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UNIT 10: MARKETING, COMPETITION AND THE CUSTOMER THE MARKETING DEPARTMENT STRUCTURE OF A TYPICAL MARKETING DEPARTMENT The bigger the company, the more people will be employed in the Marketing department SALES DEPARTMENT is responsible for the sales or the product MARKET RESEARCH DEPARTMENT is responsible for finding out customers’ needs, market changes and the impact of competitors’ actions PROMOTION DEPARTMENT deals with organizing the advertising for products DISTRIBUTION DEPARTMENT transports the products to the market THE ROLE OF MARKETING Identify customer needs (what kind of products or services they want, the prices they want to pay, after- sales service Satisfy customer needs (to achieve sales of their goods or services) Maintain customer loyalty (building customer relationships) Gain information about customers (to meet their changing needs and to establish long term relationship with them Anticipate changes in customer needs (by identifying new trends in customer demand or gaps in the market so the business can produce goods and services that are not available at the time BUSINESS SHOULD MEET ONE OR MORE OF THE FOLLOWING OBJECTIVES: Raise customer awareness of a product or service of the business Increase sales revenue and profitability Increase or maintain market share Market share is the percentage of total market sales held by one brand or business UNDERSTANDING MARKET CHANGES Why customer/ consumer spending patterns change Consumer tastes and fashions change Changes in technology Change in incomes Ageing populations Why have some markets become more competitive? Globalization of markets has meant that products are increasingly sold all over the world It is now easier to get products from one part of the world to another part of the world Internet is a way to connect well with and promote to customer How can businesses respond to changing spending patterns and increased competition? Maintain good customer relationship Keep improving its existing product Bring out new products to keep customers’ interest Keep cost low to maintain competitiveness Mass market is where there is a very large number of sales of a product Advantages: The sales to these markets are very large The firm can benefit from economies of scale Risks can be spread Opportunities for growth of the business due to large potential sales Disadvantages: High levels of competition between firms High costs of advertising SUSIE IGCSE1 Niche market is a small, usually specialized, segment of a much larger market Advantages: Small firms are able to sell to niche markets as large firms may not have identified them but concentrated on the mass markets instead The needs of consumers can be focused on and therefore targeted by the firm in a niche market Disadvantages: Niche markets are small and therefore have a limited number of sales, which means only small business can operate in these markets Often businesses in a niche market will specialize in just one product Market segment is an identifiable sub- group of a whole market in which consumers have similar characteristics or preferences Segmenting a market can help a business to: Make marketing expenditure cost effective by producing a product which closely meets the needs of these customers and only targeting its marketing efforts on this segment Enjoy higher sales and profits for the business, because of cost- effective marketing Identify a market segment which is not having its needs fully met, and therefore offer opportunities to increase sales Ways of segmenting a market By socio- economic group By age By region/ location By gender By use of product By lifestyle