Chapter 10 — Marketing, Competition and the Customer.

1. The Marketing department.

- marketing = identifying customer wants and satisfying them profitably

- customer = person, business or other organisation which buys goods or services from a
business
- sales team = responsible for sales = separate regional sections
- market research = finds out customers’ needs, market changes and competitors’ actions
- promotion = organises advertisement and design for products + a marketing budget
- distribution = transports products to the market.

2. The Role of Marketing.

- identify customer needs = products? prices? where? how? after-sale services?

- satisfy customer needs = sold profitably, must be the right product/place/price
- maintain customer loyalty = keeping in touch with customers and maintaining customer
relationships, and adjusting to demand changes quickly, easier to keep old customers
than make new ones
- build customer relationships to gain information = market research information used to
understand why customers buy products and how they use those
- anticipate changes in customers needs = identify new trends and gaps in the market to
satisfy those demands
• enables business to:
- raise customer awareness
- increase/maintain market share
- improve/maintain the image of the business
- target market segments
- enter new markets
- develop new products/improve existing products.

3. Understanding Market Changes.

• why spending patters change:

- consumer tastes and fashions change
- changes in technology
- change in incomes
- ageing populations
• why have some markets become more competitive?
- globalisation
- transportation improvements
- internet/e-commerce
• power and importance of changing customer needs:
- if businesses fail to respond to customer needs, business will be likely
- the customer is the ‘king’, as businesses must observe their changing wants closely and
respond to those immediately.

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 4. How can businesses respond to changing spending patterns and increased competition?

- maintain good customer relationships = cheaper to keep existing customers than gain
new ones
- keep improving its existing product = business will be know for differentiated products
- bring out new products to keep customers’ interest = business can increase/maintain
market share
- keep costs low to maintain competitiveness = attracts more customers.

5. What is meant by a Market?

- market = total number of customers + potential customers + sellers

A. Mass Market.
- mass market = very large number of sales for a product
- the products are designed to appeal to the entire market, generalised
• advantages:
- the total sales of the market are very high
- the business benefits from economies of scale
- risks can be spread since the business probably has multiple different products
- there are many growth opportunities as well
• disadvantages:
- high competition levels
- high costs of advertising and promotion
- standardised products and services are produced = may not respond to individual needs.

B. Niche Market.
- niche market = small, usually specialised segment of a much larger market
- luxury products, small businesses that offer personalised goods and services
• advantages:
- small business can sell successfully since there’s less competition
- the needs of the customers can be focused on closely, leading to good customer loyalty
• disadvantages:
- small, so limited sales and limited scope for growth within the niche market
- specialisation could lead to business failure if the product isn’t in demand anymore.

6. Market Segments.

- market segmentation = when a market is broken down into sub-groups which share
similar characteristics
- a lot of thought and money is put into market research, advertising and packaging
- it is cost-effective, brings high sales and profits, and assists to neglected segments
- segmentation needs detailed analysis of the market, maintenance of company image and
standard, and identification of costs of entering each segment.
segmenting by = socio-economic group, age, location, gender, use and lifestyle
• benefits: more sales, different brands for different small unidentified groups, wider
choice of shops, clever advertising and packaging.

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