MARKET POTENTIAL

Market opportunities are profitable possibilities to meet unsatisfied needs. On the other hand, market opportunities mean creating new possibilities in sectors in which the company can produce goods or services effectively and is likely to enjoy advantage, due to its competences (the things it does particularly well). In order to analyze market opportunities and to plan their marketing activities, companies have to measure current demand and forecast future demand. This will depend on the overall marketing environment which can of course change as well as the company’s marketing programme.

Market demand is the total volume that would be bought by a particular customer group or market segment in a particular geographical area and period of time, in a defined marketing programme. Market demand is not a single number but a function which responds, to a finite extent, to demand-stimulating marketing expenditure. Some markets are extremely sensitive to marketing expenditure. The market for many new products, for example, can usually be expanded quite easily. Other markets cannot, so the level of marketing spending will hardly affect them. Here a company’s marketing effort will be designed to increase its market share rather than the size of the total market.

In competitive market individual firms with an effective marketing programme can and do increase their market share, i.e. a company’s sales expressed as a percentage of the total sales of an industry (or its percentage of the total sales volume generated by all companies that compete in a given market). Knowing one’s market share helps marketers analyze their competition and their status in a given market. Market shares change all the time and as new competitors enter the market and as the size of the market increases or decreases in volume.

There is, therefore, a company demand function or sales response function (i.e. the relationship between sales volume and expenditure on a particular element of the marketing mix) which forecasts the likely sales volume during a specified time period associated with different possible levels of a marketing-mix element. But of course market potential (the limit approached by demand in a given market and marketing environment as marketing expenditure increases or when additional marketing expenditure no longer produces a significant return) depends on many factors in the marketing environment that a company cannot control, such as the general health of the national economy. Furthermore, the sales response function assumes that other variables, such as competitors’ prices, remain constant, whatever the company spends on marketing. This is obviously untrue, and so has to be compensated for in calculations.

Marketing expenditure gives first increasing, then diminishing returns, as there tends to be upper limit to the total potential demand for any particular product. The easiest sales prospects are sold first, so that only more difficult ones remain. Competitors are also likely to increase marketing effort at the same time, so each company will experience increasing sales resistance, i.e. unwillingness of consumers to purchase goods, even when they are exposed to advertising, promotions and sales presentations. If sales did not stop increasing at the same rate, the firm with the greatest level of marketing effort would take over the whole industry, and create a natural monopoly.

3. Define the main idea of each paragraph.

4. Find among the underlined words in the text those meaning the following:

1.computations

2.to foresee, to predict

3.costs, spending

4.an amount of something

5.becoming less

6.profit

7.to buy

8.the ability to do something in a satisfactory or effective way

9.reacting quickly or strongly to something

10.not wanting to do something

11.happening or existing now

12.the refusal to accept something new such as a plan, idea, or change

13.a part of a total number or amount of something that is divided between several people or things

14.total, whole

15.chances of success

5. State in what part of the text the following information is mentioned:

1.At first the profits of the company tent to be large, then tend to become less.

2.To analyze present and future demand is of great importance for companies.

3.Sales continue rising at a fast speed.

4.It is supposed that some factors must remain the same which can’t be achieved.

5.Opportunities in the market mean possibilities to meet needs profitably.

6.Not all goods are sold very easily.

7.There are different possible levels of a marketing-mix element.

8.Market demand reacts to the marketing expenditure.

9.The total potential demand has its limits.

10.Marketing effort is required to increase a company’s market share.

11.All companies face consumers’ reluctance to buy products.

12.Potential of market is dependent on the uncontrollable marketing environment.

13.Expansion of some markets is very easy.

6. A) Do the following words generally form partnerships with the word ‘market’ or ‘marketing’?

… activities … mix … demand … opportunities

… effort … potential … environment … programme

… expenditure … share … forces … value

B) Make word combinations with ‘market’ and ‘marketing’ using words from the box. Then match the word combinations with the definitions below:

methods mix plan segments strategy target

1.groups of consumers with similar needs or purchasing desires

2.the consumers, clients or customers you want to attract

3.a definition of the company, the product / service and the competition

4.detailed information about how to fulfill the marketing strategy

5.the techniques you can use to communicate with your consumers

6.the combination of different elements used to market a product or service

7. M&T Cables wants to enter a new market. Read the letter to a possible export partner. Fill in the missing words in the sentences choosing from the following:

analysis free mix research demand goods plan trends

Thank you for your letter about your plans to market our products in the South Pacific region. As you know, we want to sell our (1) … in every (2) … market in the world, so naturally we are interested in your region.

Obviously we have to do some market (3) … . For now, we have four questions:

1.How is the present supply and (4) … for our kind of products?

2.What kind of marketing (5) … do you think we should develop in our marketing (6) … ?

3.What are the marketing (7) … in this sector?

4.Can you recommend someone to carry out a detailed market (8) … for us?

We look forward to hearing from you as soon as possible.

8. Match up the terms with their definitions:

1.A company’s plans regarding the marketing mix, including product features, price, expenditure on promotions, the allocation of resources, and so on.

2.Figures set as annual sales goals by management for a company division, a product line, a sales team, individual sales representatives.

3.The limit approached by company demand as it increases its marketing effort relative to its competitors.

4.The extent to which a market is dominated by a few large companies.

5.The extent to which goods or services are available in a potential market area.

6.Taking existing products into new markets or new market segments.

7.The expected level of a company’s sales in a given marketing environment and with a particular marketing plan.

8.The market demand that corresponds to a whole industry’s planned level of marketing expenditure.

a) market concentration b) market forecast c) market coverage

d) sales quotas e) sales forecast f) company potential

g) marketing programme h) market development

1. Read the text. Translate all the highlighted words and word expression into Russian. Speak on different types of market forecasting.

Date: 2015-01-12; view: 4875