What do consumers want?
By TOM W. GLASER
© St. Petersburg Times, published April 5, 2001
Montgomery Ward looked at its record of success in catalog sales, considered the increasing demands of the market and the most efficient distribution methods, and decided to keep its primary focus on its catalog operation. There would be some retail outlets, but mostly to serve as warehouses and centers for people to view and pick up catalog items and bring merchandise for repair or exchange.
Sears, however, looked at the trends of the times. The interstate highway system was being built to accommodate the masses of cars that were being snapped up as fast as they could made by a public that had not been able to buy a new automobile in four years.
Developer William Levitt introduced the idea of suburban living with his mass production of housing tracts, and the move to the suburbs started by the trolley car was completed by the auto. Moreover, as land prices near cities went up, people moved further away to cheaper land. As people moved further away from central business districts, more businesses began to follow them away from the cities.
Therefore, Sears decided on a new approach. Not only did it begin to emphasize its retail operation over its catalog sales, it also became a developer of shopping centers to take advantage of the emerging trends. This also led to increased retail credit operations, which in turn spun off the Discover credit card. If there is any doubt about which business decision was correct, consider that Montgomery Ward is now bankrupt and in the process of closing its last few stores.
Determining the market for goods or services is vital for an entrepreneur. No matter how good you think your idea is, if the customers don't want it, you won't sell it. Yet there are always other items, which you may consider ridiculous, that can lead to success. How do you determine the market? And can you tell in advance what will and will not appeal to the market?
Well, the answers are "sort of" and "maybe." You need to turn to market research or market analysis. This is done by a market survey. Surveyors contact people to try to find out what they like and don't like, and what they want and don't want. If you think your idea is great and you think the public will snatch it off the shelves, you still might want to do a survey to test the waters first. Sometimes what we think people will want is not the same as what they will actually buy.
But these companies can't just go out and find that people are saying, "By golly, I wish someone would invent and market Product X!" The entrepreneur must first have the vision of what he or she wants to do. Then the market research firms can determine if people would or would not be interested in buying the product.
One way to make a unique product is to stay on the cutting edge of technology. The more sophisticated the item you make, the less chance it can be copied by someone who doesn't have access to that same level of technology. Also, a unique product is more likely to get the protection of the government by receiving a patent. America is still the world leader in developing modern technology.
But as more manufacturing is being done overseas, America has become what has been called a post-industrial nation. An increasingly large amount of American business is in the service sector. They sell what people do rather than deliver a piece of merchandise. Although manufacturing concerns need to consider the availability of shipping services, such as airports, highways and sea ports, many times all the service industry needs is electrical power and a telephone. Again, the more advanced and technical the service, the less likely it will be that someone can duplicate your service. However, services are quite difficult to patent.
So what is the answer to the question, "Goods or services?" The best answer is, "It depends." It depends on your vision as an entrepreneur, the interests of the market, the feasibility of the product -- in short, it depends on many things. The successful entrepreneur will be flexible enough to adapt to the changes in the market, strong enough to keep his original goal in mind and wise enough to know what can and can't be done. Unfortunately, not every dream can become a reality.
First have class members survey fellow students, friends and families about what they would like to see offered for sale. Set a short time period for this, ideally one or two days. Then have the class compare results. The information gathered will most likely be too diverse to be useful.
Then have the students organize themselves into product design teams. (If there are individuals who have their own ideas, let them work alone. Genius doesn't often manifest itself in committee.) Have each team, either from suggestions made in that first survey or from their own imaginations, create a single good or service they think people would want.
See if you can get a representative from a market research company to speak with your class. That person can talk about careers in the field and help students to prepare a more focused survey form to use in their next round of interviews.
This time, each team will ask for responses specifically about their product ideas. They can determine if there is a demand and how much of a demand there is. Then have the teams report their results to the class as if the class were a board of directors deciding whether or not to develop that product. If you want this to be part of a longer range lesson plan, have the class pick the most promising product to make and market as a class. Funding for this can be accessed through the Florida Council on Economic Education.
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-- Tom W. Glaser is a high school teacher at the School for Advanced Studies at the Wolfson campus in Miami. He has won numerous national economic teaching awards and was named Florida Council on Economic Education Economic Educator of the Year in 1997.
About the Florida Council on Economic Education
Money Stuff was developed by the Florida Council on Economic Education and project director Fonda Anderson. The council is a statewide non-profit organization founded in 1975 to educate K-12 teachers and students about the free enterprise system and to instill in them an appreciation for a market economy. For more information on the council's programs for teachers and students, please call (813) 289-8489.
About Newspaper in Education
The St. Petersburg Times devotes news space to NIE features throughout the year, including this classroom series. The Times' NIE department works with local businesses and individuals to enrich the classroom experience by providing newspapers, supplemental guides and educational services to schools in the Tampa Bay area. To find out how you can become involved in NIE, please call (727) 893-8969 or (800) 333-7505, ext. 8969. For past chapters check out www.sptimes.com/nie and click on Money Stuff.
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