The role of marketing

●​ Identify customer needs by finding out what kind of

products or services customers want, prices they are
willing to pay, where and how they want to buy the
product, after sales services they might want.
●​ Satisfy customer needs customer wants the right
product, in the right product, in the right place at the right
price. Failure to do this will lead to failure of business.
●​ Maintain customer loyalty by building customer
relationships. Close links with customers to find out if
products or services meet their needs to ensure success
of business. If customers change expectations, business
should respond to meet the new needs. This will be
identified by maintaining close relationships with
customers. It is important to keep customer loyalty ( keep
existing customers , its cheaper to keep customer loyalty
than try to gain new customers
●​ Gain information about customers to meet their
changing needs and to establish a long term relationship
with them. Building a relationship with customers means
that market research information can be used to
understand why customers buy products and how they
use them. This makes for better and therefore more
effective marketing.
●​ Anticipate changes in customer needs by identifying
new trends in customer demand or gaps in the market so
that business can produce goods or services which are
not currently available.
 Why customer spending patterns change
●​ Consumers tastes and fashions change - fashions
may change for clothes and so consumers may want
different syles of clothes to those they wore last year.
●​ Changes in technology - NEw products with better
technology mean old versions do not have high sales
anymore.
●​ Changes in income - If an economy has high
unemployment then many consumers wil buy cheaper
products. If economy then grows and unemployment falls
the sales of more expensive products will increase.
●​ Ageing populations - The age structure of the
population in many countries is chnging to a greater
percentage of older people. This has changed the type of
products which are increasing in demand, such as
anti-ageing face creams for women.

The power and importance of

changing customer needs
●​ If businesses fail to respond to customer needs then they
are likely to fail. Customers are ‘king’ because as their
needs change, it is the business which research about
 their changes and respond to them, this will be the ones
that are successful. THey will switch to other businesses
if we do not meet their needs.

Why have some markets

Become more competitive?
●​ Globalisation of markets has meant that products are
increasingly sold all over the world.
●​ Transportation improvements have meant that it is easier
to get products from one part of the world to another part
of the world.
●​ Internet/ e commerce has meant that consumers can
search for products and buy from overseas markets.
Even some services such as insurance can be bought
from businesses based in another country. Increased
consumer information about products and the different
international businesses that produce them make a
market much more competitive.

How can businesses respond to changing spending

patterns and increased competition?
●​ A business will have to take action to maintain its market
share whenever there is growth amongst its competitors.
This may be necessary if an image of business has been
harmed by bad publicity by the media, In this case the
business will need to find ways to convince customers
that the problem has been corrected. IF not , sales
revenue and profits will go down. Improving or
 maintaining image is an important factor in improving or
maintaining amarket share. In order to remain
successful, a business may need to:
●​ Maintain good customer relationships - key role in
continuing to meet customer needs, also provides market
research info about customers. Marketing departments
which become experts on customer needs will respond to
these needs and maintain customer loyalty. It has been
shown that it is often cheaper to keep existing customers
than gain new ones.
●​ Keep improving its existing product - This is true if
competitors improve their products. By making the goods
it sells very different from those produced by competitors
the business will become very well known for
differentiated products.
●​ Bring out new products to keep customer’s interest
in their company rather than their competitors. THis will
keep them to maintain or even increase, their market
share. ( ex: Would be microsoft, which keeps on
improving their operating systems )
●​ Keep costs low to maintain competitiveness as this
should keep low prices

Mass marketing
Mass market: When there is a very large number of sales of a
product.
If a product has very large number of sales, it could be said to
be sold to a mass market ( many people in the population will
buy this product, ex: aspirin ) Products are designed to appeal
to the whole market. Therefore advertising are intended to
appeal to most customers.

Advantages:
●​ The sales to these markets are very large
●​ The firm can benefit from economies of scale
●​ Risk can be spread, as often the business will sell
several different variations of products to the mass
maret, and if one variety of the product fails then the
other product may still sell very well
●​ Opportunities for growth of th ebusiness due to large
potential sales

Disadvantages:
●​ High level of competition between firms
●​ High costs of advertising
●​ Standarised products or services are produced and so
may not meet the specific needs of all customers or
potential customers, therefore leading to lost sales.

Niche marketing
NIche market: a small, usually specialised segment of a much
larger market.
Some products, often specialised products, are only sold to a
very small number of customers who form a very small
segment of a much larger market. This is referred to as a
niche market. These products are quite often sold by small
firms as they have too few sales for large firms to bother with.

Advantages:
●​ Small firms are able to sell to niche markets as large
firms may not have identified them but concentrated on
the mass markets instead. This may avoid competition
from the larger business.
●​ The needs of consumers can be focused on and
therefore targeted by the firm in a niche market. THis will
give them an advantage over larger firms who aim to
meet the needs of the mass market rather than thee
needs of these specific customers.
Disadvantages:
●​ Niche markets are small and therefore have a limited
number of sales, which means only small businesses can
oeprate in these markets. If the business wants to grow it
will need to look outside the niche market to find sales of
other products.
●​ Often businesses in a niche market will specialise in ust
one product. This means that if the product is no longer
in demand the business will fail as the business has not
spread its risks. Producing several products rather than
just one product means that if one fails there are other
 product which are still in demand and the business
carries on trading.

Market segments
Market segment: An identifiable sub-group of a whole market
in which consumers have similar characteristics or
preferences.

Segmenting a market can help a business to:

●​ Make marketing expenditure cost effective by producing
a product which loosely meets the needs of these
customers and only targeting its marketing efforts on this
segment.
●​ Enjoy higher sales and profits for the business, because
of cost effective marketing
●​ Identify a market segment which is not having its needs
fully met, and therefore offer opportunities to increase
sales.

Ways of segmenting a market:

●​ By socioeconomic group: Income groups can be defined
by grouping people’s jobs according to how much they
are paid. Ex: managers are usually paid more than office
staff. Office staff are usually paid more than production
workers. Unemployed people will obviously be the lowest
income group. This often means that products are priced
differently to target certain income groups. For example:
Cars range in size, performance and price level. Only
 someone on a high income could afford a Ferrari, but a
person on a much lower income might afford to buy a
Tato Nano. Some perfumes are sold at low prices
whereas other perfumes are very expensive and are
aimed at different income groups.

●​ By age: Products bought by different age groups won

be be the same. Example: clothing and fashion. Toys
bought for babies will be different
●​ By region: ex: if there are dry and wet parts of the
country then waterproof clothing would be sold in the
rainy part and not the wet part. If product is exported,
may need to change slightly ( different name or
packaging ) to appeal to the tastes of people in other
countries
●​ By gender: Some products are bought only by women or
on.y by men. Ex: shaving razor normally bought by a
man
●​ By use of the product:: Cars can only be used by
consumers for domestic use or business use. The
advertising media and promotions methods used wil
differ. Cars for business use may be advertised by
sending brochures out to the business, whereas cars for
domestic use may be advertised on television. These
cars may be the same models, but marketed in a
different way.
 ●​ By lifestyle: ex: a single person earning the same income
as a married person with three children will spent income
differently buying different products.

3.2 Market research

The role of Market research

●​ Market research is the objective collection, compilation
and analysis of information about a market
●​ Effective market research:
-​ Reduce risk when laucnching new products
-​ Identify and understand the future needs and
wants of customers
-​ Understand consumer behavour
-​ Identify how much consumers are prepared to pay
-​ Identify potential gaps in the market ( market
niches ) which can be exploited to increase sales
-​ Identify competitors and gauge their potential
strengths and weaknesses

●​ With effective market research businesses are well

placed to make informed decisions about the most
effective way to use their valuable resources and
develop a suitable marketing mix
●​ On going market research helps businesses to update
their marketing strategy in line with customers changing
needs and preferences
 Types of information
Market research can find out:
●​ Quantitative information, answers questions about
quantity of something which is in numerical data. Ex:
‘How many sport shoes were sold in the last month’
-​ Easier to analyze
●​ Qualitative information, answers questions were an
opinion or judgement is necessary. Ex: ‘what do
customers like about a particular product?’

Market orientation
●​ Market orientation is an approach to marketing that
focuses on the needs of consumers and uses this
information to design products that meet customer
needs.
-​ Consumers are at the centre of marketing decisions
-​ Products which responds to consumer needs are
developed
-​ Market proentated businesses are usually more
adaptable to changing customer needs.
- For example: universities often develop new
courses based on the feedback they receive
●​ Market orientation should lead to a business benefitting
from increased demand, increased profits, and a valued
brand image as its products are more desirable than
those of rivals.
 Primary Research
●​ Primary market research is the process of gathering
information directly from consumers in the target market.
-​ This process gathers information that does not
already exist and is specific to the needs of the
business collecting

●​ Surveys, interviews and focus groups are common

primary market research methods
-​ Many of these methods make use of questionnaires
to organise research questions and responses.

Method

Survey:
●​ Surveys are the most widely used tool to gather primary
research.
●​ Surveys may be face to face, online carried out by
telephone or by post
●​ A series of questions are posed to a defined number of
people ( respondents )
●​ A wide range of respondents can be reached using
online survey tools such as Survey monkey.
Observation:
 ●​ A market researcher studies consumer behaviour
during their interaction with a business.
●​ E.g: Shoppers may be accompanied as they shop in a
store or consumer traffic is measured at a particular
location and time.
●​ Common focuses for observation include:
-​ The impact of packaging on the products
consumers select
-​ The impact that the placement of a product in a
store may have on consumer choice.s
Interviews:
●​ A more formal meeting than a survey between a
researcher and a customer.
●​ Questions may be similar to those in a survey but the
interviewee may be asked follow up questions to gather
detailed information as well as cues such as body
language.
Test marketing
●​ Free samples are provided for a limited period to the
target market to gauge their response to the product.
●​ Receipts of samples are asked to review products and
provide detailed feedback to allow changes to be made
before the product is formally launched.
Focus groups
●​ Free-range discussions led by a marketing specialist
collect detailed feedback on all aspects of the marketing
mix from the target market
●​ Usually limited to a small group of 12-15 people who may
meet more than once
●​ Group members are usually rewarded for attendance