Capital market is a market for medium-term and long-term loans. The capital market serves the…
TYPES OF MARKET
Marketing consists of the performance of business activities that direct the flow of goods and services from the producer to the consumer or users in order to satisfy customers and accomplish the company’s objectives. It encompasses all activities aimed at facilitating exchange.
Marketing creates time, place and possession. It arranges for production and making goods available at the right time, in the right place and form. Marketing embraces all the activities relating to the product itself. These activities include the pricing, distribution, promotion, research and sales forecasting.
A market may be defined as a place where goods and services are exchanged. It is an avenue for buying and selling. In other words, a market is a place, point or any means of communication whereby the transfer of title or ownership of goods and services can be effected.
Types of Market
Market falls into three categories, namely:
- Consumer Market: This consists of the purchasers in the household who intend to consume or benefit from the purchased products and who do not buy products for the main purpose of making profit.
- Industrial Market: This consists of individuals, groups or organisations that purchase a specific kind of product for direct use in producing other products or for day-to-day operation.
- Producer Market: It consists of individuals or businesses that purchase products for the purpose of making profit by using them to produce other products.
Market segmentation is the process of dividing a total market into market groups, consisting of people who have relatively similar product need. The market will be subdivided into homogeneous subsets of customers where any subset may be selected as a target market to be reached with a distinct mix. Put in another way, market segmentation is the division of a market into identifiable sub markets for the purpose of reaching target customers with the most appropriate marketing mix. It enables the seller to make appropriate set of product mix, quality, price, advertisement etc.
Usually there are two segmentation strategies employed by marketing professionals.
- Concentration Segmentation: This is when an organisation directs its marketing efforts toward a single market through one marketing mix, e.g. Roll Royce produces luxurious cars.
- Multi-segment Strategy: This is one where the organisation directs its effort at two or more segments by developing a mix for each selected segment.
TYPES OF UTILITY
- Form Utility: Form utility is created by changing the form of raw materials into finished goods, e.g. production in agriculture or manufacturing creates form utility.
- Place Utility: This is reflected in the transportation of the product from the point of production to the final consumers.
- Possession Utility: Possession utility is reflected in the transfer of title and in providing information about the product so that the buyer may use or enjoy it to the best advantage.
IMPORTANCE OF MARKETING IN AN ECONOMY
Market is important to the economy in the following ways:
- Marketing bridges the gap between the producer and the consumer.
- It also reduces wastages through marketing research thus indirectly increasing production.
- Marketing converts peoples’ needs into profitable company opportunities, through the movement of industrial goods to rural consumers by promotion and consumer education.
- Marketing is a creative employer because all the numerous activities performed therein are possible employment avenues.
- The excercise improves the standard of living by making goods produced in one area available in another area.
- Marketing creates market for goods and services.
- It assists in the transfer of goods from the producer to the consumers.
- Marketing informs the consumers about the availability of goods and services.
- It also ensures consumer satisfaction.
FUNCTIONS OF MARKETING
The functions of marketing are:
- Risk bearing: This involves anticipating business risks and taking appropriate measures to reduce their impact by taking the necessary insurance cover.
- Financing: This covers the provision of funds throughout the period of production to the point of selling through loans and credit facilities.
- Storage/Warehousing: This makes it possible for goods to be produced ahead of demand so that they can be available when needed.
- Buying/Selling/Exchange: This covers purchase of raw materials and goods from so many sources and transfer of ownership of such goods to the consumer at the right quality.
- Grading and Standardizing: It involves ensuring that the goods conformed to the required standard and quality with respect to shape, colour, taste, etc.
- Marketing Information Research: This involves collection of information from many sources and dissemination to producers and distributors.
- Transportation: This covers movement of goods from where they are produced to the point where they are required.
- Pricing: Marketing, assisting in fixing price at a level reasonable enough to give profit to the company.
Differences between Marketing and Selling
- Marketing covers the process of distribution of goods and services.
- It creates various types of utilities, e.g. possession, time and place.
- Marketing is highly specialised and requires professionalism.
- This is the overall process of creating demand and facilitating distribution of goods and services.
- Selling is a part an aspect of marketing.
- It creates only possession utility.
- Selling is simple and can be performed by anybody.
- This involves the actual exchange of goods and services.