Page 556 - Business Principles and Management

Chapter 20 • Nature and Scope of Marketing

marketing locations enables a business to
achieve the most sales for its marketing dollar. FIGURE 20-2 Possible Target Markets for Bicycles

IDENTIFYING TARGET MARKETS
Companies can produce goods and services that
meet consumers’ needs better if they know who Leisure biking
their customers are, where they are located, and (comfortable;
low maintenance)
what they want and need. Many companies
spend a great deal of money on market research
before they begin to develop products. Market Competitive
research is the study of a company’s current Age 6-10 biking
and prospective customers. (first bike)
Companies use market research to identify
their target markets. Target markets are groups
of customers with very similar needs to whom
the company plans to sell its product. If the com-
pany can find a group of people with very similar
Mountain Lightweight
needs, it can more easily produce a product that biking touring
will satisfy everyone in the group. On the other
hand, if people in the group have needs that are
quite different, it will be almost impossible to de-
velop a product that will satisfy each of them.
Imagine developing a product like a bicycle. It
can be made in a variety of sizes and shapes with
a number of special features. No one bicycle will satisfy everyone’s needs. Long-
distance racers want something very different from what the weekend rider desires.
However, if you could find a group of people with very similar needs, you could
successfully design a bicycle for that group. If you identified the groups depicted
in Figure 20-2, each with unique needs for your product, your bicycle company
could choose to design a slightly different product for each group.

CHECKPOINT
List six customer profile characteristics that can be used to
identify markets.

The Marketing Mix

Marketing managers have many decisions to make. These decisions center on four
elements of marketing: (1) the product, (2) its price, (3) distribution (sometimes
referred to as place), and (4) promotion. Planning each element involves answer-
ing some important questions. For example, assume that you want to market a
new product. You must answer the following questions related to the four ele-
ments of marketing: (1) Will you make the product in one size and color, or in
several? (2) Will you price the product high, medium, or low? (3) Will you sell the
product in retail stores or over the Internet? (4) Will you use newspaper, radio,
television, or Internet advertising?
The blend of all decisions related to the four elements of marketing—product,
price, distribution, and promotion—is called the marketing mix. The marketing
mix for a new product may be to design the item for young adults, give it a low

543