CHAPTER THREE

THE MARKETING SYSTEM

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1.      Define market;

2.      Identify types of market;

3.      Explain the marketing system;

4.      Define a marketer;

5.      Identify and explain what is/are marketed.

WHAT IS A MARKET?

Market has several definitions depending on the discipline as well as situation. The economists view market as a collection of buyer(s) and seller(s) for transacting a particular product. Put differently, a market is the coming together of buyers and sellers in a particular place or through mediums such as telephone and internet to exchange goods and services. In essence, a market can only exist if there are both buyers and sellers on one hand, and commodity to exchange. When any of these attributes (i.e. buyer, seller or commodity) is missing then there is no market.

However, Marketers view ‘market’ simply as buyers. Moreover, unlike the economists that regard market as a collection of buyers and sellers, marketers define the two concepts (i.e. buyers and sellers) differently. They regard ‘market’ as a collection of buyers and ‘industry’ as a collection of sellers or producers.

Types of Market

There are four common types of market in marketing: consumer market, business market, global market and non-profit/government market.

1.      Consumer market: This refers to a market where consumer goods such as toiletries, utensils, food and beverages, cosmetics, and clothing are sold, and consumer services such as barbing, hotel and tourism, transportation, communication, teaching, laundry, and health services are provided. Companies producing consumer goods usually target the final consumers with appropriate product, price, distribution and promotion. When a business organization manufactures and sells goods and services to the customers, it is called Business-to-Customer (B2C) market. For instance, if Dangote Sugar Company sells bags of sugar to households for direct consumption.       

2.      Business/industrial market: This refers to a market where business goods such as raw materials, factory or production technologies, office stationery, furniture and fittings and automobiles are traded. Business market also constitutes business buyers and sellers. Business buyers are business organizations that hire highly skilled and professional personnel that specialize in “purchasing and supply” to purchase goods on behalf of the company for the purpose of making a product and reselling to the consumers at a profit. Business sellers, however, manufacture or stock business goods and sell to business organizations only. That is, business sellers target other business organization, hence the term Business-to-Business (B2B) marketing. For example, Dangote Cement Company in Nigeria may be involved in supplying cements to a construction company like Julius Berger or Power Works (PW). Another example is when a private university is engaged in training and developing banks’ staff for a fee.

Business market is the agglomeration of industries such as agriculture (forestry, poultry, fisheries, etc), mining, manufacturing, construction, transportation, communication, public utilities, tourism, banking, insurance, distribution and services. All business organizations have derived demand.

3.      Global markets: A global market is market without boarders but with key players – buyers and sellers – and other characteristics of a market (product and money). Companies participating in global markets are usually called global firms. A global firm operates in many countries, source for resources (human, material and financial resources) from many countries, and uses a mixture of marketing-mix standardization and adaptation to suit each target market. Examples of global firms that operate in global market are Coca-Cola, DHL, Shell, Nokia, Procter and Gamble, Nescafe, Dell, GE, etc.    

4.      Non-profit and government markets: Like persons, non-profit and government organizations also produce consumer goods and services. In essence, they sell what they produce and buy what they consume. Non-profit organizations rely on donors to fund their activities and thus, lack financial strength to buy highly priced goods and services. Therefore, companies selling to non-profit organizations must price carefully. On the contrary, government organizations have the financial wherewithal to make purchase of all kinds usually through contract bids. Hence, companies selling to government organizations must price effectively to win competition.        

THE MARKETING SYSTEM

A system refers to separate and independent units that are integrated together and function as one in order to achieve a common goal. Thus, a marketing system refers to independent marketing units that are integrated together and function as one to satisfy stakeholders’ needs and aspirations. The independent units in a marketing system are buyers, sellers/producers, communication process (e.g. the media), and exchange process (e.g. the financial institutions). Practically, sellers gather information from buyers in order to identify their needs; they communicate to buyers about a product and its functions and performances. Sellers use media (newspaper, billboards, radio, television, and internet) to communicate effectively with the consumers.

Essentially, buyers and sellers engage in exchange during transaction. The seller parts with goods or services required by the buyer, while the buyer parts with money to take possession of goods and services and become legitimate owner of such goods. In essence, sellers require a good transportation network to move goods to the buyers or market. In the same vein, buyers require a good financial system to source for funds and pay for purchases made. A simple marketing system is depicted in Figure. 3.1.

Figure 3.1:  A Marketing System

Who is a marketer?

Two questions that are often asked are “who markets?” and “who is a marketer?” Those that market goods, services and other marketing entities are called ‘marketers.’

A marketer is a person who seeks response from prospects. Prospects could be consumers, customers, or public who have a particular need to satisfy. That is, an effective marketer should be able to draw the attention of the prospective consumer towards the product and ultimately to make him/her purchase it. Practically, a marketer should be able to make a customer look at what he wants him/her to look at, to make the customer see what he wants him/her to see, to make him/her listen or hear what he wants him/her to hear, to make him/her touch what he wants him/her to touch, to make him/her choose  what he wants him/her to choose, and ultimately to make him/her buy what he wants him/her to buy. 

What is marketed?

The things that are marketed are called ‘marketing entities. These are:

        i.            Goods: Companies usually market tangible offerings that satisfy a need such as soap, car, clothes, etc.

      ii.            Services: Companies frequently market their intangible offerings such as health services, insurance services, transportation services, and financial services, etc.

    iii.            Places: Cities, states, regions, parks, and museum are marketed to attract tourists and investors for income generation.

    iv.            Persons: Individuals are ‘brands’ and can be marketed. E.g. sport stars, film stars, music starts, and Nobel price winners, etc. have marketing managers that help to effectively package, position and sell their clients’ skills and professionalism to the prospective buyers.

      v.            Organization: Universities, hospitals and churches can be marketed just like product. 

    vi.            Experiences: Beautiful experience such as ‘dinning at Sheraton Hotel’ or ‘riding on an elephant at Yankari Park’ can be marketed.  

  vii.            Ideas: Ideas such as ‘smokers are likely to die young’ and ‘AIDS is real’ can be marketed to create change in behaviour. In fact, the root of every product is idea. Remember the popular advert “good product, good idea.”

viii.            Events: Events such as world cup, Olympics, food festival, pilgrimage at Mecca or Jerusalem can be marketed. A good example is Argungu Fishing Festival that takes place annually at Argungu in Kebbi State, Nigeria.

    ix.            Properties: Real property like housing estates can be marketed like goods and services. In addition, financial property such as stock and bonds require effective marketing for it to sell.

      x.            Information: Broadcasting and print media produce information required by people on daily basis. Information is often promoted in-house by the media producing the information or by media houses. Effective marketing of informative TV and radio programs will enhance effective sale of information. 

SELF-ASSESSMENT QUESTIONS

1.      Marketers make to market and market to make. Discuss.

2.      a. What is a market?

b.      Who markets?

c.       Who is a marketer?

d.      What is/are marketed? (2010 Exam Question, IBBUL)

3.      With a means of a suitable diagram, describe a marketing system.

4.      List and explain major classifications of markets.