Marketing Strategies and Consumer Behavior

Marketing Competition and the Customer

• Role of Marketing:
  • Identify customer needs (wants, willingness to pay, purchase channels, after-sales services).
  • Satisfy consumer needs and demands (right product, place, price). Failure leads to revenue/profit loss.
  • Maintain customer loyalty (build relationships, meet needs/wants, adapt to expectations, encourage repeat business).
  • Build customer relationships (long-term, adapt to changing needs, easier market research, understand customer motivations).

Reasons for Changing Customer Spending Patterns

• Taste and Fashion: Changes in these influence buying habits, hobbies, and diets.
• Technology: Outdated products lead to demand for newer, more advanced features (e.g., iPhone upgrades).
• Income: Increased income leads to purchasing more expensive goods; low income leads to choosing cheaper alternatives.
• Aging Population: Increased demand for elder-related products (e.g., adult nappies, anti-aging products, medical equipment).

Importance of Changing Consumer Needs

• Businesses must respond to customer needs to remain profitable, as customers are the source of income.

Increasing Market Competition

• Globalization: Easier global product distribution at lower costs.
• Improved Transportation: Faster, cheaper global distribution.
• Internet: 24/7 online shopping convenience.

Business Responses to Market Changes

• Maintain Customer Relationships: Understanding changing needs is crucial.
• Improve Existing Products: Maintain unique selling points and adapt.
• Develop New Products: Expand product lines and increase market share.
• Introduce New Products: Extend product lines, maintain/increase market share.
• Keep Costs Low: Maintain profitability; possibly lower prices for increased demand/sales.

Mass Marketing

• Definition: Selling the same product to a broad market. Attempts to appeal to everyone.
• Advantages: High total sales, lower average cost, spread risk, high growth potential.
• Disadvantages: High competition, products may not meet specific customer needs.

Niche Marketing

• Definition: Selling products to a small segment of the market with specific needs.
• Advantages: Higher prices possible due to specialized needs, allows smaller businesses to thrive where larger companies focus on mass markets.
• Disadvantages: Lower sales volume, higher risk, potential for attracting competitors.

Market Segmentation

• Definition: Dividing the market into subgroups with shared characteristics (socioeconomic, age, region, gender, product use, lifestyle).
• Benefits: Tailored goods to specific needs, identify market gaps, simplified market research, targeted promotion, efficient resource allocation.
• Examples: Socioeconomic (income-based), Age (baby products, teen clothes, adult apparel), Region/Location (local tastes, adapting to culture/climate), Gender (differentiated product use), Lifestyle (dependent on life stage).

Solved Examination Questions

• Reasons for Spending Pattern Changes:

  • Changes in taste/fashion
  • Changes in income/wealth

• Benefits of Market Segmentation:

  • Tailor products to customer needs
  • Identify market gaps

• Mass vs. Niche Marketing:

  • Mass marketing: Economies of scale, lower costs, higher profits, but high competition.
  • Niche marketing: Specialization, higher prices, potentially higher revenue, but limited volume, higher risk. Niche strategy can be beneficial for focused markets or special areas where customers prefer to pay extra.