Since exchange involves two or more people, it is natural to think of the market as people, individuals, or groups. Clearly, without the existence of people to buy and consume goods, services, and ideas, there would be little reason for marketing. Yet this perspective must be refined further if it is to be useful.
People constitute markets only if they have overt or latent wants and needs. That is, individuals must currently recognize their need or desire for an existing or future product, or have a potential need or desire for an existing or future product. While the former condition is quite straightforward, the latter situation is a bit more confusing, in that it forces the marketer to develop new products that satisfy unmet needs. Potential future customers must be identified and understood.
When speaking of markets as people, we are not concerned exclusively with individual ultimate consumers. Although individuals and members of households do consitute the most important and largest category of markets, business establishments and other organized behavior systems also represent valid markets. People, individually or in groups, businesses, and institutions create markets.
However, people or organizations must meet certain basic criteria in order to represent a valid market:
- There must be a true need and/or want for the product, service, or idea; this need may be recognized, unrecognized, or latent.
- The person/organization must have the ability to pay for the product via means acceptable to the marketer.
- The person/organization must be willing to buy the product.
- The person/organization must have the authority to buy the product.
- The total number of people/organizations meeting the previous criteria must be large enough to be profitable for the marketer.
All five criteria must be met for an aggregate group of people or organizations to equate to a market. Failure to achieve even one of the criteria may negate the viability of a market. An interesting example is the pharmaceutical industry. There are several serious human diseases that remain uncured only because they have not been contracted by a large enough number of people to warrant the necessary research. The excessive research costs required to develop these drugs necessitates that companies are assured a certain level of profitability. Even though the first four criteria may be met, a small potential customer base means no viable market exists.