Marketing, competition and the customer

• What is the role of marketing?

  Identify customer needs- finding out what kind of products or services customers want, the prices they are willing to pay, and the after-sales services they might want.

  Satisfy customer needs to achieve sales of their goods or services. Customers want the right product, in the right place and at the right price.

  Maintain customer loyalty by building customer relationships. Keeping close links with customers and finding out if products or services are continuing to meet their needs will help to ensure success of the business.
• Why do customer spending patterns change?

  If an economy has high unemployment then many consumers will buy cheaper products. If the economy then grows and unemployment falls then the sales of more expensive products will increase.

  The age structure of many countries is changing to a greater percentage of older people.
• If businesses fail to respond to customer needs then they are likely to fail. Customers are 'king' because as their needs change, it is the businesses which research and know what these changes are.
• Why have some markets become so competitive?


  Globalisation of markets has meant that products are increasingly sold all over the world.

  Transportation movements have meant that it is easier to get products from one part of the world to another.
• How can businesses respond to increased competition?

  Maintain good customer relationships- Marketing departments that become experts on customer needs will respond to these needs and maintain customer loyalty.

  Keep improving its existing product- By making the goods it sells very different from those produced by competitors the business will become well known for its differentiated products.
• A mass market is a market in which there is a very large number of sales and it is sold to a large population.
• Advantages of selling to a mass market:

  The sales to these markets are very large- a majority of the popn will buy the product meaning that the sales are high and therefore revenue increases too.

  The firm can benefit from economies of scale- as the firm sells more and more goods and services, it gets larger, meaning that it can benefit from economies of scale.
• Disadvantages of selling to a mass market:

  High levels of competition between firms- since the target market of the product is the general population, there will be many other firms trying to get more customers, this means that there is a high level of competition between firms.

  High cost of advertising- many advertisements will be needed to increase awareness of their product in the large population. This will lead to an increase in advertising costs.
• Niche market is where products are only sold to a very small number of customers who form a very small segment of a much larger market.
• What are the advantages of niche marketing?

  Firms in the niche market can avoid competition from the larger businesses.

  The needs of consumers can be focused on and therefore targeted by the firm in a niche market.\
• What are the disadvantages of niche marketing?

  Niche markets are small and therefore have a limited number of sales. If the business wants to grow then it will need to look outside the niche market to find sales of other products.

  If the product is no longer in demand the business will fail as the business has not spread its risks.
• Market segmentation is when a market is broken down into sub-groups which share similar characteristics.
• Why is market segmentation important?

  It makes marketing expenditure cost-effective by producing a product that closely meets the needs of these customers and only targeting its marketing efforts on this segment.

  Identifying a market segment that is not having its needs fully met, and therefore offer opportunities to increase sales.
• How can a business segment a market?

  By the socioeconomic group

  By age.

  By gender

  By lifestyle.