Understanding Marketing Fundamentals and Consumer Behavior
1. Commercial Activity in Marketing
Commercial activity, the exchange between a company and the market, represents the final stage of a company’s asset cycle. A marketing-oriented approach to business involves:
- Analyzing the trading system (market, competitors, suppliers, stakeholders, and environment).
- Designing strategies by combining marketing tools (product, price, distribution, and promotion).
- Leading, organizing, and controlling the business activities.
2. Defining Marketing
Marketing is a mindset or philosophy that prioritizes identifying people’s needs and creating products to satisfy them. It has three dimensions:
- Analysis Tool: Used to understand market potential, consumer behavior, and market trends.
- Action Medium: A tool for customer acquisition and market penetration.
- Ideology: A socio-economic framework that guides a market-oriented enterprise, believing in its value to enhance individual and societal well-being by stimulating demand and supply, leading to higher quality goods and services. Marketing is built upon needs, wants, demands, and market products.
3. Fundamental Marketing Principles
The four fundamental principles of marketing are:
- Product: Encompasses all decisions regarding what a company offers, from product development and creation to packaging.
- Distribution (Place): Involves decisions that ensure the product reaches the target market at the right time and place.
- Promotion: Includes strategies to persuade the target market of the product’s value.
- Price: Requires estimating customer reaction to different price points, evaluating competitor pricing strategies, and considering the company’s total production costs.
4. Understanding Consumer Behavior
Understanding consumer behavior involves knowing the why, how, what, where, and when of their purchasing decisions. This includes understanding the types of needs and wants that drive consumer behavior.
5. Maslow’s Hierarchy of Needs
6. Market Segmentation
Market segmentation involves dividing the market into distinct consumer groups.
7. Defining the Market
In economic terms, a market is the interplay of supply and demand. It can also refer to a physical space where buyers and sellers interact and conduct transactions.
8. Conditions for Perfect Competition
Perfect competition requires:
- Numerous buyers and sellers, none of whom can individually influence the market.
- A homogenous product offered without distinctive features.
- Sufficient product quantity.
- Market transparency, with perfect information about transactions.
- Absence of agreements or restrictions hindering free competition.
9. Monopoly and Oligopoly
Monopoly: A market dominated by a single seller. In a monopoly, factors like product characteristics, sales service, and advertising become more important than price competition.
Oligopoly: A market with few sellers and many buyers. Product differentiation, especially strong brand image, can make an oligopoly resemble a monopoly.
10. Oligopoly and Oligopsony
11. The Services Market
The services market consists of transactions involving intangible assets, activities, benefits, or satisfactions offered for sale.
12. Consumer Protection Institutions in Spain
Several institutions inform and protect consumers in Spain:
- National Consumer Institute
- Municipal Consumer Information Offices
- Consumer and user associations