SBI PO 2014 - Marketing Awareness Part 1What is the market?
Any structure which may be a place or may not be can be defined as the market that allows buyers and sellers to exchange any type of goods, services and information. It can also be called as an arrangement constructed by buyers and sellers. It facilitates trade and enables the distribution of resources in a society.
Thus a market:
1. It establishes the prices of goods and services.
2. It consists of systems, institutions, procedures, social relations and infrastructure.
3. It brings a sense of competition.
4. It works on a basic force of demand and supply.
Types of market:
On the basis of place
1. Local market
2. National market
3. International market
On the basis of time
1. Very short period market
2. Short period market
3. Long period market
4. Very long period market
On the basis of competition
1. Perfectly competitive – It consists many sellers. E.g. – Mobile market, internet providers etc.
2. Imperfectly competitive
(a) Monopoly – one seller. E.g. – Indian Railway
(b) Duopoly – two sellers.
(c) Oligopoly – few sellers. E.g. – petroleum product market
(d) Monopolistic – many sellers
On the basis of product
1. Consumer market - These are the markets where products and services bought by consumers for their own and family use.
(a) Fast moving consumers goods (FMCG)
- High volume
- Low unit cost
- Fast and frequent purchase
E.g. – Biscuits, soaps, detergents, newspapers etc.
(b) Consumer durables
- Low volume
- High unit cost
E.g. – Freeze, TV, computers, motorbikes, laptops etc.
(c) Soft goods - It is like consumer durable.
- Low/high volume
- High/low unit cost
- Frequently purchased
E.g. Clothes, shoes, specs etc.
- Targeted consumers
- Brand name more important
E.g. – Health insurance, beauty parlours, insurance etc.
2. Industrial market- These markets are not intended directly to consumers but among businessmen.
- Finished goods market
- Raw material market
E.g. – Accountancy, legal advice, security services, waste disposal services etc.
What is a market economy?
It is an economy system in which economic decisions regarding monetary control, products and their production and methods and control over distribution are based on supply and demand. These are decided solely by the aggregate interaction of a country’s citizens as consumers and businesses and there is very little government intervention or central planning.
Since in market economy, markets are governed by the law of supply and demand, the market itself will determine the price if goods and services.
Businesses can decide which goods to produce and in what quantity and consumers can decide what they want to purchase and at what price. The prices of goods and services are determined in a free price system. In such economy, the government allows and protects ownership of property and exchange. Government plays an important role as the protector of property rights and individual liberty.
In theory, market economy is completely different from practical market economy. However most developed nations today can be classified as mixed economies, they are often said as market economies because they allow market forces to drive most of their activities, typically engaging in government intervention only to the extent that it is needed to provide stability. It can be contrasted with planned economy or centrally planned economy, in which government decisions drive most aspects of a country's economic activity.
What do you understand by Market Penetration?
Market Penetration is basically a strategy to increase the base or market share of the existing product. It is one of the four growth strategies of the ‘product market growth matrix’ defined by Ansoff. It occurs when a company penetrates a market in which current or similar products already exist.
Market Penetration can be done by the following means:
(a) Attracting nonusers of the product
(b) Encouraging existing users to use more quantity of products.
(d) Mega sales
(e) Lowering prices
Market Penetration can also be mathematically calculated using following formula –
Market Penetration = (sales volume of the product × 100) ÷ total sales volume of all competing products.
What is a product?
A product can be defined as anything which can be offered to a market to satisfy a need or want. Here want or need can be different from different angles. For example if a product ‘biscuit’ is sold in a market, it is satisfying the need of stomach of a person and same time maximizing profit of the company selling the biscuit. In retail product are called as merchandise.
Product can be classified as:
1. Tangible– Vehicle, cloth, gadget etc.
2. Intangible – Cannot be perceived by touch. E.g. – sad songs, action movies etc.
3. Branded– It carries a brand name.
4. Unbranded– It does not carry any brand name.
Note – Goods, idea, method, information, object or service that is the end result of a process and serves as a need or want satisfier. It is a bundle of tangible and intangible attributes like benefits, features, functions, uses etc. that a seller offers to buyers for purchase.