MARKETING Flashcards
What is Marketing?
By definition, marketing is the management process responsible for identifying, anticipating and satisfying consumers’ requirements profitably.
What is the role of marketing in Buisness
Identifying customer needs through market research
Satisfying customer needs by producing and selling goods and services
Maintaining customer loyalty: building customer relationships through a variety of methods that encourage customers to keep buying one firm’s products instead of their rivals’. For example, loyalty card schemes, discounts for continuous purchases, after-sales services, messages that inform past customers of new products and offers etc.
Gain information on customers: by understanding why customers buy their products, a firm can develop and sell better products in the future
Anticipate changes in customer needs: the business will need to keep looking for any changes in customer spending patterns and see if they can produce goods that customers want that are not currently available in the market.
Why Customer spending patterns change?
change in their tastes and preferences
change in technology: as new technology becomes available, the old versions of products become outdated and people want more sophisticated features on products
change in income: the higher the income, the more expensive goods consumers will buy and vice versa
ageing population: in many countries, the proportion of older people is increasing and so demand for products for seniors are increasing (such as anti-ageing creams, medical assistance etc.)
Why some markets have become more competitive?
Globalization: products are being sold in markets all over the world, so there are more competitors in the market
Improvement in transportation infrastructures: better transport systems means that it is easier and cheaper to distribute and sell products everywhere
Internet/E-Commerce: customers can now buy products over the internet form anywhere in the world, making the market more competitive
How business can respond to changing spending patterns and increased competition?
maintaining good customer relationships: by ensuring that customers keep buying from their business only, they can keep up their market share. By doing so, they can also get information about their spending patterns and respond to their wants and needs to increase market share
keep improving its existing products, so that sales is maintained.
introduce new products to keep customers coming back, and drive them away from competitors’ products
keep costs low to maintain profitability: low costs means the firm can afford to charge low prices. And low prices generally means more demand and sales, and thus market share.
What is Niche Marketing?
Niche Marketing: identifying and exploiting a small segment of a larger market by developing products to suit it. For example, Versace designs and Clique perfumes have niche markets- the rich, high-status consumer group.
What are the advantages and disadvantages of Niche marketing
Advantages:
Small firms can thrive in niche markets where large forms have not yet been established
If there are no or very few competitors, firms can sell products at a high price and gain high profit margins because customers will be willing be willing to pay more for exclusive products
Firms can focus on the needs of just one customer group, thereby giving them an advantage over large firms who only sell to the mass market
Limitations:
Lack of economies of scale (can’t benefit from the lower costs that arise from a larger operations/market)
Risk of over-dependence on a single product or market: if the demand for the product falls, the firm won’t have a mass product they can fall back on
Likely to attract competition if successful
What is Mass Marketing?
Mass Marketing: selling the same product to the whole market with no attempt to target groups with in it. For example, the iPhone sold is the same everywhere, there are no variations in design over location or income.
What are the advantages and disadvantages of Mass Marketing
Advantages:
Larger amount of sales when compared to a niche market
Can benefit from economies of scale: a large volume of products are produced and so the average costs will be low when compared to a niche market
Risks are spread, unlike in a niche market. If the product isn’t successful in one market, it’s fine as there are several other markets
More chances for the business to grow since there is a large market. In niche markets, this is difficult as the product is only targeted towards a particular group.
Limitations:
They will have to face more competition
Can’t charge a higher price than competition because they’re all selling similar products
Whats a Market Segmentation?
Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. For example, PepsiCo identified the health-conscious market segment and targeted/marketed the Diet Coke towards them.
