3.1 – Marketing, Competition and the Customer

• Marketing: identifing customer wants and satisfying them profitably.
• Customer: a person, business or other organisation that buys goods or services from a business
• Customer loyalty: when existing customers continually buy products from the

  same business.
• Customer relationships: communicating with customers to encourage them to become loyal to the business and its products
• Market share: the percentage of total market sales held by one brand or business
• Consumer: someone who buys goods or services for personal use - not to re-sell.
• Mass market: where there is a very large number of sales of a product.
• Niche market: a small, usually specialised, segment of a much larger market.
• Market segment: an identifiable sub-group of a whole market in which consumers have similar characteristics or preferences.
• Why customer spending patterns may change:

  • tastes and preferences
  • technology
  •  income
  • ageing population
  • increased competition
• Niche Marketing:

  • Advantages:
  • Small firms can thrive in niche markets 
  • Firms can sell products at a high price 
  • Firms can focus on the needs of just one customer group
  • Limitations:
  • Lack of economies of scale
  • Risk of over-dependence on a single product 
  • Likely to attract competition if successful
• Mass Marketing

  • Advantages:
  • Larger amount of sales
  • Benefit from economies of scale
  • Risks are spread
  • More chances for the business to grow
  • Limitations:
  • They will have to face more competition
  • Can’t charge a higher price (selling similar products)
• Types of segmentation:

  • age
  • geographical
  • socio-economic group
  • gender
  • lifestyle
  • business or consumer
• Disadvantages Market segmentation

  • detailed market research needed
  • expensive to adapt products/ promotion for each group
  • segment may be too small to be profitable
• Advantages Market segmentation

  • meets special needs of groups of consumers
  • effective marketing - directed at each group
  • customer loyalty more likely
• Role of marketing:

  • identify and satisfy customer needs
  • establish close customer loyalty relationships to build customer
  • gain information about customer
  • anticipate changes in customer demand
• Business response to market changes:

  • maintain good customer relationships
  • adapt existing products
  • new products
  • keep costs low to be competitive