is concerned with providing
information, for decision-making for a wide
range of business activities
That starts from a new product development
right to after sales services.

This systematic gathering, recording and

analyzing of data about 'problems' is not an
easy task.
To acquire valid and reliable information, a
series of steps are likely to be used, which are
referred collectively as the
Marketing Research Process.
Defining the

preparing a list
Preparing the
of the needed
research report

whether such
information is
Summarize the already
findings available, either
in records of the
company or in
outside sources.
Select the
information it in
instrument to be
terms of the
used, select
problem being
sample type and
For example, managers of a retail clothing
store chain decided that falling sales were
caused by poor floor set-up and incorrect product
positioning. However, research concluded that
neither problem was the cause. It turned out that
the store had hired sales persons who weren't
properly trained in providing good customer
service. Careful problem definition would have
avoided the cost and delay of research and would
have suggested research on the real problem.
Research Instruments
Research instruments mean the instruments,
tools methods or techniques employed in
research for gathering the
One such most commonly used instrument by the
entrepreneurs, is Market Survey.

Market survey is a smaller concept ie its a

method of conducting market research.

Market survey amounts to the original field

research work for the purpose of collecting
primary data, with reference to a defined
problem on hand.
Market Survey:
Market survey is one of the most widely used market
research techniques and at times, viewed as
synonymous with Market Research.
Market survey is just one method/technique of
collecting information required for carrying out a
given marketing research task.
It is used if the required data is not available either
The company's internal records, or
The external published resources.

Market survey is an organized and in-depth

approach, which includes all the research activities
involved with extracting out carefully the information
for not only the first time, but directly from the
As an example, Company A sells kids' cereal. It was once really
popular, but now its sales have dropped almost 25% in the past
year, and it wants to know why. Marketing research is done to
answer this question.
Research reveals that Company B's kids' cereal has seen a
substantial jump in sales. The two companies sell a similar
product. More research reveals that Company B has added
some vitamins to its product, changed the look of the cereal
box, and is running advertisements to promote this new
"healthier" product. In fact, lots of food companies are
developing healthier versions of their products, and they are all
selling well. Even non-food products, such as sports equipment
and books about healthy living, are seeing an increase in sales.
Based on the results of this research, Company A decides to
create a healthier version of its cereal, making it better than, or
at least comparable to, Company B's brand. This new cereal is
promoted, free samples are given away, and within a few
months, sales are better than they were before the drop.
Although this is simplified, this example shows what this form of
research is and how it works.
Common Methods used for
Where you actually speak to
members of your target
audience, is a survey.

It can be conducted through:

Personal interviews
Telephonic interviews
Direct mail interviews
Fax/E-mail interviews
Online interviews
Questionnaire Development
Field work
Steps in a Market Survey
Survey is a customized technique.
According to objectives of study technique is to
be applied, for extracting information to the
optimum from the respondent.

Companies hire the services of professionals

to conduct survey on their behalf while
Small entrepreneurs do it all by themselves.
Steps in
Procedure for market survey
Step 1 Step 2 Step 3 Step 4
Planning the Field Work Analysis and Report
Survey Interpretation Making:
Decide what Managerial of Data:
is it, he/she and Tabulate the summarize
wants or administrativ collected data findings and
needs to know e skills recommendat
Define the Investigators Edited A summary
problem for fieldwork of what the
Tabulated study
Select the scientifically processe revealed is
most recruited d and recorded.
appropriate and trained
method of properly interpret list of
survey supervised ed recommenda
Time Statistica tions for the
Decide the schedule is enterprises
area and followed
l analysis continual
extent of the Responses and growth and
study accurately interpret success in
recorded the market is
Questionnair Collection of ations are done.
Importance or objectives
Basic objective of a market survey is to collect
information on various aspects of the business.
It involves:-
gathering, recording and analyzing the
Regarding the utility and marketability of the

A survey helps in each and every decision making

of an entrepreneur which is based on proper logic
and supportive date.
The survey is incomplete if it is not edited,
tabulated, and analyzed.
A report or some kind of inference as a conclusion
must be drawn from the whole study
Its importance can be judged from the
following points:-
Customer is the King

Risk reduction

Helps attaining objectives

Market Overview


Facilitates Decision Making

Types of Market Survey
To harness the power of surveys, the
entrepreneur needs to first learn how to do it
It is a tool, to be used with caution, tact and

There are two types of market surveys:-

a) The census b) The sample

The objective is to produce information with:

(i) Required degree of accuracy
(ii) Within the planned time span
(iii) Keeping the expenditure to the
Expanding Markets
Domestic companies around the world are
going global, which is not only intensifying
competition but giving rise of flurry of new
activities, in market
In order to
survive in
the changed
, a business
needs to be
enough to
cope with
Normally, any company has only two options
(a) Withdraw or
(b) Fight

There is no fun in surrendering before a war.

Therefore, it is better to plan:
(a) Sharper, focused, competitive strategies
to face the new competition.
(b) Tone up the existing strength and
leverage the first mover advantage.
(c) Realize the need for growth of business
Strategic Alternatives before an Enterprise:

Entrepreneurial Strategy represents the set of

decisions, actions and reactions that first
generates and then exploit over time,

A new entry in a way that maximizes the

benefits of newness with minimizing its cost.

But whether associated with a new product, a

new market and/or a new organization,
"Newness" is like a double-edged sword to
be used carefully and tactfully.
Strategic alternatives are available to a firm for
achieving its growth objectives.

The corporate strategies a firm can adopt,

(i) Stability maintain strategies
(ii) Expansion growth strategies
(iii) Retrenchment/Divestment strategies
(iv) Combination strategies
Stability Strategies
Initially, the organization continues to serve its customer
with basically the same products and services
"STABILITY" is what the entrepreneur is looking for in
the beginning as stability strategy is:
Less risky
Easier and
Automatically pursued
Defensive and
Enhances functional

Stability strategy is most likely to be pursued by small
businesses or firms in a mature stage of development.
Expansion Strategies:
Expansion is one of the forms of internal
growth of business.

It means enlargement or increase in the same

line of activity.

Expansion of an enterprise can be both

Domestic as well as International.

It can be pursued through a number of methods

and many options are available, depending on:-
the degree of growth and
thrust of growth which one aspires.
Need for expansion
Thus, an expansion strategy is a strategy that a firm
pursues when:-
(1) It serves the public with additional product or
(2) The growth is fast in the market for their
(3) They have a tendency to have larger than
average profit margins.
(4) A stretch rather than a fit strategy is pursued.
(5) New markets, new products, new processes and
new usage for old products are regularly developed.
(6) Internal expansions, mergers and acquisitions
are used to achieve expansion.
(7) Shifting from local to global markets is an
expansion sign.
Importance of growth & Expand
All organizations should grow and expand because:
(a) A Healthy firm normally has a natural desire for growth.
(b) Growth is essential for survival because if a firm does not
grow when competitors are growing, it might lose its
(c) A company needs growth to increase its market share.
(d) Market leadership is an objective of growth for several
(e) A company needs to diversify its business to minimize
(f) Growth becomes essential for full utilization of the
existing resources of the company.
(g) To increase profits is the most obvious objectives of
(h) People working in the organization will be motivated
only if there are challenges, opportunities and growth.
Market Expansion grid.

Expansion options:-
integration, diversification
In ten sive Expan sion :- mean s th e en ter prise in cr ease th e sales of its existin g pdts.

Penetration Market Pdt development

strategy development strategy
Encouraging Involve selling the Developing or
existing customers firms existing pdts to modifying the
to buy more of new group of existing pdt to meet
current pdt customers the requirement of
Approaches:- Approaches:- the customers:-
Encourage New demographic Approaches:-
frequency of use:- market Adding new
brush twice a day Tata Nano caters to features: - a
with x toothpaste to a segment of middle fairness cream with
prevent cavities. income group. sunscreen
Attract new New pdt use component.
clients:- Aspirin, a pain killer, Different Quality
Archies has been discovered Levies: - Surf excel,
aggressively good for heart too. Surf Ultra, etc.
promoted cards New geographic Alternative
more as a medium of market Technology: -
communication Nirma,local Gujarat CDMA and GPRS
Attract market expanded to mobiles.
competitors regional and then to
customers Dove national markets.
Vertical expansion Horizontal Integration
Expansion to serve its own When an organization takes up
needs the same types of products at
Any activity performed through the same level of production
external agencies will be and marketing process it is
performed by the firm itself called as Horizontal integration.
Backward integration:-
Going back to the source of raw Heinz and Kraft Foods merger.
materials On March 25th, 2015, Heinz
For example: and Kraft merged into one
For manufacturing of 'Nirma' company.
detergent an important raw
material used 'Linear Alkaline
Benzyne (LAB) which was
earlier purchased is now
manufactured by Nirma itself.
Forward Integration:-
Moving closer to the finished
For example:-
A car spare parts manufacturers
makes its own cars.
The manufacturer of a product
Marketing, an ancient art, includes all
activities pertaining to
creation of place, time and
possession utility.

It's a process of discovering and translating

consumer needs and wants into products and
services, creating demand for these products
and services and then increasing this demand.

In fact, marketing, in any economy, activates -

Number of aspects are involved in marketing a
product or service. Some are controllable and
others are uncontrollable.
Those which are uncontrollable, least could be
done about them.
Controllable aspects are:
The features of the product,
Its price
Its selling system i.e. through own
Its advertisement mode selection etc.

Sensible entrepreneur always tries to choose a

mix of alternatives or decisions amongst the
alternatives which may yield the maximum return
Entrepreneur designs activities and programmes
to win customers.
All these attempts keep revolving around the of
"Total Offer" to the consumer in such a
manner that:

(i) The offer fulfils the needs of the consumer

(ii) The terms of the offer are acceptable and
beneficial to the consumers,
(iii)All the organizational goals, including profits,
are achieved in the process.
'Total Offer
Has to perform in very systematically, calculatedly, attentively
and step by step
(meet the identified needs of the chosen consumer group)

(the consumers conveniently get the desired product)
(communicating with the consumer and promoting the
(balancing that is acceptable to the firm as well as the
This combination meet marketing objectives - is
marketing mix.
This set of controllable variables can influence buyers
Product Oriented:
(i) According to Price Oriented Benefits:
needs of the (i) Determination of price
according to the paying
capacity of customers
(ii) Saleable quality
(ii) Fair pricing of the
(iii)Improving the product
quality (iii)Credit facility
(iv)Attractive (iv)Discount and
designing and Target allowance.
(v) After sales market
Distribution Oriented:
Promotion Oriented:
(i) Availability at
(i)Advertising the right place
(ii)Sales (ii) Availability
promotion through convenient
(iii)Personal outlets.
Marketing Mix Variables

Marketing mix is a
plan which designs
marketing strategy
variables of market

Obtaining the
perfect blend of
marketing elements
4 P's,

in a way that there

Product Mix:
A product means something more than a physical

And marketing starts with the identification of human

needs and concludes with the satisfaction of the same

Nature and Classification

Product can be classified on the basis of:
(a)Durability - perishable, non-durable, durable services
(b)Utility capital/producer goods, consumer goods,
intermediary goods
(C) Weight wise - heavy and bulky goods, voluminous
Standard quality products satisfy the
Product requires carefully plan for following dimensions:-

1. Volume of output, sales growth potential

2. Shape, size, weight, color, features
3. Quality and standard of the product
4. Design and range
5. Brand name
6. Packaging and labeling.
7. Product testing
8. After sale service
Place Mix
Physical Distribution is
Moving the goods and services from the place of
production to the place of their consumption.
It creates both place and time-utility to a product.
Place mix determines
not only the place, where the product
should be made

but also whether goods are to be
marketed through
retail outlets or any
other channel.
Marketing Mix:

Direct Channels/Zero-
Single bakery, Bata Shoe
Indirect Channels
(One level channel):
refrigerators, washing machines

Two level channels

sugar, soaps, ghee, grains,

Three level channels

Agent Wholesaler

Hindustan Levers,
limited product line to cover Levers,
a wide market. The agents take
the responsibility of covering a fixed area.
Price Mix:
Price is the exchange value of a product.

Basically, price revolves around two major

(a)Utility: The generic property of the product
to satisfy the need or want of the consumer.
(b)Value: The quantitative worth the consumer
attaches to the product, for which he is willing
to part with a certain quantum of money.

Price and sales volume together decide the

Revenue of any business.
Thus, Price Mix is the determination of Money
Value of any product or service.
Factors Influencing Pricing
Internal Factors
External Factors
objectives of the firm
Image sought by the characteristics
firm (ii) Nature of economy

Cost of (iii) Nature of

manufacturing and
(iv) Bargaining power
Uniqueness' & utility of
of the product
Price elasticity of the
(v) Bargaining power

Demand elasticity of
the product. suppliers
Importance of Pricing:
Key to Revenue: Price and sales volume together decide
the revenue of any business
Attract Customers: Pricing's power to break customer's
brand loyalty by a lower price in the market
Edge Over Competition: Consumers want the maximum
quantity at minimum prices. Good quality but at reasonable
price is their demand. So it is competition that contributes
the maximum to the importance of pricing.
Crucial to Profits: It is risky area of decision in marketing
Platform for Achieving other Objectives: Business firm
have number of objectives -short term, long term, primary,
and secondary to be attained.
This is one of the reasons, why corporate go for profit
optimization rather than profit maximization
(i.e. an optimum level of profit over a long period as a
sounder objective of pricing than maximum profit in the
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