Demand States in a Market

Demand States in a Market

There are eight possible states of demand within a given market -- negative demand, nonexistent demand, latent demand, declining demand, irregular demand, full demand, overfull demand and unwholesome demand. The negative demand means that the majority of consumers in a market dislikes or avoids the product or service; the approach of the marketer should revolve around the identification or elimination of the forces which create the strong feelings of dislike and the emphasis on the features which bring benefit to the buyers. The nonexistent demand occurs when customers are unaware of the existence of a product within the market. The most useful approach is that of familiarizing the buyers with the respective products, focusing also on the less obvious benefits of the item. The latent demand occurs when the demands of the consumers cannot be met as the product they require does not yet exist. The most beneficial means of dealing with such a situation is that of collaborating with the research and development divisions in order to support the development of the desired product. Customer relations should emphasize on the efforts made to satisfy the needs of the clients.

In the declining market state, consumers purchase less of the respective product and general demand is declining. Marketers should work closely with the development teams in order to improve the product and make it appealing to the public. In the irregular demand state, the desire for the product is inconsistent, the most relevant examples being offered by seasonal products. Marketers should strive to promote the product onto new markets and increase customer access to the item. The full demand occurs when customers are buying all that is offered by the company and the approach to this state is that of maintaining the sales levels. Overfull demand occurs when there are fewer products available than the demand. The role of the marketers is that of communicating with production to increase output. Finally, the unwholesome demand describes a situation in which the product has harmful social effects and, due to the ethical complexities, it raises the most difficulties for the marketer (Grashaw, 2009).

2. The five core business processes

There are five core business processes which operate at two levels. At a first level, they individually perform their specific tasks. At a secondary level, they perform their tasks in a means that support the organization in reaching its overall goals; this type of operations also includes interactions between the processes. At the most generic level, one can identify five sets of core business processes -- product research and development, administrative processes, quality delivery, accounting and technological processes and finally, sales processes. The product research and development processes revolve around the design and manufacturing of the actual item. Elements included at this stage refer to the functionality of the product, its style and so on. The administrative process incorporates the totality of operations necessary for a proper functioning of the organization. It includes features such as managerial decisions, financial decisions and human resource management. The quality delivery process refers to operations which test and improve the quality of a given product or service. The parties involved in this process look at how well the product is able to comply with its stated benefits; they for instance assess how well an electronic gadget performs its main task and how well can it serve secondary benefits, such as energy efficiency. The accounting and technological processes are more complex. On the one hand, accounting handles financial responsibility operations, including the formulation of financial documents to be audited by external investigators. The technological processes strive to integrate innovation in both products, as well as internal processes. Sales and marketing processes support means by which the final product reaches the final customer.

3. Characteristics of good marketing research

Scientific Method -- in order to gather sufficient and relevant information to be used in the marketing efforts, marketers have to carefully observe the situation, formulate hypotheses, predict future events and test their beliefs.

Research creativity -- the usefulness of a marketing effort is also pegged to the levels of creativity involved, generally referring to the marketer's ability to use innovative ideas and create new solutions to existent problems.

Multiple methods -- a good marketer has to gather information from multiple sources and use multiple methods of assessment and generation of solutions. This approach increases the ultimate chances of success and reduces the adherent risks.

Interdependence of models and data -- a good marketing endeavor should recognize the fact that conclusions are driven from previous models and thesis and they, as such, should strive to explain the models which led to the formation of the conclusion.

Value and cost of information -- an effective and efficient marketing endeavor should also rely on the assessment of the report between the cost of gathering and processing the information and the value of the data.

Healthy Skepticism -- good marketers will learn to not rely entirely on the information they receive from other parties, but will maintain a certain dosage of skepticism and will as such analyze more features to improve the quality of their research.

Ethical marketing -- finally, despite the realization that marketing studies come to the benefit of both organization as well as consumer, it has to be noted that the research must comply with the norms of ethical marketing (Encyclopedia of Management, 2009).

4. Traditional vs. modern customer-oriented organizational charts

Much has changed in the surrounding environment and economic agents have strive to integrate all these changes within their organizational structures and affairs. A relevant example of such changes refers to the shift of managerial attention from production to customers and human resources. This change is also integrated within organizational charts. The traditional charts rarely included the presentation on the role and importance of the customers and generically perceived them as the force buying whatever the company was manufacturing or delivering. This basically means that the traditional chart was focused on internal processes and departments within the company. Production was the core element and productivity the main component of perceived business success. Additionally, it placed top management at the very top of the organizational pyramid. In the case of the modern organizational chart, this not only includes the customers, but presents them as the pivotal component to business triumph. Organizational clients are the ones telling the company what to produce and deliver. The modern customer-oriented chart recognizes the importance of customer satisfaction and outlines the crucial function of all internal processes to combine forces and satisfy the demand of the buyers. Less and less emphasis is placed on production and the top management, which is in fact depicted at the very bottom of the pyramid. Another important feature of the modern customer-oriented organizational chart is that it does not limit the presentation of the customers to a single entry, but argues that they are present at all organizational levels, and as such influence not only production, but also top and middle management.

5. Databases and marketing efforts

Recent business history has shown us that the introduction of innovative technologies within business processes is not only a means of upgrading and improving results, but also a necessity. The use of a database can bring about numerous benefits at all organizational levels. At a marketing level, it could be used to generate improvements in at least five relevant ways. For once, it could include references and information on all products ever manufactured and sold by the entity. The statistics adherent to each product marketed would inform the marketers of the demand for the respective item and would lead to the formation of solid conclusions and recommendations. Secondly, still relative to products, the database could inform on the period the products were introduced, the stages they have gone through and the current life cycle stage. This would allow marketers to make better informed product decisions in accordance to the product's state at an introductory, growth, maturity or declining stage. Third, the database would contain the contact information on all customers. The data could be used to conduct surveys or inquire the customers on their levels of satisfaction relative to the products purchased. Fourth, the results of the surveys would also be included in the database and they could be retrieved in order to help the marketing team identify any product complaints. The results would then be forwarded to the development team and improvements would be made. Finally, the fifth way in which the database could support the marketing process refers to its ability to store information on the partners which have been used throughout previous marketing campaigns. This would help with the selection of the future partners, by offering input on who was supportive and who was not.

6. Stages of market evolution

A market, just like a product, goes through four stages of evolution. Within the first stage, the market is created and emerges, ergo the name of the emergence stage. At this level, the non-existence of a market is pegged to the fact that consumers are in need of another, newer and different market. Yet, they do not know exactly what it is that they want. A database would be extremely helpful at this stage as it could offer information on the type of products and services the customers need and the new market could as such be created. A relevant example of an emergent market is constituted by the it products and services within most developing countries. The second evolutionary stage occurs as the products and services introduced in the emergence stage begin to register high levels of sales. At this level, more producers are interested in promoting their own products within the growing market and the future expectations related to it are generally positive. The growth stage of the market is also supported by customers, who realize the benefits of the given product, but also by companies which develop and implement strong marketing campaigns.

The third evolutionary level is maturity, a situation in which the market is saturated. The main characteristic of this stage is that the interest of the consumer is at its highest levels and not much can be done to further increase it. The marketers' strategies mainly revolve around maintaining the current sales levels. Bolder actions refer to regaining the interest of the customer, but this seldom succeeds as the clients are also saturated with the product. The forth and final stage is the decline, in which the products no longer manage to raise the interest of the customers. The efforts of the marketing specialists revolve around the introduction of new features which serve new needs (Rao and Jain).

7. Brand equity

The brand of a product is often a major determinant in the purchase decision. For the customer, the brand means that they have to spend more on the respective item, but they also get to enjoy it more for two main reasons -- the brand offers them the personal pleasure pegged to the usage of a reputable trademark and as such makes a social statement. Secondly, the brand guarantees a high quality of the product. From the standpoint of the manufacturer, the strength of the brand creates a net advantage, generally called brand equity. The concept can be simply defined as the larger advantages which are generated by the focus on brand in comparison to the fewer advantages which would be retrieved if a brand was not used.

The strength of the brand, manifested through brand equity, helps the consumer make positive associations between the product and the company and as such stimulates the purchase decision. The main characteristics of brand equity are: it represents an organization asset; it allows the more accurate estimation of future incomes; and third, it reduces marketing expenses, allows premium pricing and reduces promotional costs, all leading to increased cash flows. Based on the angle of analysis, brand equities can be perceived in three distinct manners. From the financial standpoint, brand equity allows premium pricing. Secondly, in terms of extensions, brand equity can form the basis of launching other organizational products. Finally, from the consumers' standpoint, brand equity improves customer perceptions relative to the product and brand, as well as the manufacturing organization (Net MBA, 2007).

8. Customer Value Hierarchy

An important element within the marketing campaign is that of promoting and placing the product in full accordance with the customer value hierarchy. The concept refers to the means in which customers perceive the value of the product, decide their need for it and determine whether or not to purchase it. There are five distinct levels within a hierarchy of customer value -- the core benefits of the product, the basic product, the expected product, the augmented product and the lastly, the potential product. The highest levels of competition are met at the augmented level. It is also important to notice that each new value added to the product increases its cost of production and as such its retail price. For instance, if a microwave oven adds a value of low electricity consumption, its price will also increase.

At the core benefit level, marketers identify the main advantages of the product or service. Within the hospitality industry for instance, the core benefits would be ensured by the ability to book a room that provides sleep and rest facilities. The basic product refers to the actual offer included in the product or service, such as the bedroom or the bathroom. The third value chain incorporates the features expected by the customer to be included in the service, such as clean sheets, cable television or fresh towels within the booked hotel room. The fourth layer, the augmented product, refers to the complementary products and services which could be offered in order to satisfy more needs and as such increase customer satisfaction. Examples in this sense include access to the hotels' spa, the swimming pool or any other complementary service which generates additional pleasure to the consumer. Finally, the potential product value level translates into a new product, commenced with the core benefits and improved through time, with the additional values as perceived by customers (Rao).

9. Product line width, length, depth, and consistency

Similar to the marketing mix (the 4Ps of marketing -- product, place, price and promotion), the product in itself is also constructed on a mix. This is generically formed from the product line's width, length, depth and consistency. At the first level, the product mix consists of the totality of different product lines that a company manufactures and sells. For instance, METRO, a leading retailer within the European market, produces under its ARO brand a wide selection of consumer goods, from foods to cleaning supplies. Nike Inc. On the other hand has a less wide mix, as it only process three product lines -- sports apparel, shoes and equipments.

The length of the product mix refers to the number of products included within a product line. The "longer" the product mix, the more items the company includes in one line. An example of product mix length is given by Fisher-Price, an undisputable leader within the toys and baby gear industry. The third layer, or the depth of the product line, refers to the internal diversity of the offering in the meaning of presenting the customers with numerous versions of the selected product. Knorr, the largest brand of Unilever, offers its condiments in powder form, cubical shapes or granules. Another example of product line depth refers to the size of the product; in the Knorr example, the spices can come in 10 grams packages or in 1 kilo bags. Last, the consistency of the product mix refers to the closeness between the various product lines, assessed from different angles. In the case of Knorr, the levels of consistency are high as they serve customers the same purpose. The Metro product lines are less consistent as they serve different needs.

10. Hybrid channel distribution system

The explanation of a hybrid channel system of distribution is generally a simple one. In this essence, a hybrid distribution includes the usage of more than one distribution channels. The practical application of the concept is however more complex due to the increased risks it involves, such as the potential threat of channel conflicts. This basically means that the multiple channels used by the company to sell its products could reach a situation where they compete against each other, in the net detriment of the manufacturing organization.

Despite its relative novelty, the hybrid distribution system is gaining in popularity. And this is obvious not only at a corporate level, but also with small and medium size entities. In terms of multinationals however, coffee monolith Starbucks is probably the company offering the most relevant example of a hybrid distribution system. Alongside with other delivery systems, they use direct sales throughout their own stores, indirect sales through grocery stores or direct marketing, in which sales are conducted online (Know This, 2009).

The concept and practice of multiple distribution channels are relatively new and occurred as a response to the changing features of markets and organizations. Historically, companies would only use a single distribution system to market one product onto one market. As diversification emerged and as the registration of profits through sales onto multiple markets were identified however, the hybrid channel distribution system came into being. The new system, increasingly popular, offers a wide series of benefits to organizations. "With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments. But such multichannel systems are harder to control, and they generate conflicts as more channels compete for customers and sales" (Kotler and Armstrong, 2005).

11. Service output levels

Another feature which increased the complexity of the marketing function is the necessary analysis of the service output levels. The emergence of this characteristic is pegged to the growing popularity of services, which is mostly revealed by the enlarged numbers of service providers, but also by the linking of complementary services to base products. Generically, there are four service outputs -- bulk-breaking, spatial convenience, timing of availability and breadth of assortment. Some sources also indicate a fifth output level, materialized in the segmentation process.

The first level of service output, as expected by the customers, is that of the ability to purchase individual products, in the quantity desired, rather than being forced to purchase an entire bulk. Assuming that white flour is shipped in one tone containers, bulk breaking allows the customer to only purchase one kilo, or the quantity he needs. Spatial convenience refers to the location of purchase in the meaning that it is desirable for the store to be located in the vicinity of the buyers' home or in an easy-to-reach location. For instance, customers expect to purchase their eggs at the supermarket, rather than the farm. Third, timing of availability refers to the necessity for the store to sell the product desired by the customer at the time he needs it. This criterion is for instance not met when the vendor does not sell bread when the customer needs it. Fourth, breath of assortment refers to the product diversity which is required from the store in the meaning that it is desirable for the vendor to sell various products from various manufacturers (Perner, 2009).