Understanding Market Dynamics and Marketing Strategies
Market Activities
A market involves the joint purchase of a product, conducted by buyers and sellers.
Types of Markets
Perfect Competition
Perfect competition occurs when the following conditions are met:
- Homogeneity of Product: The product offered by one seller is the same as that offered by others.
- Many Different Buyers and Sellers: One seller’s decision has little influence on the total market.
- Total Knowledge of the Market: Participants have full information on market conditions.
- Freedom of Entry and Exit in the Market: If there are good market expectations, others will want to enter. If a product cannot be monetized, sellers will stop making it.
Imperfect Competition
Imperfect competition is the most common market type. Companies seek the greatest possible control over the market to influence product prices and improve profits. Examples of imperfect competition include:
- Monopoly: The opposite of perfect competition, where there is only one seller and many buyers (e.g., “Iberdrola”).
- Oligopoly: There are few suppliers and many buyers. Competition is very strong as a few companies adopt policies influencing each other (e.g., “oil”).
- Monopolistic Competition: Many buyers and sellers of a homogeneous product. Companies try to differentiate their products through unique features, making them more desirable (e.g., “compact discs”).
Demand
Demand is the quantity of goods or services that shoppers are ready to buy in a particular period.
- Total Demand: The total amount of purchases made in a period. It is calculated by adding the total sales of all companies in that market.
- Potential Demand: The maximum amount of sales that can be reached in a given period.
Market Share
Market Share Formula: (Company’s Market / Total Market) x 100
This represents the proportion of total sales a company rightfully holds.
Market Study
A market study typically involves these phases:
- Objectives of the research and research model
- Data collection
- Classification structure
- Analysis and interpretation of data
- Presentation of results
Data Collection Techniques
Data can be collected through surveys, email, etc.
General Environment Analysis
This includes legal, technological, social, and economic factors.
Consumer Analysis
This involves understanding consumer behavior and buying habits (who, where, when, what).
Product Positioning
Product positioning refers to the image a product has in the minds of its target audience, compared to competing products or other products from the same company.
Positioning Strategies Associated with the Product
These strategies focus on specific features or properties:
- Specific Attribute: (e.g., the dimensions of a digital camera)
- Benefits: (e.g., “helps reduce cholesterol”)
- Comparison: (e.g., “now with more fruit”)
- Recommendation by a Specialist: (e.g., a shampoo recommended by dermatologists)
Positioning Strategies Related to the Brand
- Quality: Associating the brand with quality (e.g., “Pascual is good”)
- Prestige: The brand brings something distinctive (e.g., “Mercedes” is associated with a high standard of living)
- Low Price: Distributor brands like Carrefour or Mercadona are cheaper substitutes.
Market Segmentation
Market segmentation divides the market according to uniform requirements. The public is defined by three criteria:
- Socio-demographic: Gender, age, habitat
- Socio-economic: Income, consumption possibilities
- Psychographic: Personality, lifestyle
Marketing
Marketing involves a series of activities designed to meet company needs and consumer desires, with the intention of making a profit.
Importance of Marketing
The idea that “a good quality product sells itself” is outdated. A product sells if there is a good marketing policy. Products are increasingly similar; if a manufacturer produces high quality but does not have a good campaign to study where, when, and what consumers want, they will have a warehouse full of unsold products.
Elements of Marketing
- Product: An essential element in marketing. It is the object that can influence the market. Everything that can be bought and meets the needs of the consumer.
- Brand: A name, term, symbol, design, or combination thereof that identifies the goods and services made by the company.
- Price: The amount of money the buyer gives the seller in exchange for purchasing a product. It is influenced by economic theory, costs, competition, and pricing strategies (maximum, penetration).
- Distribution: Allows the product to be found at the site where the consumer can acquire it. It involves a set of processes that bring the product from the company to the consumer.