Unit 4 - Marketing (The Market) Flashcards
Importance of Marketing
- Satisfying customer needs
- Build better relationships
- Customer loyalty
- Market orientation
- Product orientation
- Market share
- Nice and mass markets
Customer and Consumers
- A customer is someone who buys a product from a business.
- A consumer is someone who uses goods and services.
- Customer and consumer are often the same person.
- However, businesses have to identify the wants and needs of both consumers and customers as they may be different.
The process of exchange
- Exchange occurs when someone gives up something in return for something else.
Customer needs and wants
- Business needs an effective understanding of needs and wants of customers.
- Businesses have to identify peoples’ needs, something that needs to be fulfilled for us to survive.
- Businesses can also identify wants, which are what we would like to satisfy our needs.
What are customer needs?
To be successful, a business will need to know what its customer needs are, as well as understand what customers expect in order to attempt to satisfy these needs successfully.
Customer needs: Quality
Customers will want the good/service to be the quality that they require and expect.
Customer needs: Price
Customer will expect to pay a reasonable price for goods or services.
Customer needs: Choice and competition
Customers may be looking for a wide choice of features or options from a good or service.
Customer needs: Convenience
Most successful retailers will now have websites and e-sales options that are more convenient and increasingly expected by customers such as click and collect options.
Process of identifying customer needs for a new business
- When first setting up, entrepreneurs will try to identify customer wants and needs through market research.
- Correct marketing mix
- Secure the survival
Understanding customers is the key to getting sales and avoiding expensive mistakes.
Build better relationships
Many businesses try to build relationships with their customers and consumers. They do this by ensuring that they have effective communications and ensuring that customers’ needs are met.
Customer loyalty
Once a business has gained its customer base, they need to ensure that they continue to purchase from them.
Product vs Market orientation
Product Orientation:
- Adopted by businesses that are inward looking.
- They focus on selling products that they make, rather than making products that they can sell.
- They supply the products and tempt the customers to buy them.
Market Orientation:
- Adopted by businesses that are outward looking.
- Making products that they can sell, rather than selling products they can make.
- They supply products that meet consumer needs and wants.
Advantages
Product Orientation:
- Quality can be assured.
- Pay higher price
Market Orientation:
- Flexibility
- less risk
Disadvantages
Product Orientation:
- Inward looking because they assume that they know what the consumers want.
- Very risky.
- High failure rate.
Market Orientation:
- Market research tends to be very expensive.
- Uncertainty of the future, there is no guarantee that this approach will work.
Market share
Market share is a measure of the size of a business in comparison to other sin the same industry.
The firm with the largest market share in the industry is known as the market leader.
Market segmentation
Segmentation involves dividing a market of customers and consumers into groups that reflect their different needs and wants and therefore buying decisions.
Target marketing
Once the business has identified the relevant segments of the market it will decide which ones to focus its marketing mix on. This is called target.
If a business decides that segments don’t matter and you wish to target everyone in all/most segments it is called a “MASS” targeting strategy.
If a business designs a product which is suitable to a very select segment of customers who share specific needs and wants it is called a “NICHE” targeting strategy.
Why segment and target a market?
Business segment a market because customers differ in the…
- Benefits they want
- Amount they are able to or willing to pay
- Media they observe
- Time and place that they buy
- Quantities they buy
Benefits of effective segmentation and targeting
- Helps make the marketing mix more effective.
- Improves customer satisfaction as their needs are better met.
- Allow business to grow its share in a market or to effectively target fast-growing segments. This leads to greater sales revenue.
- Improves competitiveness
- Helps with new product development.
Potential drawbacks of segmentation
- Data is not always available, up-to-date or reliable.
Just because a business can identify a specific marketing segment, it does not mean it can successfully reach the customers in it! - May be ignoring other market segments.
