Marketing

Question 1

Why customer/consumer spending patterns may change?

Answer 1

• The price of the product
• The price of competitor’s products
• Changes in consumer income
• Changes in population size and structure

Question 2

Why some markets become more competitive?

Answer 2

• Legal controls that prevent individual firms from dominating the market
• Deregulation - the removal of government controls from an industry
• Providing financial and other assistance to new and small to medium-sized businesses
• E-commerce and social networks. This increases the level of competition because the websites are available worldwide

Question 3

How business can respond to changing spending patterns and increase competition?

Answer 3

• Develop their products
• Improve efficiency
• Increase promotion
• Look for new markets

Question 4

Limitations of niche marketing?

Answer 4

• The opportunity to earn high profits may attract potential competitors
• The small size of the market means that economies of scale are unlikely to be achieved
• Small changes in consumer spending patterns could have a very significant impact on firms

Question 5

Benefits of niche marketing

Answer 5

• Small firms are able to survive and earn profit even in markets that are dominated by larger firms because there target market is only a small part of the market
• There is less competition so firms do not waste scarce resources because of competitors
• Consumers will usually pay more for a high status, exclusive product. Which means that the firm is more likely to have a high profit margin
  Limitations

Question 6

Limitations of mass marketing

Answer 6

• Much more competition in the market which lowers prices and profit margins
• Not all markets are large enough to support a mass marketing approach

Question 7

Benefits of mass marketing

Answer 7

• Larger firms benefit from economies of scale which reduces unit cost
• Larger market has the potential for high sales and profits
• Changes in consumer patterns might have less effect on firms selling to a mass market

Question 8

Define market segmentation

Answer 8

Dividing the whole market into segments by consumer characteristics and then targeting different products to each segment

Question 9

Benefits of segmentation to some business

Answer 9

• Goods and services can be designed to meet the specific needs of consumers which increases sales
• Small firms which may not be able to compete in the whole market are able to operate in on or two segments - perhaps a niche market
• Marketing strategies can be better targeted at each segment
• May be possible to charge higher prices

Question 10

Pros of primary research

Answer 10

• Data is up to date
• Data is collected for a specific purpose that is directly relevant to the business
• It is not available to other businesses, which may provide competitive advantage

Question 11

Cons of primary research

Answer 11

• Costly
• Time consuming
• Risk of inaccurate data

Question 12

Pros of secondary research

Answer 12

• Fairly cheap to obtain

- Easier and quicker to obtain

Question 13

Cons of secondary research

Answer 13

• May not be up to date

- May not be directly relevant to the business

Question 14

Factors influencing the accuracy of market research data

Answer 14

• The sample chosen may be too small
• The business may have chosen the wrong type of method to collect the data
• People may not answer the questions truthfully
• Questions asked may be bias, which forces the interviewee to not give their true view
• Language may be unclear