3.1. Marketing and the market
- Syllabus
- 0264–2027–2028
- Topic
- 3.1
- Level
- —
Learning objectives
3.1.1The role of marketing• identifying customer needs• satisfying customer needs• maintaining customer loyalty• building customer relationships• anticipating changes in customer needs3.1.2Understanding market changes• why consumer spending patterns may change• why some markets are becoming more competitive• how businesses can respond to changing spending patterns and increased competition• calculate market share3.1.3Mass markets and niche markets• concepts of mass markets and niche markets• advantages and disadvantages of mass markets and niche markets3.1.4Market segmentation• how markets can be segmented according to: age, income, location, gender, lifestyle• advantages and disadvantages of market segmentation
Use marketing to create lasting customer value
Marketing identifies and anticipates customer needs, then coordinates decisions to satisfy them profitably. It is an ongoing relationship process, not simply advertising.
Research reveals needs and changes; the business designs a suitable product, price, promotion and route to market; customer feedback and sales show whether needs were satisfied; reliable quality and service build relationships and loyalty; continued research anticipates the next change.
Loyal customers may buy repeatedly, recommend the business and cost less to retain than constantly replacing lost customers. Loyalty must be earned through consistent value, communication and problem resolution.
A customer may want a product but be unwilling or unable to pay. Marketing decisions must consider needs, purchasing power, competition and business costs.
Respond to market change and calculate market share
| Source of change | Possible business response |
|---|---|
| income, tastes or demographics | adapt the product, price or target segment |
| technology and online access | change promotion, distribution or product features |
| new competitors or imports | improve value, quality, service or differentiation |
| laws, environment or social attitudes | redesign products and communication |
market share(%)=total market salesbusiness sales×100
If a business sells 2.4millioninamarketwithtotalsalesof12 million, its market share is (2.4/12)×100=20%. Use the same period, market boundary and unit for both figures.
Rising sales do not guarantee rising market share: the whole market may be growing faster. Market share can use sales value or volume, but numerator and denominator must match.
Choose between mass and niche markets
| Feature | Mass market | Niche market |
|---|---|---|
| customer group | broad, high-volume demand | small, specialised segment |
| advantages | large sales potential, economies of scale, wide awareness | close customer knowledge, differentiation, less direct competition, possible premium price |
| disadvantages | intense competition, costly promotion, pressure to standardise | limited sales, dependence on a small segment, entrants may copy a profitable niche |
Choose according to business resources, specialist knowledge, customer differences, capacity, competition and growth objectives. A niche can be attractive to a small specialist firm; a mass market may reward a large efficient producer.
Niche does not mean no competition or automatically high profit. Mass products may still be segmented and differentiated.
Segment a market without stereotyping customers
Market segmentation divides a broad market into customer groups with meaningfully different needs or buying behaviour, so the business can target its marketing decisions.
| Basis | How it may shape an offer |
|---|---|
| age | product features, media and language |
| income | price point, quality and finance options |
| location | availability, climate needs and local promotion |
| gender | only where reliable research shows a relevant need or preference |
| lifestyle | interests, values, activities and usage occasions |
Segmentation can improve product fit, promotion efficiency, loyalty and pricing, and reveal underserved niches. It also adds research and marketing cost, reduces scale, may use inaccurate data and can exclude potential customers.
A segment is evidence-based, measurable and reachable—not an assumption that every person sharing one characteristic behaves alike. Combine variables when that better predicts real needs.