Advanced Option Strategies

Id like to start by saying that market is a set of condition where people (sellers and buyers) meet each other and exchange what they need – first have goods and services to offer, second money to pay for them. But in the context of this topic I would define a market as people or organizations that buy or may buy the products, or an area where they are sold.

If the companies respond quickly to the needs of a market they are usually called market-driven or market-oriented.

As we are talking about marketing, I would define this category as the process of developing, pricing distributing and promoting the goods and services that satisfy people’s needs. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.

So marketers have to identify or anticipate a consumer need; develop a product or service that meets that need better than any competing one; persuade target customer to try the product or service; and in the long term, modify it to satisfy changes in customer needs or market condition.

In my opinion marketing is not selling. The difference between them is quite clear.  The “selling concept” assumes that resisting consumers have to be persuaded to buy the existing goods. Thus products are sold rather then bought. The ”marketing concept” assumes that the producer’s task is to find wants and to fill them. In other words, you don’t sell what you make, but you make what will be bought. As satisfying existing needs, it also create new ones.

I would also say that the marketing concept rests on the importance of cus­tomers to a firm and states that:

To use the marketing concept a business should:

Rather then making a decision on the basis of intuition and guesswork good information about the market is necessary and that is why most companies undertake market research. They collect and analyze all the info. they can get about the market: the size of a potential market, population, shifts, local development, local economic situation should also be monitored to enable early identification of problems and opportunities. They are usually based on a ques­tionnaire given to present customers and/or prospective customers, can disclose problems and areas of dissatisfac­tion that can be easily remedied, or new products or services that could be offered successfully. Moreover marketing information can be got by simply by observing things around them. They can visit competing stores to check on facilities and prices. They can evaluate their customer mix by recording how many and what kinds of customers shop in the store at different times. Competitor advertising can be monitored by collecting ads. from local media.

Telephone interviewing is one of the best methods for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain questions that are not understood. Depending on the respondent’s answers, they can skip some questions or probe further on others.

But telephone interviewing also has drawbacks. The cost per respondent is higher than with mail questionnaires, and people may not want to discuss personal questions with an interviewer. The way a interviewer talks, small differences in how they ask questions, and other differences may affect respondents’ answers. Finally under time pressures some interviewers might even cheat by recording answers without asking questions.

After this we gonna realize what type of product or a service we wonna produce and who will be our customers. Concentrating their marketing efforts on one or a few key market segments is the basis of target marketing. Every market can be divided into segments, or in other words, into separate groups of con­sumers. The major ways to segment a market are:

As for the factors we think about they are usually – demographic, like age, income, educational background, occupation, size of a family, type of home and neighborhood and so on, and psychographic – consumer’s opinions and interests, hobbies and some others.

Then a product is compared with the goods already established in the market by quality and quantity standards. To be a access you must be ahead of your competitors.

Competition never stops. That is why market segmentation must never stop as well. It should be on a permanent basis.

Once a target market has been identified, a company has to think about so-called market opportunities – has to decide what goods or service to offer. This means that much of the work of marketing has been done before the final product or service comes into existence. It also means that the marketing concept has to be understood throughout the company, e.g. in the production department of a manufacturing company as much as in the marketing department itself.

Lets go further. Now we need to understand what type of a marketing strategy to use. If a firm wants to be a success it should tailor its product offerings, prices, distribution, promotional efforts and services towards their particular market segment. The best situation is when the strategy addresses customer need which currently are not being met in the marketplace and which represent proportional size and profitability.

But let me tell you that before we start choosing a strategy we need to understand quite good what kind of SBU our firm or company is. SBU – strategic business unit – a product, a product line, a division, a department or an organization. And usually we can distinguish between:

Stars. An SBU that has a high share of a high-growth market. Obviously, stars need great deal of financial resources because of their rapid growth. When growth slows, they become cash cows and become important generators of cash for the organization.

Cash cows. An SBU that has a high share of a low-growth market. They produce a great amount of cash for the organization but, since the market is not growing, do not require a great amount of financial resources for growth and expansion. As result, the cash they generate can be used by the organisation to satisfy current dept and to support SBUs in need of cash.

Question marks. When an SBU has a low share of a high-growth marked the organisation must decide whether to spend more financial resources to build it into a star, or to phase it down or eliminate it al together.

Cash traps or dogs. When an SBU has a low-growth market, it may generate enough cash to maintain itself, or it may drain money from other SBUs. The only certainty is that, cash traps are not great sources of cash.

Thus, depending on whether the SBUs are products, product lines, entire divi­sions, or departments, an organisation may have one star, three cash cows, two ques­tion marks, and two cash tarps. After classifying each SBU according to the business portfolio matrix, management must then decide which of the four alternative strategies should be pursued for each:

SBUs change position in the business portfolio matrix. As time passes, ques­tion marks may become stars, stars may become cash flows, and cash cows may be­come cash traps.

Aspects to be considered in marketing products include quality, features (standard and optional), style, brand name, size, packaging, services and guarantee.

Place in a marketing mix includes such factors as distribution channels, locations of points of sale, transport, inventory size, etc.

Promotion groups together advertising, publicity, sales promotion, and personal selling.

Price includes the basic list price, discounts, the length of the payment period, possible credit terms, and so on. In setting price, the goal should be to maximize profit. The ingredients of profit are, costs, selling price and the unit sales volume and they must be in a proper proportions if the desired profit is to be obtained.

The “best” price for a product is not necessarily the price that will sell the most units. The “best” selling price should be cost oriented and-market oriented. It should be high enough to cover your costs and help you to make a profit. In determining the best selling price, think of four elements:

To make a long story short, it is the job of a product manager or a brand manager to look for ways to increase sales by changing the marketing mix.

And at the end of my story I feel like saying a few words about producers and consumers markers. Few consumers realize that the producer market is actually lager then the consumer market, since it contains all the raw materials, manufactured parts and components that go into consumer goods, plus capital equipment such as buildings and machines, supplies such as energy and pens and paper, and services ranging from cleaning to management consulting, all of which have to be marketed. There is consequently more industrial than consumer marketing, even though ordinary consumers are seldom exposed to it.