Cambridge IGCSE Business - 3.1 Marketing Strategies

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Questions and Answers

Which of the following is NOT a factor that marketing helps businesses identify about their customers?

  • The best way to manufacture the product (correct)
  • The variety and quality of goods and services they want
  • The type of marketing campaign that will make them more likely to buy a product
  • The prices they are willing to pay

Satisfying customer needs means simply providing them with products that meet their basic requirements.

False (B)

What are two ways in which marketing helps a business identify customer needs?

Marketing helps a business identify customer needs by finding out about the variety and quality of goods and services they want, the prices they are willing to pay, the promotional techniques that may persuade them to make repeated purchases, the convenience factors including where and how they want to purchase products, and the after-sales services they anticipate.

Marketing helps a business identify and ______ the needs and wants of its customers.

<p>satisfy</p> Signup and view all the answers

Match the following marketing aspects with their corresponding customer needs:

<p>Variety and quality of goods and services = Identifying the types of products customers are looking for Prices customers are willing to pay = Determining a price point that is appealing to the target market Convenience factors = Understanding where and how customers prefer to buy products After-sales services = Assessing the level of support customers expect after purchasing a product</p> Signup and view all the answers

What is the main benefit of customer loyalty for a business?

<p>Reduced marketing expenses (B)</p> Signup and view all the answers

Customer loyalty leads to a decrease in market share.

<p>False (B)</p> Signup and view all the answers

Give one example of a way businesses can build customer relationships.

<p>Using loyalty cards</p> Signup and view all the answers

Businesses can use ___________ to gather important information about their customers.

<p>technology</p> Signup and view all the answers

What is the primary reason for changes in customer spending patterns?

<p>Changing customer needs and wants (C)</p> Signup and view all the answers

Match the following changes in customer spending patterns with their respective reasons:

<p>Changes in tastes and fashions = Trends in some markets can change very quickly Increased disposable income = Customers have more money to spend on discretionary items Economic downturn = Consumers may cut back on spending or shift towards cheaper alternatives Technological advancements = New products and services emerge, attracting customers</p> Signup and view all the answers

Products aimed at niche markets are typically produced on a large scale.

<p>False (B)</p> Signup and view all the answers

Which of the following is an example of a product targeted at a mass market?

<p>Kellogg's Corn Flakes (B)</p> Signup and view all the answers

What is the main difference between mass marketing and niche marketing?

<p>Mass marketing targets a broad market segment, while niche marketing targets a small subset of the market with specific needs.</p> Signup and view all the answers

Products in mass markets are generally ______ with little differentiation.

<p>standardized</p> Signup and view all the answers

Match the following companies with their respective market focus:

<p>Kellogg's = Mass market Bob's Red Mill = Niche market</p> Signup and view all the answers

What is a key benefit of developing new products for a business?

<p>Increased customer satisfaction (D)</p> Signup and view all the answers

Minimizing costs is not a step a business can take to remain competitive.

<p>False (B)</p> Signup and view all the answers

Explain how Google has used product improvement to remain competitive.

<p>Google has implemented product improvements like Google Meet, which differentiate them from other search engine software and allow them to maintain their competitive edge.</p> Signup and view all the answers

Providing outstanding ______ service ensures customer loyalty for longer periods.

<p>customer</p> Signup and view all the answers

Match the business strategy with its corresponding step in the content:

<p>New product development = Offering new and innovative products to attract customers Customer focus = Maintaining excellent customer service Improve products = Developing and improving existing products to remain competitive Minimise costs = Reducing operational expenses to increase profit or lower prices</p> Signup and view all the answers

Which of the following is an example of a company that focuses its products on a niche market?

<p>Louis Vuitton (B)</p> Signup and view all the answers

Businesses that operate in niche markets typically benefit from economies of scale.

<p>False (B)</p> Signup and view all the answers

What are two ways in which a business can segment its market?

<p>Businesses can segment their markets by geographical location, demographics, behavior and lifestyle, age, or gender.</p> Signup and view all the answers

The process of dividing a single market into sub-markets is called ______.

<p>market segmentation</p> Signup and view all the answers

Match the following market characteristics with their corresponding descriptions:

<p>Niche Market = Targets a specific, narrow market segment with specialized products Mass Market = Focuses on a broad range of customers with standardized products High Average Costs = Common in niche markets due to small-scale production Economies of Scale = Cost savings achieved by producing large quantities High Profit Margin = Possible in niche markets due to high prices and specialized products</p> Signup and view all the answers

Which of the following factors is LEAST likely to be considered when segmenting a market?

<p>Product price (D)</p> Signup and view all the answers

A business operating in a niche market can avoid competition altogether.

<p>False (B)</p> Signup and view all the answers

Why is it important for businesses to understand the process of market segmentation?

<p>Market segmentation allows businesses to tailor their marketing efforts to specific customer segments, improving their chances of success by focusing on the most relevant groups of consumers.</p> Signup and view all the answers

What is a key factor a business needs to consider when choosing a market segmentation strategy?

<p>All of the above (D)</p> Signup and view all the answers

A luxury fashion retailer could potentially harm its brand image by targeting a budget market.

<p>True (A)</p> Signup and view all the answers

Explain how a bespoke watchmaker might use income as a basis for market segmentation.

<p>A bespoke watchmaker could target high-income customers who can afford handmade, niche market pieces, as this aligns with the high-quality, custom nature of their product offerings. This segmentation allows them to cater to a specific group who value exclusivity and craftsmanship, which aligns with the brand image and target market.</p> Signup and view all the answers

A business that runs boot camp style exercise classes might target individuals who are motivated by ______ changes.

<p>lifestyle</p> Signup and view all the answers

Match the following market segmentation factors with their respective explanations:

<p>Brand image = The business must consider whether appealing to the chosen segment aligns with the existing brand image of the product/company. Cost of entry into the segment = How much advertising will be needed to attract the attention of the segment? Market analysis data = The business will need to examine market research data to find out how big the potential market segment is in terms of number of customers and potential future sales.</p> Signup and view all the answers

Which of the following is NOT a factor that a business should consider when choosing a market segmentation strategy?

<p>Product distribution channels (A)</p> Signup and view all the answers

Market analysis data is crucial for determining the size of a potential market segment and its future sales potential.

<p>True (A)</p> Signup and view all the answers

Give one example of a promotional strategy that might be necessary for a new fitness fashion company to enter a competitive market.

<p>A new fitness fashion company could utilize influencer marketing to reach a large audience in the fitness community. Partnering with popular fitness influencers who align with their brand values could help them gain visibility and credibility, attracting a wider customer base.</p> Signup and view all the answers

Flashcards

Role of Marketing

Marketing identifies and satisfies customer needs and wants.

Identifying Customer Needs

Finding variety, quality, prices, promotions, and convenience desired by customers.

Satisfying Customer Needs

Ensuring products are available, priced right, and of expected quality with good service.

Convenience Factors

Where and how customers want to purchase products and expect after-sales service.

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Promotional Techniques

Strategies to persuade customers to make repeated purchases.

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Responding to Competition

Businesses must act to maintain market position against competition.

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New Product Development

Creating innovative products to gain customer loyalty and attract new clients.

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Customer Focus

Providing excellent customer service to ensure long-term customer loyalty.

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Improve Products

Enhancing products to stay competitive and meet customer expectations versus rivals.

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Minimise Costs

Reducing costs allows for lower prices, increasing competitiveness and profit retention.

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Market Changes

Businesses must continuously monitor and respond to unpredictable shifts in the market.

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Competitive Advantage

The edge gained by businesses through unique strategies and offerings.

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Promotion Funding

Retained profits can fund promotions to raise product awareness and support expansion.

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Mass Marketing

A strategy where products are sold to a broad market segment with little differentiation.

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Niche Marketing

A strategy aimed at a small subset of the larger market to satisfy specific needs.

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Standardized Products

Products produced with minimal variations for a larger market.

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Production Scale

The volume of goods produced, varying from small (niche) to large (mass).

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Market Evolution

The process where niche markets can develop into mass markets over time.

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Customer Loyalty

When customers repeatedly buy from the same business.

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Importance of Customer Loyalty

Leads to repeat purchases and increased market share.

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Building Customer Relationships

Communicating with customers to foster loyalty.

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Using Technology for Relationships

Gathering information about customers’ preferences.

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Changing Customer Needs

Evolving wants and needs that impact spending habits.

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Impact of Market Research

Ongoing research helps businesses identify market changes.

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Failure to Adapt

Not responding to changes may lead to business failure.

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Trends in Markets

Fashion and preferences can shift rapidly.

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Niche Market

A specialized market aimed at a specific segment of consumers.

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Mass Market

A market strategy that aims at a broad audience with general products.

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Market Segmentation

Dividing a market into distinct groups of buyers with different needs.

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Geographic Segmentation

Segmenting markets based on physical locations and regions.

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Demographic Segmentation

Dividing the market based on observable characteristics like age and gender.

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Behavioral Segmentation

Segmentation based on consumer behaviors such as purchasing habits.

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High Average Costs

Higher production costs due to small-scale manufacturing in niche markets.

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Economies of Scale

Cost advantages that businesses obtain due to the scale of operation.

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Brand Image

The perception of a brand in the minds of customers.

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Cost of Entry into Market

The expenses related to advertising and attracting a segment.

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Lifestyle Segmentation

Dividing a market based on lifestyle choices and behaviors.

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Income Level Segmentation

Targeting customers based on their income brackets.

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Market Analysis Data

Research data used to understand market sizes and sales potential.

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Promotional Campaign Budget

The amount of money allocated for advertising efforts.

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Competitive Market

A market with many businesses competing for the same customers.

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Study Notes

Cambridge IGCSE Business - 3.1 Customers, Marketing & Competition

  • The Role of Marketing: Marketing helps businesses identify and satisfy customer needs and wants. This includes understanding customer needs (variety, quality, price, convenience, after-sales service), which drives business survival and success.

  • Identifying & Satisfying Customer Needs: A crucial aspect of marketing is understanding customers' needs. This includes the price they are willing to pay, preferred product features, convenient purchase locations, and the desired level of after-sales service. Satisfying these needs ensures product availability, competitive pricing, and appealing promotions.

  • Competing in the Market: Businesses need to adapt to evolving customer preferences to avoid obsolescence and maintain their competitive edge. Meeting customer needs ensures customer loyalty and repeat business. This entails staying updated with changing fashions and tastes, and developing a positive reputation.

  • Changing Customer Needs & Spending Patterns: Markets are dynamic, with continuous shifts in customer desires and spending habits. Changes in disposable income, tastes and fashions, technology, and global trends impact spending patterns. Identifying and interpreting these changes is key for successful businesses.

  • Customer Loyalty & Relationships: Businesses strive for customer loyalty, fostering repeat purchases through strong relationships. Maintaining a positive image, developing close ties, using technology to gather customer information, and proactively addressing changing customer needs are all vital components.

  • Niche & Mass Marketing: Mass marketing targets the entire market, while niche marketing focuses on a specialized segment. Mass markets are characterized by standardized products and high production volumes to maintain low costs. Niche markets offer specialized products designed to cater to the specific needs of a smaller segment.

  • The Process of Market Segmentation: Dividing a large market into smaller segments with distinct characteristics lets businesses target specific needs and desires. Segmenting is crucial because one-size-fits-all approaches may be ineffective for achieving high sales volume. This involves considering location, demographics, lifestyles, and behavior to deliver products effectively. Businesses should recognize that segments aren't homogeneous; individual consumers might have different preferences.

  • Responding to Changing Spending Patterns & Increased Competition: Businesses need to adapt and innovate to stay competitive when facing changing customer needs and increased competition. Several strategies include developing new products, improving products to improve the customer experience, lowering costs, and providing outstanding customer service.

  • Factors Affecting Market Segmentation: Factors like brand image, cost of entry into the market, market analysis data, and the potential market segment's size and sales potential influence segmentation decisions. Businesses must carefully consider these factors to effectively target potential customers. Specific data on potential customer buying behaviors is valuable.

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