The marketing strategy: the Strategy

Question 1

niche market

Answer 1

Targeting a product at a smaller segment of a larger market, where customers have specific needs and wants

Question 2

Examples of niche market

Answer 2

Chilli infused chocolate
Wedding dress
Engagement rings

Question 3

Advantages of a niche market

Answer 3

• Less competition – the firm is a “big fish in a small pond”
• Clear focus - target particular customers (often easier to find and reach too)
• Builds up specialist skill and knowledge = market expertise
• Can often charge a higher price – customers are prepared to pay for expertise
• Profit margins often higher
• Customers tend to be more loyal

Question 4

Disadvantages of a niche market

Answer 4

• Lack of “economies of scale” (these are lower unit costs that arise from operating at high production volumes)
• Risk of over dependence on a single product or market
• Likely to attract competition if successful
• Vulnerable to market changes – all “eggs in one basket”

Question 5

Mass market

Answer 5

Where a business sells into the largest part of the market, where there are many similar products on offer

Question 6

Key features of a mass market

Answer 6

• Customers form the majority in the market
• Customer needs and wants are more “general” & less “specific”
• Associated with higher production output and capacity (economies of scale)
• Success usually associated with low-cost operation, heavy promotion, widespread distribution or market leading brands

Question 7

Why do mass markets have low costs

Answer 7

• economies of scale

Question 8

Market segmentation

Answer 8

The process where the market is split up into different groups with different characteristics and needs

Question 9

Why is it important for businesses to segment the market

Answer 9

• Can take advantages of new opportunities for growth
• To Target advertising in a cost-effective way
• Customers differ and therefore the knowledge of these differences means products/services can be developed to better match these needs.
• Can maximise profits in some cases by matching pricing strategies to different types of customers

Question 10

Disadvantages of Market Segmentation

Answer 10

• Some markets are poorly researched with little information about different customer needs and wants
• Difficulty in measuring and predicting customer behaviour for example the grey age. 50+
• Hard to reach customers, finding the right way to reach target customers can be challenging
• Its able to over segment meaning you lose out on sales

Question 11

Impulse and planned purchases

Answer 11

An impulse purchase is a purchase that isn’t planned by the customer and happens on the spot, whereas a planned purchase is when the customer specifically goes to buy that product

Question 12

Impulse purchase

Answer 12

A consumer buying behaviour where you buy something without thoughtful consideration / planning

Question 13

Planned purchasing

Answer 13

Purchasing activity undertaken with a problem previously recognised and a buying intention previously formed

Question 14

Example:

Answer 14

When shopping.
Discounts at the start
Customers also bought

Question 15

Consumer and buyer behaviour

Answer 15

Impulse & planned purchases

Question 16

Market orientated

Answer 16

a business reacts to what customers want. The decisions taken are based around information about customers’ needs and wants, rather than what the business thinks is right for the customer. Most successful businesses take a market-orientated approach.

Question 17

product orientated

Answer 17

the business develops products based on what it is good at making or doing, rather than what a customer wants. This approach is usually criticised because it often leads to unsuccessful products - particularly in well-established markets.

Question 18

What are the majority of markets doing

Answer 18

Most markets are moving towards a more market-orientated approach because customers have become more knowledgeable and require more variety and better quality. To compete, businesses need to be more sensitive to their customers needs otherwise they will lose sales to their rivals

Question 19

Customer Market Advantages and Disadvantages

Answer 19

Advantage
- Well matched to the needs and wants so therefore more likely to be successful

Disadvantage
- Market research is needed and will cost money

Question 20

Product Market Advantages and Disadvantages

Answer 20

Advantage
- More likely to have a USP and leads to more innovation