Section 3
A market consists of all buyers and sellers of a particular
good.
What is marketing?
By de nition, marketing is the management process responsible for
identifying, anticipating and satisfying consumers’ requirements
pro tably.
The role of marketing in a business is as follows:
• 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 rm’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 rm 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.
Some objectives the marketing department in a rm may have:
• Raise awareness of their product(s)
fi fi fi fi fi
, • Increase sales revenue and pro ts
• Increase or maintain market share (this is the proportion of
sales a company has in the overall market sales. For example,
if in a market, $1 million worth of toys were sold in a year and
company A’s total sales was $30,000 in that year, company A’s
market share for the year is ($300,000/ $1000000) *100 =
30%)
• Enter new markets at home or abroad
• Develop new products or improve existing products.
Market Changes
Why customer spending patterns may 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the old versions of products become outdated and people want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.)
The power and importance of changing customer needs:
Firms need to always know what their consumers want (and they
will need to undertake lots of research and development to do so) in
order to stay ahead of competitors and stay pro table. If they don’t
produce and sell what customers want, they will buy competitors’
products and the rm will fail to survive.
Why some markets have become more competitive:
fi fi fi
, • 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:
A business has to ensure that it maintains its market share and
remains competitive in the market. It can ensure this by:
• 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 pro tability: low costs means the
rm can afford to charge low prices. And low prices generally
means more demand and sales, and thus market share.
Niche & Mass Marketing
Niche Marketing: identifying and exploiting a small segment of a
larger market by developing products to suit it. For example,
fi fi
, Versace designs and Clique perfumes have niche markets- the rich,
high-status consumer group.
Advantages:
• Small rms can thrive in niche marketswhere large forms
have not yet been established
• If there are no or very few competitors, rms can sell
products at a high price and gain high pro t 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 rms who only
sell to the mass market
Limitations:
• Lack of economies of scale (can’t bene t 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 rm won’t have a mass
product they can fall back on
• Likely to attract competition if successful
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.
Advantages:
• Larger amount of sales when compared to a niche market
• Can bene t 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
fi fi fi fi fi fi fi
A market consists of all buyers and sellers of a particular
good.
What is marketing?
By de nition, marketing is the management process responsible for
identifying, anticipating and satisfying consumers’ requirements
pro tably.
The role of marketing in a business is as follows:
• 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 rm’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 rm 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.
Some objectives the marketing department in a rm may have:
• Raise awareness of their product(s)
fi fi fi fi fi
, • Increase sales revenue and pro ts
• Increase or maintain market share (this is the proportion of
sales a company has in the overall market sales. For example,
if in a market, $1 million worth of toys were sold in a year and
company A’s total sales was $30,000 in that year, company A’s
market share for the year is ($300,000/ $1000000) *100 =
30%)
• Enter new markets at home or abroad
• Develop new products or improve existing products.
Market Changes
Why customer spending patterns may 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.)
The power and importance of changing customer needs:
Firms need to always know what their consumers want (and they
will need to undertake lots of research and development to do so) in
order to stay ahead of competitors and stay pro table. If they don’t
produce and sell what customers want, they will buy competitors’
products and the rm will fail to survive.
Why some markets have become more competitive:
fi fi fi
, • 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:
A business has to ensure that it maintains its market share and
remains competitive in the market. It can ensure this by:
• 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 pro tability: low costs means the
rm can afford to charge low prices. And low prices generally
means more demand and sales, and thus market share.
Niche & Mass Marketing
Niche Marketing: identifying and exploiting a small segment of a
larger market by developing products to suit it. For example,
fi fi
, Versace designs and Clique perfumes have niche markets- the rich,
high-status consumer group.
Advantages:
• Small rms can thrive in niche marketswhere large forms
have not yet been established
• If there are no or very few competitors, rms can sell
products at a high price and gain high pro t 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 rms who only
sell to the mass market
Limitations:
• Lack of economies of scale (can’t bene t 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 rm won’t have a mass
product they can fall back on
• Likely to attract competition if successful
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.
Advantages:
• Larger amount of sales when compared to a niche market
• Can bene t 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
fi fi fi fi fi fi fi
