Market Analysis: Pricing, Production & Consumer Behavior
Commercial Function and Objectives
The commercial function defines when and to whom to sell to obtain benefits and control the accuracy of forecasts. Objectives include:
- Understanding the market and competition
- Designing a competitive offer
- Analyzing market results
- Highlighting sales benefits
Market
A market consists of buyers and sellers of a product. A market-related business’s relationship with the market is essential, as its existence is justified by delivering goods and services to consumers. Market update refers to when a company’s turnover reaches a certain point. Market potential represents the maximum sales achievable at a given time.
Types of Markets
Market characteristics include:
- Buyer characteristics: Consumer market (individual or family purchases); Business market (products for production or resale)
- Number of competitors: Monopoly (one company); Oligopoly (few companies); Perfect competition
- Product novelty: First-hand (new products); Second-hand (used products)
- Geographical location: Local, regional, national, international
Price and Pricing Strategies
Price is the monetary value a buyer pays a seller for a product. Pricing strategies include:
- Promotional pricing: To facilitate sales and attract consumers
- Penetration pricing: Low prices to introduce a new product and compete
- Price skimming: High initial prices, then lowering them to maximize profit quickly
- Psychological pricing: Considering consumer sensitivity to price digits
- Discounts: Temporary price reductions
- Price discrimination: Varying prices based on the buyer
- Prestige pricing: High prices to signal high quality
Production Management
Production management plans, organizes, and manages the production function. The production system involves: 1. objective management, 2. planning/programming, 3. control. Factors influencing production include: 1. production capacity, 2. product demand, 3. product system design, 4. economic environment.
Production Planning
Production planning aims to manage production efficiently to manufacture specific products in given quantities and timeframes. Stages include:
- Strategic planning: Determining manufacturing plant location and capacity
- Master planning: Considering demand variations and production costs
- Programming: Defining specific tasks and resource allocation
Consumer Behavior
A consumer satisfies a desire or need by using a product. The target group includes all potential buyers or consumers of a product, not necessarily current customers.
Consumer Factors
Individual behavior is influenced by internal and external factors. Consumer social behavior refers to group influence on purchase decisions. Prescribers (professionals or otherwise) recommend products. The purchaser decides who buys, the payer provides the money, and the consumer uses the product.
Understanding the Consumer
- Product and brand preferences
- Identifying the buyer, prescriber, and consumer
- Purchase benefits
- Purchase type (impulsive vs. reflexive)
- Purchase frequency and duration
- Purchase location (important for manufacturers)
- Purchase quantity