3.1 + 3.2 Marketing

Question 1

Why customer/consumer spending patterns may change

Answer 1

• The price of the product
• The price of competitor’s products
• Changes in consumer income
• Changes in population size and structure
• Changes in tastes and fashion
• Spending on advertising and other promotional activities

Question 2

The power and importance of changing customer needs

Answer 2

Changing customer needs is very important to businesses as they need to make changes in order to satisfy customers and to survive and earn a profit

Question 3

Why some markets become more competitive

Answer 3

• Legal controls that prevent individual firms from dominating the market
• Deregulation - the removal of government controls from an industry
• Providing financial and other assistance to new and small to medium-sized businesses
• E-commerce and social networks. This increases the level of competition because the websites are available worldwide

Question 4

Benefits of Niche Market

Answer 4

Benefits

• Small firms are able to survive and earn profit even in markets that are dominated by larger firms because their target market is only a small part of the market
• There is less competition so firms do not waste scarce resources because of competitors
• Consumers will usually pay more for a high status, exclusive product. Which means that the firm is more likely to have a high profit margin

Question 5

Limitations of Niche Market

Answer 5

Limitations

• The opportunity to earn high profits may attract potential competitors
• The small size of the market means that economies of scale are unlikely to be achieved
• Small changes in consumer spending patterns could have a very significant impact on firms
• recession and economic crisis

Question 6

define Niche market

Answer 6

Developing products for a small market segment, focus on specific needs

Question 7

Benefits and Limitations of Mass market

Answer 7

Benefits
- Larger firms benefit from economies of scale which reduces unit cost
- Larger market has the potential for high sales and profits
- Changes in consumer patterns might have less effect on firms selling to a mass market
Limitations
- Much more competition in the market which lowers prices and profit margins
- Not all markets are large enough to support a mass marketing approach

Question 8

define Market-orientated businesses

Answer 8

Products are developed based on consumer demand as identified by market research

Question 9

Uses of market research information

Answer 9

• Identify customer needs
• Discover the current and future market size for the product
• Provide information about the business’s existing products and markets
• Identify strengths and weaknesses of competitor products
• Decide on how to price the product and promote the product
• Predict how changes and trends in customer tastes and fashion may affect the future demand

Question 10

Benefits(3) and limitations(3) of Primary Research

Answer 10

Benefits
- Data is up to date
- Data is collected for a specific purpose that is directly relevant to the business
- It is not available to other businesses, which may provide competitive advantage
Limitations
- Costly
- Time consuming
- Risk of inaccurate data

Question 11

Benefits(2) and limitations(2) of Secondary Research

Answer 11

Benefits
- Fairly cheap to obtain
- Easier and quicker to obtain
Limitations
- May not be up to date
- May not be directly relevant to the business