28: Effective marketing

Question 1

Marketing

Answer 1

identifying and meeting customer needs.

Question 2

Niche Marketing

Answer 2

Focusing marketing on selling differentiated products to a small, specific part of a larger market.

Question 3

Market

Answer 3

The group of customers who are interested in buying a product with the ability to purchase it.

Question 4

Mass marketing

Answer 4

Selling undifferentiated products to the whole market - no attempt made to identify specific niche sections of the market.

Question 5

Consumer Marketing

Answer 5

Creating and delivering products to meet consumer needs

Question 6

Business Marketing

Answer 6

serving the needs of a business or businesses within one or more industries.

Question 7

Advantages of targeting a niche market segment:

Answer 7

• The ability to focus specific products on the needs of individual customers and respond quickly to changes in these needs.
• The return on marketing expenditure is often high because it can be so well targeted.
• There is little competition which makes it easy to gain market share.
• It may be possible to charge premium prices because of the lack of direct competition. This will lead to increased profitability.
• In a new niche market, ‘fast mover advantage’. It may be possible for a small new business to gain a significant market share in new market and a strong brand image before larger firms get involved. This is even more likely if the innovation is protected by a patent.

Question 8

Disadvantages of niche marketing:

Answer 8

• The degree of specialisation makes niche markets vulnerable to changes in market conditions.
• It can be costly to use research to identify market niches and develop products to satisfy customers within them.
• A successful niche may attract the interest of large, multi-national companies. Once such organisations enter the market, small firms will find it difficult to compete.
• Sales levels may be relatively low which could cause problems if costs rise unexpectedly, and profit margins are squeezed. This is one of the reasons why many businesses operating in niche markets have found greater success through the Internet and e-commerce: operating costs are much lower, therefore giving higher profit margins.

Question 9

Advantages of mass marketing:

Answer 9

• High sales, at low prices, mean costs a spread over a greater number of units. This may mean, for example, that a firm in the mass market can afford expensive advertising.
  Profit margins may be low, but actual profits can still be very high due to the high volume sold.
• As products are aimed at a large range of potential customers, it is likely that revenue will be regular, and cash flow problems are less likely.

Question 10

Disadvantages of mass marketing:

Answer 10

• High profits will attract a lot of competitors into the market which can drive down prices and reduce profit margins.
• It may be very difficult to spot changes in customer needs because the market is so large, which could lead to a loss of market share.
• It is very difficult for small or medium sized businesses to compete with the small number of very large organisations operating in many mass markets.