A market is any place where the sellers can meet with the buyers of goods and service to perform a transaction.
Features of a market include:
Buyers and Sellers: These are the two parties in a transaction.
Commodity: This is the object of the transaction. It is the reason for the market, provided by the seller sought by the buyer.
Medium of Exchange: For every transaction, an exchange occurs. Money, gold, silver, etc., are media of exchange. It must be a legal tender.
Area/Channel: This is the location where buyers and sellers interact. Technology has made online platforms a fast-growing channel, including digital marketing.
Competition: This is the demand and supply forces at work.
There are two main types of markets:
Product Market: goods and services (B2C)
Resource Market: factors of production (B2B).
The marketplace may be a physical entity (bricks and mortar store) or may be virtual (website or app).
It may be local, national or global.
It is important for a business to understand the market in which it operates, as each type have different characteristics that will impact decision making regarding the product, its features, marketing, pricing and distribution channels.
For example, when operating in a B2B (business) market most sales are done with trade credit (invoicing) which means that the seller will not get paid immediately and therefore must manage its cash flow and debt collection to ensure its customers (businesses) pay on time after the usual 30 days. However, when operating in this market the customer (business) will also be reordering on a continuous basis, easier to forecast sales.
Regardless of the type of market in which the business is operating it is constantly changing. Changes in legal requirements, consumer needs/wants and economy means the business needs to constantly adapt. New technology usually streamlines process making it more efficient and easier for businesses to carry out operations but usually at the expense of losing the personalised contact that allows businesses to develop relationships with it customers and suppliers.
As ‘globalisation’ of economies occur so does markets. It become more difficult for local businesses to compete in their markets as increase competition from multinational firms enter. This gives multinational businesses an unfair competitive advantage, especially in the area of pricing, as they have reached a high level of economies of scale and can offer their products at a much lower price. To keep customers local businesses, need to continuously find their competitive advantage by innovating costing time and money.
"Marketing is the management process for identifying, anticipating and satisfying customer requirements profitably."
Although there are many definitions of marketing, they all consider the same elements.
There are 4 main elements to this widely used definition
A management process: Marketing has to be planned, have goals and be within a budget to ensure return on investment.
Customer requirements: A successful business must understand its customers' needs, wants, habits and attitudes and it achieves this through thorough market research and careful analysis of data.
Satisfying customers: Goods and services must satisfy customers' needs and wants and be perceived as good value for money. A satisfied customer often results in repeat purchasing behaviour and good word-of-mouth promotion.
WHY
Businesses use the marketing process to satisfy customer needs and wants. If a customer is pleased with their purchase, they are more likely to come back to the business in the future, therefore ensuring the business can grow.
HOW
Businesses match elements of the marketing mix to the consumer needs and wants. For example,
Product features solves the customers pains or desires.
Price is within the customers affordability based on their disposable income.
Place – product can be purchased where consumers have access to
Promotion – business communicates using methods and channels which will reach the desired consumer.
Marketing process requires many different skills and knowledge from analytical to creative. It is difficult for a small business owner to possess all the required knowledge and skills to develop and action a marketing plan, therefore they need to hire specialised personnel or other businesses to assist such as a manufacturing, or ad agency.
It requires close management to ensure the consumers are informed about the right product for them, at the right price and place, at the right time. If any of these factors fail the customer will not be satisfied.
Marketing process needs to constantly change to keep up to date with the changing business environment (laws, economic fluctuations, consumer needs/wants).