UNIT 4

Introduction into marketing

After studying this unit, you should be able to:

• define market and marketing

• understand the marketing concept and analyze the benefits of marketing

• describe market share and define target market

• list the components of the marketing mix

• speak on types of marketing research

Reading section

READING I

Market and marketing

Before you read

Vocabulary tasks

1. Word building: complete the following table with appropriate derivatives.

verb	noun	person	adjective
	market
		industrialist
consume
			researching
produce
	plan
			reselling

2. There are some collocations with the word ‘market’ and ‘marketing’ Think of other word-combinations with this word. Use dictionaries to help yourself.

to launch onto the market	marketing concept
to expand the market	marketing research
…	…
…	…
…	…
…	…

Key terms

1. Choose the Russian equivalents for the following English terms and word expressions.

requirements of the markets	непосредственный потребитель
consumer market	рынок производителей
industrial market	потребительский рынок
reseller market	рынок полуфабрикатов
ultimate consumer	сырье
semi-finished products	рынок посредников
raw materials	требования рынка
institutional market	рынок организаций

Think ahead

What do you know about a market? Can you identify different markets?

Text 4.1 Scan the text and name different types of markets.

Market and its types

A market is an aggregate of people who, as individuals or as organizations, have needs for products in a product class and who have the ability, willingness, and authority to purchase such products. At times market refers to the total population or mass market that buys products in general. But our definition is more specific; it refers to all potential customers sharing a particular need or want and seeking products in a specific product category. Obviously, any complex economy has many different markets.

Requirements of the market

For an aggregate of people to be a market, it must meet four requirements:

1. The people must need the product. It the people in the group do note desire the particular product, then the aggregate is not a market.

2. The people in the group must be able to purchase the product. Ability to purchase is a function of buying power, which consists of resources such as money, goods, and services that can be exchanged.

3. The people in the aggregate must be willing to use their buying power.

4. Persons in the group must have the authority to buy the specific products.

If an aggregate of people lacks any one of these four requirements, it is not a market.

Types of markets

Based on the characteristics of the individuals and organisations that make up a specific market, markets fall into three categories: (1) consumer markets, (2) industrial markets, and (3) reseller markets. Since the kinds of marketing activities used for each of these markets are different, marketers must know the general characteristics of these types of markets.

A consumers market consists of purchasers and/or individuals in their households who intend to consume or to benefit from the purchased products and who do not buy products for the main purpose of making a profit. Each of us belongs to many consumer markets. The combined force of millions of individuals with the desire, ability, willingness, and authority to buy makes up a multitude of consumer markets for such products as housing, clothes, food, personal services, vehicles, and appliances. As individual buying power increases and our population rises, we can expect the size and number of consumer markets to become even greater.

An industrial market consists of individuals, groups, or organisations that purchase specific kinds of products for direct use in producing other products or for use in day-to-day operations. Compared with ultimate consumers, industrial customers tend to be more knowledgeable about the products they consider. Usually, industrial buyers purchase fairly large quantities of a relatively limited assortment of products on a periodic basis. They must be well informed about these products in order to buy the most appropriate items for the required job at the best price. Thus industrial marketers often need to provide their customers with larger amounts of information. Industrial market can be divided into three categories: producer, government and institutional markets.

Individuals and business organizations that purchase products for the purpose of making a profit by using them to produce other products or by using them in their operations are known as producer market. These markets include buyers of raw materials as well as purchasers of semi-finished and finished items used to produce other products.

Federal, state, county, and local governments make up government markets. They spend loads of money for goods and services to support their internal operations and to provide such products as highways, education, water, national defense, fire protection, and energy. Government purchases are made through either bids (offer (a certain price) for something, especially at an auction) or negotiated contracts. To sell a government purchaser through bids, a firm must be on a list of qualified bidders. When the government unit wants to buy through bidding, it sends out a highly specific description of the desired products to qualified bidders. Businesses that wish to sell such products submit bids. The government unit usually is required to accept the lowest bid if any bid is accepted. When buying non-standard or highly complex products, a government unit selects only a few firms and then negotiates with them regarding specifications and terms; it eventually awards the contract to one of them. Most large defense-related purchases are made through negotiated contracts.

Organizations that seek to achieve goals other than such normal business goals as profit., market share, or return on investment make up the institutional markets. Members of institutional markets include churches, private school and hospitals, civil clubs, charities, and foundations. Institutions annually purchase millions of dollars’ worth of products to provide goods , services, and ideas to congregations, students, patients, members, and others. Because institution often have different goals and fewer resources than other organizations, marketers may have to serve these markets through special marketing activities.

Intermediaries, such as wholesalers and retailers, who buy finished goods and resell them for purpose of making a profit make up the reseller markets. Except for minor alterations, resellers do not physically change the products they handle. With the exception of products that producers sell directly to consumers. All the products sold to consumer markets are also sold to reseller markets.

Text 4.2 Read the text and discuss the strengths and weaknesses of each definition of the term ‘marketing’.