Theme 1.1 Meeting customer needs Flashcards
What is mass marketing
Where a business sells into the largest part of the market, where there are many similar products offered by competitors
What is niche marketing
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants
Key features of mass market
Customers form the majority in the market
• Customer needs and wants are more “general” & less “specific”
• Associated with higher production output and capacity + potential for economies of scale
• Success usually associated with low-cost operation or market leading brands
Aims of a mass market
• Create products with universal appeal
• Aim for leadership of the largest market
segment
• Build strong brands that are associated with the underlying product
• Exploit economies of scale to earn high profits
Benefits of Successful Mass Marketing
Widest potential customer base
Lower risk
Lower market research cost
Drawbacks of being in a Mass Market
Highly Competitive
Low Customer Loyalty Small Profit Magins
Can lead to lack of business focus
Advantages of niche market
Less competition - a “big fish in a small pond”
Clear focus - target particular customers
Builds up specialist skill and knowledge
Can often charge a higher price Profit margins often higher Customers tend to be more loy
Drawbacks of niche market
Lack of economies of scale
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”
What is market size
Indicates the potential sales for a firm
Measured in terms of both volume
units) and value (sales
How can market growth be measured
Growth rate can be calculated using either value (e.g. market sales) or volume (units sold)
What is market share
Explains how the overall market is split between the existing competitors
Tends to be calculated based on market value, but volume can also be use
What are key sources of change in a market
– Customer tastes and preferences
– Impact of technology on what customers buy and how they buy
– Impact of new market entrants
Examples of highly dynamic markets
Film industry e.g netflix
Taxi services e.g uber
Camera market e.g go pro and iphone
