Customer orientation

Customer orientation

A firm in the market economy can survive by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even existence as a going concern.

A market economy is an economic system where decisions regarding investment, production, and distribution are based on the interplay of supply and demand, which determines the prices of goods and services. The major defining characteristic of a market economy is that investment decisions, or the allocation of producer good, are primarily made through capital and financial markets. This is contrasted with a planned economy, where investment and production decisions are embodied in an integrated plan of production established by a state or other organizational body that controls the factors of production.

Market economies can range from free market systems to regulated markets and various forms of interventionist variants. In reality, free markets do not exist in pure form, since societies and governments all regulate them to varying degrees. Different perspectives exist as to how strong a role the government should have in both guiding and regulating market economies and addressing the inequalities the market naturally produces. Most existing market economies include a degree of state-directed activity or economic planning, and are thus classified as mixed economies. The term free-market economy is sometimes used synonymously with market economy.

Market economies do not logically presuppose the existence of private ownership of the means of production. A market economy can and often does include various types of cooperatives, collectives, or autonomous state agencies that acquire and exchange capital goods in capital markets. These all utilize a market-determined free price system to allocate capital goods and labor. In addition, there are many variations of market socialism, some of which involve employee-owned enterprises based on self-management; as well as models that involve the combination of public ownership of the means of production with factor markets.

Goods

In economics, goods are materials that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods that are tangible property, and services, which are non-Physical. A good may be a consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it. In contrast, free goods, such as air, are naturally in abundant supply and need no conscious effort to obtain them. Personal goods are things such as televisions, living room furniture, wallets, cellular telephones, almost anything owned or used on a daily basis that is not food related. Commercial goods are construed as any tangible product that is manufactured and then made available for supply to be used in an industry of commerce. Commercial goods could be tractors, commercial vehicles, mobile structures, airplanes and even roofing materials. Commercial and personal goods as categories are very broad and cover almost everything a person sees from the time they awake in their home, on their commute to work and arrival in the work place.

Commodities may be used as a synonym for economic goods but often refer to marketable raw materials and primary products.

Although in economic theory all goods are considered tangible, in reality certain classes of goods, such as information, only take intangible forms. For example, among other goods an apple is a tangible object, while news belongs to an intangible class of goods and can be perceived only by means of an instrument such as print or television.

Demand

In economics, 'demand' is the quantity of a commodity or a service that people are willing or able to buy at a certain price.

The relationship between price and quantity demanded is also known as demand curve. Preferences and choices, which underlay demand, can be represented as functions of cost, benefit, odds and other variables.