The role of marketing, markets and segmentation

Last time

Before we start: last time, in Promotion, marketing strategy and selling abroad, you learned these points. Here they are again on one card. Keep them in mind, because today builds on them.

What marketing does

Marketing is not just advertising. It is everything a business does to find out what customers want, and to provide it at a profit. This lesson covers the role of marketing, how markets change, and how businesses divide customers into groups.

The role of marketing

Identify customer needs: find out what customers want, through market research. Satisfy customer needs: offer the right product, at the right price, in the right place, with the right promotion. Maintain customer loyalty, so customers keep coming back. And build relationships, and gain information about the market.

Customer loyalty

Customer loyalty is when customers keep buying from the same business rather than switching to rivals. It is cheaper to keep a customer than to win a new one, and loyal customers recommend the business to others. Businesses build it with good service, quality, loyalty cards, and keeping in touch.

Why spending patterns change

Changes in income: richer customers buy more luxuries. Changes in tastes and fashion, often driven by social media. Changes in the population: more young or old people, or more people in cities. New technology and new products from competitors, and changes in prices.

Competition

Markets have become more competitive, with online shopping and foreign firms. Businesses respond by improving quality, cutting costs, developing new products and building their brand. A business that does not respond to change loses customers.

Mass markets

A mass market is a large market where similar products are sold to many customers, such as soap or soft drinks. Advantages: high sales, economies of scale, and less risk because it does not rely on one small group. Disadvantages: strong competition, low prices, and high advertising costs.

Niche markets

A niche market is a small, specialised part of a market, such as hand-made leather shoes or halal cosmetics. Advantages: less competition, higher prices, and loyal customers who value the special product. Disadvantages: low sales, no economies of scale, and risk if tastes change.

Market segmentation

Market segmentation is dividing a market into groups of customers with similar characteristics. Segments can be by age, gender, income, location, lifestyle, or use of the product. Each segment can then be targeted with its own product and promotion.

Segments with examples

Here are common ways to segment a market, with an example of each.

Benefits of segmentation

Products meet each group's needs better, so sales and customer loyalty rise. Promotion is targeted, so less is wasted on people who will not buy. It reveals gaps in the market, where new products could sell.

Mistakes that lose marks

Mistake one: saying marketing just means advertising. Mistake two: giving a niche market as a cheap, low-price market. Mistake three: explaining segmentation without saying how it helps the business in the case. The fix: define it, then the benefit to the named business.

The full-marks tip

The full-marks tip: define segmentation as dividing the market into groups with similar characteristics. For mass or niche, give one advantage and one disadvantage for the business in the case.

On one card

So, on one card: marketing and markets. Keep it for revision.