Page 147 - Cambridge IGCSE Business Studies

10: Marketing, competition and the customer
Product development:
see Chapter 12, page 165.
Efficient use of resources:
see Chapter 15, page 190.
Promotion: see Chapter 13,
page 182.
New markets: see Chapter 14,
page 193.
TEST YOURSELF
KEY TERM
Niche marketing: developing
products for a small segment of
the market.
increase sales. In very competitive markets, price can be an important factor for
consumers when choosing whether or not to buy a product and, if they do decide to
buy, who they buy the product from.
■ Increased promotion – increasing advertising to persuade consumers to buy your
product and not that of competitors is another way a business might respond
to changing levels of competition and consumer spending patterns. Other
promotional techniques such as buy-one-get-one-free and money-off coupons
may also be used to persuade consumers to purchase a firm’s product instead of a
competitor’s product.
■ Look for new markets – sometimes consumer spending patterns change so much,
or the level of competition in a market becomes so great, that the better option is
for a business to look for new markets for their products. Markets where there are
less competition and consumers are more likely to buy the product.
Business
Increases promotional
Uses resources
Develops activities, e.g.
new products efficiently to reduce advertising, Finds new markets
costs and lower prices
money-off vouchers
Figure 10.2 Ways businesses can respond to consumer spending patterns and
increased competition
145
1 Why can consumers’ needs change?
2 Identify and explain two reasons for increased competition in some markets.
3 Why do businesses need to respond to changing patterns of consumer spending
and competition?
Niche marketing and mass marketing
In this section, we will look at two types of target markets – niche, or specialist,
markets and mass markets.
What is niche marketing?
A niche market is a very small part of the whole market. For example, a business
that specialises in supplying hand-tailored suits is part of the much larger market
for men’s clothing. Niche marketing identifies the needs of this small part of the
whole market and then develops products to satisfy those needs. Businesses in
a niche market often sell high priced and high status goods, for example Rolex
watches and Rolls-Royce motor cars. However, some businesses may target niche
markets where the product is not particularly high status or high priced, for
example wedding cakes.