Cambridge IGCSE Business Studies 3.1 Marketing, competition and the customer

3.1.1 – The role of marketing

Roles of marketing are to

• Identify and satisfy consumer needs
• Keep customers loyal 
• Gather information about customers 
• Recognise how customer’s needs are changing

Marketing goals

• Develop products that meet customer needs and wants
• Promoting product to customers
• Increase sales
• Target a new market

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3.1.2 – Market changes

Why do consumer spending patterns change?

• Consumer taste and fashion change
• New technology being developed
• Changes in consumer income
• Ageing population

BUSINESSES MUST RESPOND TO THESE CHANGES OR FAIL!

Why have some markets become more competitive? 

Globalisation – Businesses can sell their products worldwide

Better transportation allows products to be distributed all over the world

Internet e-commerce (online shopping) allows customers to purchase goods from around the world 

How can businesses respond to increased competition?

1. Develop and maintain customer loyalty
2. Keep improving their product(s) and develop new ones that meet consumer needs and wants
3. Keep costs low to remain competitive
4. Make their products better than their

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3.1.3 – concepts of niche marketing and mass marketing

Mass marketing – Aimed at the whole market

+Advantages of mass marketing

• High sales and demands (higher number of consumers) which may lead to high profits
• Benefit from economies of scale

-Disadvantages of mass marketing

• Higher competition
• Product is aimed at the whole market so specific customer needs are not met

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Niche Marketing – Tailoring product to a particular type of customer (small specialised market)

+Advantages of niche marketing

• Small businesses can avoid competition from larger businesses
• Product meets specific consumer needs

-Disadvantages of niche marketing

• Smaller number of consumer so growth is difficult
• Risks are not spread so if demand for the specialised product falls, the business will likely fail unless they develop more products

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3.1.4 – How and why market segmentation is undertaken

Market segment – Sub group of a market with a group of consumers who have similar characteristics

Ways that businesses can segment a market

• Gender
• Age
• Income
• Location
• Lifestyle
• Use of the product (e.g. for personal use, business use)

+Advantages of market segment

• Business can concentrate on specific needs of a particular type of consumer
• Marketing becomes more effective (e.g. advertising)

-Disadvantages of market segment

• Business may only focus on one segment which is very risky (incase demands fall business wont make money)