3.1 Marketing, competition and the customer Flashcards
What is a market?
A market is where businesses sell, and consumers buy.
Give some examples of markets.
shops or town centre markets,
markets are increasingly moving online with the growth of sales websites and e-commerce.
What do markets connect businesses to?
consumers, it also refers to potential consumers, those interested in buying a product or service and who have the financial ability to do so. (In other words enough money)
Define a target market.
A target market is when a business aims goods or services at a particular group of consumers.
Define the customer base.
The customer base is the group of customers who repeatedly buy the goods or services of a business.
Define Marketing.
Marketing is the process a business undertakes to promote the buying or selling of a product or service and includes advertising, selling, and delivering products to consumers or other businesses.
What is marketing to other businesses referred to?
Marketing to other businesses is often referred to as B2B (business to business) so could be a delivery company hired by amazon to send orders to customers, or a company which designs websites for businesses.
What is the aim of marketing?
Marketing aims to identify customer needs, and satisfy those needs.
What marketing aims to do is take a want, and through marketing and promotional activity, convert it into a need.
If we use the example of Apple, through market research they find their potential customers desire for an improved camera. They design the Iphone 11 with a high performance camera and promote it so consumers feel they need to buy or upgrade, so their needs are satisfied.
How does marketing identify consumer needs?
Through market research.
What is customer loyalty?
It is when current customers come back for repeat purchases, additional services or upgrades,
Give an example of maintaining customer loyalty.
For example, online shopping businesses like Amazon and Alibaba offer free returns of products. A returned product may be an additional cost for the business in the short term, but in the long term, it builds customer loyalty as the consumer will have the confidence to buy in the future if they know they can easily return items.
Why do customer/consumer spending patterns change?
if the price rises less consumers will buy a product.
Consumers will choose the cheaper price if products or services are very similar.
population structure of a country slowly impact spending patterns.
e.g. Many Western European countries and Japan have an ageing population. There is a lower number of new births and older people are living longer so the average age is rising. This has resulted in more older and less younger consumers.
consumers’ incomes may change
How can a business adapt to competitors?
Businesses must adapt to competitors by either matching prices or differentiating their products so consumers are willing to spend more.
E.g. When start up Low Cost airlines like Ryanair and Air Asia launched their services, it had a huge impact on consumer spending on air travel.
How can a business adapt to changes in population structure (ageing population)?
Businesses may adapt by targeting the “grey dollar”, for example a holiday company offering cruises to the over 50’s.
How can a business adapt when consumer incomes change?
In a recession or economic hardship consumers will have less income so business will have to adapt by providing more price conscious budget options.
If consumer incomes rise businesses can offer more non-essential luxury products.
How do consumer needs change?
There are changes in consumer tastes over time.
For example the movement to more environmentally friendly products like electric cars or “fake meat”.
changes in promotional spending can influence consumer behaviour.
List some examples of businesses adapting to consumer needs.
Toyota has stopped producing diesel cars and are now focused on developing new models of electric cars which can meet customer needs for convenience and an affordable price.
Tik Tok reportedly spent $3 million a day in the United States to establish its customer base among younger people.
Nike’s worldwide marketing spend in 2019 was $3.75 billion. By establishing a strong brand image consumers are willing to spend up to $400 on a pair of running shoes.
How does the government prevent one company dominating the market?
by passing laws making it easier for new startup companies to open or stopping businesses that are too dominant.
In 2019 the European Union fined Google 1.5 billion euros for using it’s position unfairly to stop competitors.
