Unit 3.1 - marketing, competition and the customers Flashcards
What is marketing?
The process of identifying, anticipating and satisfying customer needs and wants profitably.
What is the point of maintaining customer loyalty?
It’s the ability of a brand/product to make customers make repeated purchases, therefore generating more profit. This relationship also provides a business with a USP and helps with market research.
What is relationship marketing?
The process of improving the brand image of a business by building good relationships with customers.
What is a market?
A place where buyers and sellers come together to trade; all the consumers and producers involved in the exchange of a product
What is the target market?
A specific segment of a market that a business aims to sell to.
State 5 reasons why spending habits may change
- Income
- Competition - if competitors start selling similar products to business, customers may switch to them
- Price of products
- Advertising & promotion
- Fashion
State 7 reasons how a business may adapt to changing customer spending habits and increased competition
- Adapting/developing new products
- Launching new products
- Selling their products in a new market
- Closing unfavorable products/locations
- Improve customer relationships
- Reduce costs through improved efficiency
- Improve promotion/advertisement
What is a mass market + benefits & disadvantages?
Businesses in this market produce products which are sold to most of the market (appeal to general public). Usually sold in large quantities for low prices. No target audience. E.g. Target
+ good source of regular income, less likely to have cash flow problems. Low costs for promotion as the business only needs to advertise one message to everyone, less time consuming
- more competitors, difficult to identify changes in customer needs, less customer loyalty because products aren’t unique.
What is a niche market?
Businesses in this market produce specialized products that meet a specific need. They appeal to a small part of the market. Usually sold in small quantities for high price.
E.g. vegan face wash
+ focus on target consumer so easier to adapt to their changing needs, little competition so more market share, can charge premium prices
- higher costs because they can’t utilize economies of scale, lower sales, successful niche markets may attract big business which would outcompete smaller ones
What is market segmentation + what factors can it focus on?
Breaking the market into clearly identifiable groups with shared characteristics
Characteristics: Location (language, culture, backgrounds, common features, etc), age and gender (demographic segmentation, broadly similar interests), socioeconomic status (different incomes)
What are the benefits of market segmentation?
- Goods can have higher added value because products can be changed/targeted to meet specific needs of people in a market segment.
- Less resources wasted because businesses aren’t trying to sell products to uninterested customers. Lower marketing cost
- Market segmentation may find new markets which increases businesses’s potential sales revenue
Name and explain 3 factors affecting market segmentation strategies
- Potential revenue - business looks at number of potential consumers in each market segment. If it’s too low, cost of entering market may outweigh profit
- Future growth - will the market segment grow?
- The brand - does the brand match the market (e.g. budget brand would not succeed
What is a product orientated firm?
A business that focuses on production processes and products.
First develops product, then finds market for it.
Usually produces stuff like food and materials.
E.g. Apple Inc
+ fewer costs from market research); less reliance on data which may be inaccurate
What is a market-oriented-firm?
A business that focuses in identifying consumer wants using market research. Investigates if there are enough consumers for the products.
E.g. Amazon
+ can attract potential customers by meeting their needs; builds brand loyalty because it’s trusted to respond to market changes
What does successful marketing involve?
- Anticipating marketing opportunities
- Using new technologies
- Satisfying consumer wants
- Generating revenue
Reasons why markets become more competitive
- Globalisation - due to more technology and international trade
- Technology - businesses can trade through the Internet
- Deregulation - government activity to reduce restrictions on business activity
