Business - 3.1, 3.2 Flashcards
marketing - definition
process of identifying, anticipating and satisfying consumers requirements / wants profitably
importance of marketing
- identifying customers needs
- satisfying customers needs
- maintaining customer loyalty
- building customer relationships
objectives of marketing
- increase sales revenue / market share
- improve / maintain image of the product / business
- target new market / market segment
why consumer spending patterns may change
- change in taste, technology or income
- ageing population
- national / global events (eg. Covid-19)
importance of changing customers needs
- need to know what consumers what
- customers will go to competitors if not given what is needed
why markets have become more competitive
- globalization : products sold around the world (more competitors)
- improvement in transportation infrastructure : better transport system = easier and cheaper to export and import
- internet / e-commerce = products sold on internet for the world
how businesses respond to changing spending patterns & increased competition
- maintain good customer relationships (helps provide market research as well)
- keep improving its existing product
- new products to keep customers interested
- keep costs low
market - definition
anywhere where buyers and sellers come together to transact with each other
mass market - definition
market that is aimed at the general population and where there is a large number of sales of a product
niche market - definition
a small, usually specialised, segment of a much larger market
mass market - advantages
- total sales are very high
- risks can be spread (if one product fails, theres others)
- straightforward since everyone is equally targeted
- lower unit costs (bought in bulk)
- high revenue makes investors buy more
mass market - disadvantages
- high levels of competition since both sell similar products
- high costs in advertising and promotion
- products and service are standardised so wont meet the specific needs of cutomers
niche market - advantages
- charge premium prices
- easier to target customers (build customer loyalty)
- small scale of production is flexible
- reduced competition
niche market - disadvantages
- risky and demand may not be consistent
- high unit costs
market segmentation - definition
the process by which a market is divided into distinct subsets of customers with similar needs and characteristics
types of market segmentation
- geographic segmentation
- demographic segmentation
- psychographic segmentation
- behavioral segmentation
geographic segmentation
- different geographical locations
demographic segmentation
- divided based on age, gender, family size, income, occupation …
eg. rolex targets rich people
psychographic segmentation
- divided based on social class, lifestyle or personality traits
eg. patagonia targets adventure-loving
behavioral segmentation
- divides buyers into groups based on their knowledge, attitudes, uses or responses to a product
eg. starbucks rewards frequent customers with free products
market segmentation - advantages
- increased sales (targeted audience)
- money and time not wasted in trying to sell products to the whole market
- able to find gaps in market
- can sell more products
market segmentation - disadvantages
- segments that are too small to be profitable
- costly and extensive market research is needed
- firms may segment wrongly
importance of market research
- reduces chances of business failure
market research - definition
process of gathering, analysing and interpreting information about the market
