MARKETING, COMPETITION AND CUSTOMER
Competitive market: a market where there are numerous producers that compete with one another in hopes
to provide the goods and services as consumers want and need.
Why some markets are more competitive than others
-Globalization: Due to globalization the market for products are increasingly sold all over the world.
-Transportation: With improvement in transportation it is easier and cheaper to transport products from
one part of the world to another.
-Internet: With the help of internet and e-commerce consumers can search for the products and can buy
from overseas market.
1. How do businesses respond to changing spending patterns and increased competition?
a) Maintain good customer relationships: Marketing departments which becomes experts on
identifying customer needs will quickly respond to any change in the needs of their customers
and will maintain customer loyalty.
b) Keep improving its existing products: a business must constantly add new features or change
existing products to remain competitive. By making goods and services very different from
those produced by competitors a business will be known for its differentiated products.
c) Keep cost low: When the businesses keep the cost low, this helps to maintain competitiveness
in the market.
2. What is meant by a market?
Market is a place where sellers and consumers meet in order to exchange goods and services for
money. A market is made up of the total number of customers as well as sellers.
3. What is difference between economies of scale and diseconomies of scale?
Economies of scale are the factors that lead to a reduction in average costs as a business increases in
size.
Diseconomies of scale are the factors that lead to an increase in average costs as business grows
beyond a certain size.
4. Differentiate a mass market and a niche market.
Mass market is where there is a very large number of sales of a product.
Niche market is a small, usually specialized segment of a much a larger market.
5. What are the advantages of selling to a mass market?
a) Total sales are very high – When it comes to mass market a large quantity of products are
ben sold in this market
b) Benefit of economies of scale – When there is reduction in cost per unit of the product when
the products are sold in large quantities in the market
c) Spreading of risk – as business sell several variations of products to mass market which result
in spreading of risk
d) Opportunity of growth – due to large potential of sales in the market
6. What are the disadvantages of selling to a mass market?
a) High level of competitions – when businesses sell similar products, there is a chance of high
competitions among the businesses
b) High cost of advertisement and promotion – to keep the product unique among the
competitors and gain market share the businesses have to invest in advertisements and
promotions
c) If products not met according to customer’s standard, it will lead to lost sales.
7. What advantages does a firm enjoy by supplying to a niche market?
Small firms are able to sell to niche markets as large firms may not have identified them. So less
competition from large firms.
Needs of consumers can be focused on and therefore targeted by the firm in a niche market.
8. What disadvantages does a firm face by supplying to a niche market?
Small markets, so limited number of sales, only small businesses can operate.
Businesses often specializes in just one product, may fail if the product is no longer in demand.
9. Define the term market segment.
Market segment is an identifiable sub-groups of a whole market in which consumers have a similar
characteristic or preferences.
10. What are the ways of segmenting a market?
a) By socio-economic groups: On the basis of income (High, medium and low income) of the
population.
b) By age: The products bought by people indifferent age groups will not be the same.
c) By region/location: The people of different region and location will buy different products.
d) By gender: Some products are bought only by women or only by men.
e) By use of the product: Some products such as cars can be used for domestic purpose or for
business use.
f) By lifestyle: Spending habits of people depends on their income and businesses can aim their
products at people who enjoy different lifestyles.
11. What are the potential benefits of segmentation to a business?
a) Customization of Products and Services
Businesses can tailor their goods and services to meet the specific needs of different consumer groups,
leading to higher customer satisfaction and increased sales.
b) Opportunities for Small Businesses
Smaller firms that lack the resources to compete in the entire market can focus on specific segments,
allowing them to establish a strong presence in niche markets.
c) Identifying Untapped Market Segments
Market segmentation helps businesses discover consumer groups with unique needs that are not yet
being met, creating opportunities for niche marketing.
d) More Efficient Marketing Strategies
Targeted marketing ensures that promotional efforts reach the right audience, reducing wasted
resources and increasing the effectiveness of advertising campaigns.
e) Price Discrimination and Profit Maximization
Businesses can charge different prices for similar products in different segments, maximizing revenue
through price discrimination.
12. What is meant by the term market gap?
Market gap is an opportunity to produce something that is not yet available but that people would
like to have.
13. What is a market budget?
A market budget is a financial plan for the marketing of a product or product range for some
specific period of time.
