4.2 The Market

4.2.1 Importance of Marketing

Marketing is important for several reasons, including:

  • Satisfying customer needs - Businesses may use marketing to ensure that their products or services address customer concerns or fulfil desires.

  • Building customer relationships - Marketing helps businesses build trust and encourages customer retention by understanding needs and providing value through their products or services.

  • Keeping customer loyalty - Marketing ensures customer loyalty by maintaining effective communication, supplying high-quality products and providing good service.

Marketing key terms and definitions:

  • Market orientation - An approach to developing products to meet consumer needs identified during the market research process.

  • Product orientation - A development approach where a business focuses on the characteristics of the product rather than the needs of the consumer.

  • Market share - The percentage of total sales in a market that is held by a specific business.

  • Market analysis - The process of gathering, analyzing, and interpreting information about a market.

  • Niche marketing - A marketing strategy where a business targets a specific, narrow segment of the market with specialized products or services designed to meet the unique needs of that group.

  • Mass marketing - A marketing strategy where a business aims to reach and appeal to a broad segment with products or services that have wide appeal.

4.2.2 Responding to changes in the market

How businesses respond to certain market changes:

Changing customer needs

Businesses must constantly monitor changes in consumer needs through market research and modify their products to guarantee continued consumer satisfaction. An example of this is if consumers become more health-conscious, businesses in the food industry may need to provide healthier products.

Changing customer/consumer spending patterns

When spending patterns change, businesses must change their pricing and promotional strategies in accordance with the new economic conditions. This is in order to ensure their products are priced well enough to maintain a sufficient amount of demand.

Increased competition

When new competitors enter the market or established competitors improve their products or services, firms must adjust. This might include differentiating products, increasing customer service, offering competitive pricing, or innovating to stay ahead of the competition and continue to increase their market share.

4.2.3 How businesses use market segmentation to target customers

Definition: Market segmentation is the process of dividing the market into subgroups of customers based on certain characteristics.

The different segments:

  • Location - Businesses may segment the market according to geographic factors. This allows them to adapt products and marketing strategies to local preferences, cultures, or environmental conditions.

  • Demographics - Demographic segmentation divides the market depending on factors such as gender, employment and ethnicity. This helps firms produce specific goods and market them in a way that appeals to the qualities of specific demographic groups.

  • Lifestyle - Businesses may segment customers based on their lifestyle which includes their interests, values, and opinions. This can help the business better understand what to produce and how to market their products.

  • Income - Income segmentation involves differentiating clients based on their income. This can help businesses adapt their products and prices to appeal to different income groups.

  • Age - By dividing markets by age group, businesses are able to create age-appropriate products and marketing strategies which meet the particular needs and preferences of each group. An example of this would using bright colors to appeal to younger children.