Chapter-10 Flashcards
Marketing, competition and the customer
What is a market?
A market consists of all customers and consumers who are interested in buying a product and have the financial resources to do so.
What is a target market?
A target market consists of individuals or organizations identified by a business as the customers or consumers of their products.
What is a customer?
A customer is an individual or business that buys goods and services from a business.
What is a consumer?
A consumer is the final user of a product.
What are consumer markets?
Consumer markets are markets for goods and services bought by the final consumer.
What is free trade?
Free trade means no barriers exist that might prevent trade between different countries.
What are industrial markets?
Industrial markets are markets for goods and services bought by other businesses to use in their production process.
What is the business environment?
The business environment is the combination of internal and external factors that influence the operations of a business.
What factors affect the amount of money customers/consumers spend on buying goods and services?
1) Price of the product: Higher prices reduce quantity sold, lower prices increase it.
2) Competitors’ prices: Consumers prefer lower-priced alternatives in competitive markets.
3) Consumer income: Lower income leads to spending on necessities rather than luxuries.
4) Population size & structure: Growth increases market size; aging populations shift demand.
5) Tastes & fashion: Changing preferences affect demand for products.
6) Advertising & promotion: Branding and marketing influence consumer purchases.
How can governments affect competition in markets?
1) Legal controls: Prevent market domination (e.g., anti-competitive laws in India).
2) Privatisation: Selling public sector firms to private businesses (e.g., Glen Valley, Tanzania).
3) Deregulation: Removing government controls in industries (e.g., postal services in New Zealand).
4) Financial support: Assisting small businesses (e.g., SEDA helped Inembe Food in South Africa).
What actions can a business take to respond to changes in consumer spending patterns and increased competition?
1) Product development: Conduct market research to create new products that meet changing consumer needs.
2) Improve efficiency: Reduce average costs to lower product prices and stay competitive.
3) Increased promotion: Use advertising, discounts, and offers to attract consumers.
4) Look for new markets: Enter markets with less competition and higher demand.
What is niche marketing?
Niche marketing is developing products for a small segment of the market.
What are the disadvantages of niche marketing?
1) Small size of the market means economies of scale are unlikely to be achieved.
2) The opportunity for high profits might attract competitors, reducing prices and future profits.
3) Small changes in consumer spending can significantly impact niche market firms.
What are the benefits of niche marketing?
1) Small firms can survive and earn profits in markets dominated by larger firms.
2) Less competition in niche markets.
3) Consumers are willing to pay more for high-status, exclusive products.
4) Small changes in consumer spending can significantly impact niche market firms.
What is mass marketing?
Mass marketing is selling the same product to the whole market.
What are the benefits of mass marketing?
1) Requires large-scale production, benefiting from economies of scale.
2) Offers the potential for high sales and profits.
3) Changes in consumer spending patterns have less effect on mass marketing firms.
What are the disadvantages of mass marketing?
1) Much more competition, leading to lower prices and profit margins.
2) Not all markets are large enough to support a mass marketing approach.
3) Consumers often prefer something different than what mass marketing offers.
What is market segmentation?
Market segmentation is dividing the whole market into segments by consumer characteristics and targeting different products to each segment.
What is a market segment?
A market segment is a part of the whole market where consumers share specific characteristics.
What is geographic segmentation?
Geographic segmentation divides consumers in the market by geographic area, recognizing that consumers in different locations may have different needs.
What are the benefits of segmentation to businesses?
Goods and services can be designed to meet specific needs of consumers in each segment, increasing sales.
Small firms can compete in specific segments or niche markets.
Segmentation can identify unmet needs, providing an opportunity for niche marketing.
Marketing strategies can be better targeted, reducing waste of resources.
Price discrimination allows businesses to charge higher prices in certain segments for higher profits.
