Business Unit 3

Question 1

role of marketing

Answer 1

-identify customer needs
-satisfy customer needs
-maintain customer loyalty
-anticipate changes in customer needs

Question 2

why customer/consumer spending patterns change?

Answer 2

-customer tastes and fashion changes
-change in. technology
-change incomes
-ageing population

quickly respond leads to success
fails to respond leads to likely to fail

Question 3

why some markets become more competitive

Answer 3

-globalisatoin of market
-transportation improvements
-interent/e-commerce

Question 4

how business can respond to changing spending patterns/competition

Answer 4

-maintain good customer relationships
-keep improving existing product
-bring out new products to keep interest
-keep cost low to maintain competitive

Question 5

market segment

Answer 5

an identifiable sub-group of a whole market in which customers have similar characteristics or preferences
e.g.) age/income/region/gender/lifestyle

Question 6

mass market

Answer 6

where there is a very large number of sales of a product (selling to whole market with no target groups)

Question 7

advantages of mass market

Answer 7

-total sales are very high
-b. can benefit from economies of scale
-risks can be spread
=opportunities for growth

Question 8

key features of mass market

Answer 8

-mass production
-widespread availability
-mass media advertising

Question 9

disadvantages of mass market

Answer 9

-high competition
-high cost of advertising/promoting
-‘standardised’ product/service-> may not meet all (potential) customers

Question 10

niche market

Answer 10

a small segment of a larger market by developing products to suit it.

Question 11

advantages of niche market

Answer 11

-customers’ needs can be more focused -> hight level of customer loyalty & good customer relationship
-small b. may be able to be successful
-larger profit margin
-less competition

Question 12

disadvantages of niche market

Answer 12

-usually small -> limited sales potential
-no more in demand-> fail because risk wasn’t spread
-small market size
-low economics of scale

Question 13

pricing methods

Answer 13

-cost-plus pricing
-competitive pricing
-penetration pricing
-price skimming
-promotional pricing

Question 14

cost-plus pricing

Answer 14

Setting price by adding a fixed amount to the cost of making the product

Question 15

competitive pricing

Answer 15

Setting a price similar to that of competitors’ products which are already available in the market

Question 16

penetration pricing

Answer 16

Setting a very low price to attract customers to buy a new product

Question 17

price skimming

Answer 17

Setting a high price for a new product that is unique or very different from other products on the market.

Question 18

promotional pricing

Answer 18

Setting the price of a few products at below cost to attract customers into the shop in the hope that they will buy other products as well

Question 19

price-elastic demand

Answer 19

where customers are VERY sensitive to changing price
(if there are many substitutes for the product)
customers have many choices in the market_ little loyalty

Question 20

price-inelastic demand

Answer 20

when customers are NOT sensitive to changing price
(if there are not really any close substitutes for the product