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A market can be defined as any form of contact between buyersand sellersfor the purpose of buying and selling goods and services. Markets always have two sides: the demandside, composed of buyers, and the supplyside, made up of sellers. Markets can be local, nationalor even international.A market typically has four elements:
1. Buyers - people wishing to acquire goods and services.
2. Sellers - people wishing to sell goods and services.
3. The goods and services, which are going to be exchanged.
4. A means of payment - that includes cash, cheque, credit,standing orderand hire purchase.
The demand for a product is the amount of a good that -people are willing to buy over a given time period at a particular price. For most goods and services the amount that consumers wish to buy (the quantity demanded) will increase as pricefalls.
The desired demand is the information showing the amount of the product that consumers are willing to buy at different prices - not what they actually do buy. The demand for a product is not only influenced by price. An individual may be influenced by factors such as personal tastes, the size of income, advertising, the cost and availability of credit. The total market demand will be affected by the size and age distribution of the population and government policy.
The quantity of goods and services that producers offer at each price is called supply. While demand is concerned with the buying side of the market, supply is concerned with the firm's or producer's side of the market. Unlike demand, the quantity supplied of a good will increase as price rises. The supply of a product is not only influenced by price. Supply will be affected by anything that helps or hinders production or alters the costs of production.
Consumers have a wide variety of choice in how they spend their income, and there is a large quantity and many different types of goods and services that the consumer can buy. One difficulty that confronts a firm is to decide what to produce. Satisfying the wants and needs of consumers and anticipating these wants can make the difference between success and failure in business. Some things, such as food, are essential. Food is an example of a single-use consumer good. Most people, having satisfied their needs, can attempt to satisfy their wants by the purchase of items such as cars, TVs, microwave ovens and compact disc players. They are sometimes called consumer durable products. Alternatively, they may purchase services such as dry-cleaning, haircuts, trips to the cinema and meals out.
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Today, a successful company is one, which tries to discover what the consumer wants or could be persuaded to buy and then makes that product and sells it at a profit. Such firms are said to be market-oriented. In a market-oriented firm one-of the functions of marketing department is to find out consumer requirements. This is in complete contrast to a product-oriented firm, which first produces a product and then tries to sell it in the hope that the consumer will buy it.
Market research involves studying the market to discover exactly what the customer really wants. Companies collect information in order to build up a picture of consumer requirements. It can come from two main sources.
1. Primary information is information that is not already available. One of the techniques used to collect this information here is field research - questioning consumers directly about their tastes and preferences.
2. Secondary information is information that is already available to the firm. It can come from a variety of sources, such as government statistics and business and trade publications. Gathering information this way is called desk research.
Identifying the tastes and preferences of consumers is not simple because there are many different types of consumers with different tastes. Firms normally try to build up a consumer profile, i.e. the age, sex, occupation and location of its consumers.
Every firm usually possesses its own internal information about the popularity of its products and about its own sales. This information, although useful, may be of limited value since it tells the firm nothing about the total size of the market, competitors' products and prices, or consumer preferences. Consumer research can be carried out by the Market Research Department of a company or by Market Research Centers, which specialize in providing this service for others.
Market researchers collect, analyze and interpret data to provide companies with information about the needs and desires of the buying public, they develop forecasts of consumer motivations and buying habits on the basis of these forecasts, they propose strategies for the marketing campaign of current products and suggest areas for market l__expansion.
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