3.1 Marketing, competition and the customer Flashcards
What are the roles of marketing?
identifying customer needs
satisfying customer needs
maintaining customer loyalty, building customer relationships
Why do customer/consumer spending patterns change?
price of competitor's product price of products changes in consumer income changes in population size and structure changes in trends spending on advertising and other promotional activities
What is ‘customer loyalty’?
when customer keeps buying the same brand no matter what the price
Why do some markets become more competitive?
legal controls prevent individual firm from dominating market
deregulation - removal of government controls from industry
e-commerce and social networks
How do businesses respond to changing spending patterns and increase competition?
Develop their products
Improve efficiency
Increase promotion
Look for new markets
What is ‘niche marketing’?
developing products for a small segment of the market
benefits + limitations of niche marketing?
+ less competition
+ customers willing to pay large sum of money
- luxury goods go out of favour during time of recession/economic crisis
- large companies see success, copy/sell for cheaper
What is ‘mass marketing’?
selling the same product to the whole market
benefits + limitations of mass marketing?
+ potential for high sales and profits
+ products don’t go out of favour during time of recession
- increased competition
- people sensitive about prices, not willing to pay large sum
What is ‘market segmentation’?
dividing whole market into segments by consumer characteristics + targeting different products to each segment
What are the two types of segmentation?
geographic segmentation: dividing consumers in the market by geographic area
demographic segmentation: dividing consumers in the market by factors
Benefits of market segmentation?
Goods + services designed to meet specific needs of consumers → increases sales Small firms (not be able to compete in whole market) able to operate in one or two segments - e.g. a niche market Marketing strategies can be better targeted at each segment May be possible to charge higher prices
What are ‘market-orientated businesses’?
Products are developed based on consumer demand as identified by market research
