4.2: The Importance of Marketing

consumer goods markets

where products for customers are sold

markets for services

include services for individuals

housing market

where people buy and sell properties

commodity markets

where raw materials are traded

what is marketing?

a management process involved in identifying, anticipating and satisfying consumer requirements profitably

importance of marketing

- satisfying customer needs
- building customer relationships
- keeping customer loyalty
- market orientation and product orientation
- market share and analysis
- niche and mass marketing.

satisfying customer needs

- businesses must produce goods and offer services customers want to buy
- they identify customer needs by carrying out market research
- businesses should also anticipate and adapt to customer needs

building customer relationships

- some businesses try to establish a bond with customers using effective communication
- businesses use social media as marketing is more successful if communication is two-way

how do businesses build relationships with customers?

- take complaints seriously
- personalise communication
- say 'thank you'
- know your customer
- connect regularly
- build trust

keeping customer loyalty

- it's important to retain customer loyalty so they continue making purchases
- this is done by satisfying their needs by developing new products, providing first-class services, maintaining effective communication and delivering reliability
- developing a brand name

how do businesses keep customer loyalty?

- reward cards
- free gifts
- charitable donations
- partnership deals

market orientation and product orientation

- businesses now are market orientated
- led by the market and focus on the customer
- do not make products until they know what people want
- these firms spend a lot of their time and resources on identifying the needs of the customers

market share

- businesses aim to increase market share at the expense of rivals
- dominating firms can charge higher prices

market share (formula)

(total product or business sales / total sales in the whole market) x 100

market analysis

- businesses are more successful if they carry out market analysis
- this is finding out about the features of the market
- businesses gather both qualitative and quantitative data
- businesses must keep in touch with markets to respond

mass marketing

- when a business sells products to all consumers in the same way
- large number of customers
- businesses can produce large quantities at a lower cost (economies of scale)
- higher sales and higher profits
- lots of competition and money used marketing

niche marketing

- small market segment
- selling to a small
- avoids competition
- easier to focus on customer needs

responding to changes in the market

- markets don't remain the same over time
- they are static and dynamic
- some markets disappear

why do customer needs change?

- consumer income change
- social mobility
- consumers are influenced by change in social markets
- fashions change
- varying needs

how do businesses meet changing customer needs?

businesses must monitor market and identify changes

changing customer/consumer spending patterns

- businesses gather information about spending patterns in the market they operate in
- they carry out their own research and use it to to evaluate the market

increased competition

- businesses operate competitors' behaviours in the market to evaluate sales and changes
- some businesses lose profit trying to attract customers from rivals in order to stay in the market

methods businesses use to attract customers

- lowered prices
- different products
- better quality
- powerful advertising
- offering extras