Chapter 10
Marketing & the Market
The Role of Marketing
Identifying and satisfying customer needs
Marketing helps a business identify and satisfy the needs and wants of its customers
o Identifying customer needs involves finding out about the
Variety and quality of goods and services that customers want
Prices they are willing to pay
Promotional techniques that may persuade them to make repeated
purchases
Convenience factors, including where and how they want to purchase
products
After-sales services they anticipate
o Satisfying these customer needs involves ensuring products are available
when and where customers want to buy them, at a suitable price, at
the quality expected and with effective customer service
The benefits of identifying customer needs
The ultimate aim of identifying and meeting customer needs is to ensure business survival
and success
Businesses that successfully identify and satisfy customer needs
o Compete more effectively than rival businesses
o Keep up-to-date with changing tastes and preferences
o Attract positive word-of-mouth recommendations and build the brand
Benefits of satisfying customer needs
Customer
Explanation Benefit to the business
need
This is the amount of
By satisfying customers with fair,
money a customer is willing
competitive pricing, the business
to pay for a product or
can attract more buyers and
Price service
increase sales
Customers often have a
This also helps build trust
budget and want good
with price-sensitive customers
value
Quality refers to the Meeting quality expectations
standard customers expect increases customer satisfaction and
Quality from a product or service encourages repeat purchases
This includes reliability This leads to loyalty and positive
and after-sales service word-of-mouth promotion
Customers have different Satisfying this need by offering
tastes and expect a variety variety makes it more likely that
of products or services to customers will find something they
Choice
suit their needs want
This may include different This increases sales and improves
sizes, styles or features brand reputation
Customers want easy access Providing convenience helps build
to products and services loyalty, improves the customer
Convenience This may include delivery experience
options, payment methods It can lead to more frequent and
and online ordering higher-value purchases
Maintaining customer loyalty and building relationships
Customer loyalty is when existing customers buy products from the same
business over and over again
o Customer loyalty leads to repeat purchases and a rise in market share.
o It is much cheaper for a business to try to keep existing customers (for
example, with loyalty cards) than to try to gain new customers, as this can
involve expensive advertising campaigns
Building customer relationships involves communicating with customers to
encourage them to become loyal to the business and its products
o Good relationships are maintained by
Developing close ties with customers and finding out if products are
continuing to meet their needs
For example, using surveys to discover if preferences are
changing
Using technology to gather important information about customers
By having strong relationships with the customer, the business can respond
appropriately when customers change their expectations
Examiner Tips and Tricks
Use the phrase “building customer loyalty” in your answers – it shows deeper understanding
that marketing is not only about attracting customers but also keeping them long term
Anticipating changes in customer needs
Predicting what customers will want or need in the future helps a business stay
ahead of competitors and continue meeting customer expectations
The role of marketing in anticipating customer needs
Market research
o Surveys, focus groups and sales data help businesses understand what
customers want now and in the future
For example, McDonalds uses customer feedback and sales data to
test new menu items like the McPlant burger, designed for the
growing demand for plant-based food
Product development
o Teams use this research to improve or create products that meet changing
needs
For example, Apple developed AirPods after noticing customer
demand for wireless and portable earphones, especially among
smartphone users who wanted more convenience
Promotions
o These can be adjusted to demonstrate how products match new customer
values or interests
For example, Coca-Cola launched its World Without Waste campaign
and promoted its recycled plastic bottles to appeal to environmentally
conscious consumers
Pricing strategies
o These may change if customers become more price-conscious
For example, Netflix introduced a lower-cost plan in some countries to
attract budget-conscious viewers during a time when many
households were cutting back on spending
Understanding Market Changes
Why consumer spending patterns may change
Markets and marketing strategies are constantly changing as a direct result of the
changing wants and needs of customers, which affect their spending patterns
Businesses that conduct ongoing market research are able to identify and
interpret the changes that are happening in markets
Reasons for changes in spending patterns
If businesses fail to respond to changing customer needs, then they are likely to fail
1. Changes in tastes and fashions
Trends in some markets can change very quickly
o For example, wide-leg jeans are now more fashionable with Gen-
Z customers than 'skinny' jeans worn by millennials
2. Change in disposable incomes
High unemployment or inflation may lead to customers to buy cheaper
products, e.g own brand breakfast cereal
3. Demographic changes
Populations in most developed countries are becoming older
Demand for products that meet their needs has driven many market changes
o For example, sales of specialist travel insurance for mature
holidaymakers has increased
4. Global influences
The arrival of well-known international brands can change demand and
purchasing patterns in a market
Increased travel, support from celebrities and extensive promotional activity
drive demand
o For example, American fast food chains now dominate the market for
fast food across Europe
5. Changes in technology
New technology makes old technology less desirable or obsolete
o For example, products such as smart speakers are replacing sales of
radios
Why some markets are becoming more competitive
Competition occurs when at least two businesses are providing goods or services to
the same target market
o The more businesses in the market, the more intense the competition
Competition results in many benefits for the customer, such as
o Lower prices
o Better-quality products
o Better customer service
Reasons for increased competition
Reason Explanation
Businesses can now sell to and compete with companies all over
the world
Customers have more choices, so businesses must work hard to
Globalisation stand out
o For example, a Spanish clothing brand competes not only
with local shops but also with online stores from Asia,
Europe and the US
The internet allows new businesses to enter the market easily and
sell online
Technology and e- Customers can compare prices and reviews quickly, increasing
commerce pressure on businesses to offer good value
o For example, Amazon competes with supermarkets,
technology stores and bookshops all at once
Lower barriers to It is now easier and cheaper for people to start a business
entry Social media, online marketplaces, such as Etsy or Shopify, and
digital tools make it possible to sell products without needing a
physical store
Customers expect better quality, faster delivery, more choice, and
Changing customer lower prices
expectations Businesses must constantly improve to meet these expectations or
risk losing customers to rivals
Innovation and Businesses continually introduce new and improved products
product Competitors must match or beat these innovations to keep their
development customers
Transportation It is easier and cheaper to transport products from one part of the
improvements world to another due to developments such as containerisation
Responding to changing spending patterns and increased competition
Whenever there are changes to spending patterns or competition, a business will
need to take action to maintain its market position
Steps a business can take to remain competitive
1. New product development
Creating new or improved products helps a business stay competitive, attract
new customers and build brand loyalty
For example, Apple responded to changes in how people listened to music by
moving from iPods to digital downloads through the Apple Music app
2. Customer focus
Providing excellent customer service encourages loyalty, improves customer
satisfaction and increases the chance of repeat sales
3. Improve products
Regularly improving products helps a business match or outperform
competitors and maintain its market share
o For example, Google continues to develop services like Google Meet
to stand out from other tech and search engine companies
4. Minimise costs
Reducing costs can allow a business to offer lower prices or increase profit
margins
Higher retained profit can be reinvested into promotion or expansion, helping
the business grow and reach more customers
Examiner Tips and Tricks
Don’t just state that markets change – in exams, explain why (e.g. technology, income,
competition) and link it to how a business might respond to stay competitive
Market share
Market share is the proportion of the total sales of a product or service compared to
the market as a whole
o e.g. Carrefour has 20.2% of the French grocery market
Market share is calculated using the formula
Worked Example
In 2024, the UK coffee shop market was worth £4.8bn. Sales of Starbucks Coffee were
£526m in 2024.
Calculate the market share of Starbucks Coffee in the UK coffee shop market.
(3)
Step 1: Identify annual sales of Starbucks Coffee
£526m
Step 2: Identify total market sales in the coffee shop market
£4.8bn
Step 3: Substitute figures into the formula
£526m
[3]
Mass Markets & Niche Markets
Mass markets
In mass markets, products are aimed at broad market segments
o Mass marketing occurs when businesses sell their products to most of the
available market
o Production usually happens on a large scale
o Products are generally standardised with little differentiation
Examples of mass market brands
Mass market
products are aimed at large groups of customers with similar needs
Evaluating mass markets
Advantages Disadvantages
Mass production allows the business
to benefit from economies of scale,
Products are often less unique, as they
reducing average costs
are designed to appeal to a wide
Lower prices make products more
audience
affordable, leading to higher sales
High levels of competition can make it
volumes
difficult to stand out and often force
The business can target a large
prices down
customer base, increasing the chance
Profit margins are lower, as prices are
of strong demand
often kept low to attract mass market
Mass marketing methods (e.g. TV,
buyers
social media) allow efficient
promotion to a wide audience
Niche markets
In niche markets, products are aimed at a small subset of the larger market,
e.g. gluten-free products
o Niche marketing occurs when businesses identify and satisfy the demands of
a small group of consumers within the wider market
o Production usually happens on a small scale
o Products may be made to order or produced with very specific customer
needs in mind
Examples of niche market brands
Niche product include specialist haircare, adapted technology such as phones and gluten-
free food
Some niche markets become mass markets as large businesses start to realise the
potential for growth
o For example, energy drinks started out as ‘niche products’ aimed at fitness
enthusiasts, but as prices have fallen and more choices are available, they
have become mass-market products
Evaluating niche markets
Advantages Disadvantages
Products are highly specialised and
Higher production costs due to smaller
unique, meeting the specific needs of
scale and limited demand
a smaller customer group
Businesses do not benefit from
The business can develop expert
economies of scale, which can make
knowledge and a strong
pricing less competitive
reputation within its chosen market
Sales volumes are lower, as products
Customers are often willing to
may be less affordable and appeal to
pay premium prices, leading to higher
fewer people
profit margins
The business may become too
Less direct competition means it's
dependent on one product or market,
easier to build customer
increasing risk
loyalty and brand recognition
Examiner Tips and Tricks
Avoid vague definitions – show understanding by linking each to advantages and
disadvantages, e.g. mass markets spread risk but face intense competition, while niche
markets face less competition but limited demand