Page 555 - Business Principles and Management

Unit 6

20.2 Elements of Marketing

Goals Terms
• Describe the role that market • market • product
determination plays in marketing. • market research • price
• Define basic marketing concepts • target markets • distribution (place)
and the four elements of the • marketing mix • promotion
marketing mix.

Market Determination

Before a company decides to make and distribute a product, it must determine
the market it wants to serve. Here, market refers to the types of buyers a busi-
ness wishes to attract and where those buyers are located. All companies need to
clearly identify their markets.

WHOM TO SERVE

There are many potential customers for a product. Some people may be search-
ing for the product, whereas others do not currently want the product and will
have to be convinced to buy it. Some people are very easy to reach, but others are
more difficult. For cost reasons, it is usually unwise to try to reach all potential
customers. Therefore, a business identifies several groups of potential customers
and then decides which group or groups will be the best markets for its product.
Marketers often develop customer profiles based on population characteris-
tics, such as age, gender, family status, education, income, and occupation, in
which to group consumers. A clothing manufacturer, for example, could handle
women’s or men’s clothing, clothing for children or adults, casual clothing or the
latest high fashion, and so on. The producer of cellular telephones may want to
attract families, people concerned about their safety, or businesspeople. A busi-
ness can decide to serve one or more markets. Companies choose a market based
on the opportunities for success that the market presents. For example, an attrac-
tive market may have few existing competitors, a large number of customers with
a need for the product, and customers with sufficient money to spend on such a
product. If the business has the ability to produce a product that will satisfy the
needs of that market, then it is a good market for the business to serve.

WHERE TO SERVE
Producers often limit the scope of their business operations to certain geo-
graphic areas. Marketing managers study sections of a city, state, country, or
continent to determine whether their product might sell more successfully in one
area than another. Climate, for example, may cause a small producer of air con-
ditioners to concentrate its marketing efforts on countries with hot and humid
climates, whereas the maker of snow skis may concentrate on areas with cold
winters and mountains. Some products may sell better on the coasts than in the
middle of the country, or in rural areas better than in cities. Finding the best

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