Every business needs to know its market and its status/position in that market.
This write-up is basically to inform businesses about the importance of knowing this to shape planning and to bring about the necessary benefits.
The market has had various meanings in the years past, but in its original form, it has assumed to be a physical place where buyers and sellers gathered to exchange goods and services To the Economist the term market tells us all about buyers and sellers who transact business over some tangible and intangible products.
For the economist, the structure, conduct and performance of each market is its main interest.
A Marketers’ Market, however, consists of all actual and potential buyers of a product/service.
The size of a Market depends largely on the number of buyers who could exist for a particular market offer.
Potential Market buyers basically have these three major attributes, interest, access and income. Assume the market for a tourist site, to decide its market they have to evaluate the total number of customers who have a potential interest in going for a tour. To achieve this the company should/could conduct a random sampling interview of consumers by asking “do you have an interest in going on a tour”, if one out of ten says yes then we can assume/say 20 per cent of the total number of consumers is the Potential Market.
Potential Market is the set of consumers that profess some level of interest in a particular product/service offering.
Access, however, is the extent to which the products/service is available to the consumer. When the company fails to avail the products/service to consumer(s) it is impossible for the consumer(s) to access the product/service, therefore, cannot be considered to part of the potential Market thereby reducing the market size for the product.
Consumers’ purchasing power also determines the entire market size for the product/service. Without the ability to pay, the potential market is significantly affected negatively.
The income levels and or disposable incomes play a major role in the product/service offering purchases.
The available market is the set of consumers that has access, interest and income for the product/service.
The Served market should be part of the qualified available that the business entity decides to pursue.
The available Market those who have interest access and disposable income is 40 per cent of the Potential Market.
The qualified available Market those who can meet the legal requirements is 50 per cent of the total available market (or 20 per cent of the Potential Market) Tour site concentrates its efforts on 50 per cent of the qualified available market-the Served market which is 10 per cent of the potential market.
Finally, the tour site and its competitors already have penetrated 50 per cent of the Served market or 5 per cent of the potential market. Businesses can cause changes in the market by applying the various marketing mix to influence the various concepts.
It is my candid assumption that this write-up helps to enrich business decision making and eventually lead to better market identification by businesses for sustainable growth.