Page 145 - Cambridge IGCSE Business Studies

10: Marketing, competition and the customer

ACTIVITY 10.2

ABC is a footwear manufacturer in Country X. It has been manufacturing shoes and other footwear items for almost 80
years. It sells its products to the final consumer through its own chain of shoe shops. The shops have very loyal customers

who have valued the quality of ABC’s footwear products and the high standard of service offered in its shops. The style of
ABC’s shoes has changed little over the past 40 years.
Country X has a growing population. Although at one time it might have been described as a developing economy, it
is now a strong economy with low unemployment and most people earning very good wages and salaries. The younger
generation are much more fashion aware than their parents and grandparents and are prepared to pay high prices to have
the latest fashion items.
In recent years ABC has faced much greater competition from other footwear manufacturers, especially from those
located in Country Y. Country Y is a low wage economy and this enables footwear manufacturers in Country Y to off er
their products at much lower prices than those produced by ABC. These businesses are also spending more money on
advertising their products than ABC, which is relying on its reputation to keep its loyal customers.
The directors of ABC are concerned about the latest sales figures for its shops. For the fourth year in a row, sales and
revenue have fallen and if this trend continues then the business will soon be making a loss.

Identify the factors that affect the spending by consumers on footwear products produced by ABC.

Changing customer needs

From the earlier definition of marketing we can see that one of the

purposes of marketing activity is to satisfy customer needs at a profit. If a
business is to survive in the long run, it has to respond to any change in
customer needs.
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It is easy to see how and why a business that produces and sells fashion items,
such as clothing, must constantly identify and satisfy the changing needs of its
customers. However, as you learned earlier, changes in tastes and fashion are not
the only influences on consumer spending.

ACTIVITY 10.3

Working in pairs and using your own country as a starting point, answer the following questions:

1 Can you think of any differences in consumer needs between the regions of your country?
2 Are you able to identify how consumer needs in your country are different from consumer needs in countries within the

same part of the world?

3 Why might the needs of consumers in your country be different from the needs of consumers in a country on the
opposite side of the world? Think of how things such as climate, tastes, wealth, religion and culture might create

differences in needs.

Why some markets become more competitive
Almost all markets have some level of competition within them. However, some
markets have seen a much greater increase in the level of competition than others.

There are several reasons for this.