Marketing

Question 1

What is the importance of identifying and satisfying customer needs.

Answer 1

• Increasing sales – by offering something that customers want or that is better than competitors, the sales of a business should increase.
• Selecting the correct marketing mix – by choosing the correct combination of Product, Price, Place and Promotion, the more likely a business will appeal to its customers.
• Avoid costly mistakes – if a business misunderstands its customers and makes mistakes with the type of product, or the price it sells it for, then this will cost the business a lot of money, as they may have to withdraw products or lower the price, which means they may not be able to cover production costs.
• Be competitive – if a business can offer better perceived value, it makes them more competitive in the market. If a business understands what exactly customers want to buy, when they want to buy it, how much they are prepared to pay for it and where that are likely to look for it, they will be able to develop their marketing more effectively and be more competitive.

Question 2

What are the benefits of segmentation?

Answer 2

• Develop its products to fit customer needs more closely.
• Target its customers more precisely – it can promote its products in the right places at the right time to boost sales.
• Set the price appropriately. E.g. if the is high demand, but relatively few providers, it may be able to charge more for its products.

There may be limits to how far a business wants to segment as ultimately everyone has slightly different tastes and in most cases a business cannot completely tailor-make a product for each customer.

Question 3

What is the purpose of market research?

Answer 3

Market research will help gather information about:

• Demand – the size and growth of the market and the different segments that exist within the overall market.
• Market share – the sales of each producer as a percentage of total sales in the market.
• Competition – the number and size of competitors and their share of the total market sales. Research might identify which businesses are growing and help managers understand why.
• Target market – a business is unlikely to want to target everyone in a market, it will want to focus on particular groups.