Matching Needs with Product Benefits

The term product-market recognizes that markets exist only when there are buyers with needs who have the ability to purchase products, and products available to satisfy the needs. Intuitively, it is easy to grasp the concept of a product-market, although theirs are differences in now managers define the term.

Markets are groups of people who have, the ability and willingness to buy something because they have a need for it.3 Ability and willingness indicate that there is a demand for a particular product or service. People with needs and wants buy the benefits provided by a good or service. A product-market matches people with needs—needs that lead to a demand for a good or service—to the product benefits that satisfy those needs. Unless the product benefits are available, there is no market—only people with needs. Likewise, there must be people who have a demand for what a given product can do for them.

Thus, a product-market combines the benefits of a product with the needs that lead people to express a demand for that product. Markets are defined: in terms of needs sustainability among different products and brands and by the different ways in which people choose to satisfy their needs. "A product-market is the .set of products judged to be substitutes within those usage situations in which similar patterns of benefits are sought by groups of customers."4

By understanding how a firm's specific product is positioned within the more general product-market, management can monitor and evaluate changes to determine whether alternative targeting and positioning strategies and product offerings are needed. In defining a product-market, it is essential to establish boundaries that contain all of the relevant product categories that are competing for the same needs.

The product-market contains an interrelated group of brands (or products) whose relationships concerning need substitution and competition are strong enough so that each brand's sales are influenced by the others in the product-market.5 the influence becomes stronger the closer the sustainability and the more direct the competition. The Ford Taurus competes directly with the Toyota Camry, whereas apparel purchases compete with entertainment expenditures due to the consumer's budget constraints.