Key definition
Marketing — identifying customer wants and satisfying them profitably.
The role of marketing
- Identifying customer needs
- Satisfying customer needs
- Maintaining customer loyalty
- Building customer relationships
Why consumer spending patterns may change
- Shift in market trends
- Change in disposable income
- An ageing market
- Developments in technology
Why some markets have become more competitive
- Globalisation — new cultures are introduced and more start-ups are set up
- Developments in transport — it is easier to import goods internationally
- The rise of e-commerce — its convenience means more start-ups are set up and goods are sold to a wider consumer base
- Privatisation of public companies — business objectives shift to profit, and a larger amount of private businesses compete
How businesses can respond to changing spending patterns and increased competition
- Maintain customer loyalty through promotional programmes
- Introduce new products that align with customer wants/needs
- Improve existing products
- Use the right pricing methods
Niche vs mass marketing
- Niche marketing — identifying a small segment of a market and selling products catered to its consumers
- Mass marketing — satisfying the needs and wants of an entire market by selling similar products to competitors
Niche marketing: benefits vs limitations
| Benefits | Limitations |
|---|---|
| Less competition | Less profit due to a smaller consumer base |
| Customers are likely to be more loyal | The success of a niche business may attract competition |
| If there is a demand for it, niche businesses can be lucrative | Niche products could fail |
Mass marketing: benefits vs limitations
| Benefits | Limitations |
|---|---|
| Often large amounts of sales | Competition is very high |
| Economies of scale | Cost of marketing is higher |
| Easier to expand the business due to high profits | As the product is not unique, there is less customer loyalty |
| A large product line can spread the risk (if one product fails, another can still profit) |
Market segmentation
Market segmentation — splitting a market into groups based on specific characteristics of customers.
How markets can be segmented
- Demographic — age, gender, income
- Location
- Psychographic — consumers with the same interests and lifestyle
Benefits of segmentation
- Advertising can be targeted
- Businesses can know what to produce
- Businesses can know how to price
- More profit is made