The Business Book

236 UNDERSTANDING THE MARKET

T

o be successful in a market,
an enterprise needs to
understand both the
environment in which it wants
to do business, and the way
consumers in that environment
think and act. The marketing
environment is the world beyond
the confines of the organization—
the world that its customers live
in—and includes the state of the
economy, government regulations,
social attitudes, current issues,
competing companies, distribution
infrastructure and partnerships,
and technological changes. At the

A product that fits the

customer will sell itself.

Every successful business...

...gathers data about the

needs of its present and

potential customers.

...assesses the market

environment—including

competitors, distributors,

the economy, technology,

and social trends.

It can then develop

the products that will

solve customer problems,

and so meet an

existing demand.

IN CONTEXT

FOCUS

Focused marketing

KEY DATES

1920s The concept of market

research emerges in the US.

1941 Robert K. Merton invents

the idea of the focus group.

1953 Peter Drucker says the

first step for any business is to

ask: “Who is the customer?”

1970 US economist Milton

Friedman puts forward the

business model of shareholder

maximization.

1998 Marketing professor

Robert V. Kozinets coins the

term “netnography” to refer to

the theory of ethnography as

applied to Internet users.

1990 US professor Gerald

Zaltman develops the first

neuromarketing technology,

ZMET, to analyze consumers’

subconscious reactions to

advertising imagery.

core of this market is the prospective

customer, who will be influenced

by many of those environmental

factors, but will also be driven by

individual needs and preferences,

which will affect what products

and services he or she buys.

This means that to understand

the market, a company must

make sense of the “broad brush”

of the external environment and,

at the same time, fathom the

psychological profile and

personality of the consumer. The

end purpose of these investigations

is to identify the biggest problems

that consumers are struggling

with. Once these are identified,

a business needs to respond

innovatively, to deliver the products

and services that will be seen as

perfect solutions.

Gathering data

This analysis may sound simple,

but given that any particular

market might number thousands or

millions of individuals, how does a

marketer go about understanding

how those people think and

behave—let alone what problems or

unfulfilled wants they have, both