Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably. It involves finding out what customers want, designing products and services to meet those needs, pricing them appropriately and making them available in the right place at the right time.
Understanding customers
Successful businesses place the customer at the centre of their decisions. They seek to understand consumers’ needs, tastes and buying habits. They also aim to build customer loyalty through high quality products, excellent service and engagement. Satisfied customers return and recommend the business to others.
Markets and competition
A market is the place or process where buyers and sellers meet to trade. Businesses operate in different types of market:
- Mass markets – where goods are sold in very large volumes to a broad audience (e.g. soft drinks). Marketing costs are high but unit costs can be low due to economies of scale.
- Niche markets – small, specialised segments of a market (e.g. organic pet food). Firms can charge higher prices but sales volumes are lower.
Markets are competitive when many firms supply similar products. Competition benefits consumers through lower prices, wider choice and better quality. Businesses respond by differentiating their products, improving efficiency and innovating.
Market segmentation
Segmentation is dividing the market into groups of consumers with similar characteristics or needs. Common bases for segmentation include age, gender, income, location and lifestyle. Segmentation enables firms to target their marketing more precisely, tailor products and promotions to specific groups and avoid wasting resources on uninterested customers.
Advantages of market segmentation
- Allows businesses to focus marketing efforts on specific groups and better satisfy their needs.
- Helps identify and exploit profitable gaps in the market.
- Enables more efficient use of resources and tailored marketing messages.
Disadvantages of market segmentation
- Requires detailed market research which can be expensive and time‑consuming.
- Producing different products or marketing mixes for various segments increases costs.
- A too narrow focus may cause a business to miss opportunities in other segments.
Types of segmentation
- Demographic: based on age, gender, income, education or family size.
- Geographic: based on location such as country, region, climate or urban/rural areas.
- Psychographic: based on lifestyle, personality, attitudes and values.
- Behavioural: based on usage rate, brand loyalty, benefits sought or occasions.
Mass versus niche marketing
Mass marketing attempts to reach the whole market with one product and marketing mix. It suits products with universal appeal and allows high sales volumes. Niche marketing targets a specific segment, focusing on specialised needs. It allows higher prices and builds customer loyalty but may carry greater risk if the niche is too small or tastes change.
| Aspect | Mass marketing | Niche marketing |
|---|---|---|
| Target audience | Large, general population. | Small, specific group with distinct needs. |
| Product range | Standardised products. | Highly specialised products. |
| Pricing | Often lower due to economies of scale. | Higher prices due to unique features. |
| Competition | Intense, many competitors. | Few competitors; barriers to entry. |
| Risk | Spread across many customers. | Higher if demand in the niche declines. |
Advantages of mass marketing
- High sales volumes leading to economies of scale and lower unit costs.
- Wide customer base spreads risk and can generate significant revenue.
- Strong brand recognition as products are widely advertised.
Disadvantages of mass marketing
- High levels of competition require heavy marketing expenditure.
- Products may not meet specific needs, reducing customer loyalty.
- Large‑scale production can be inflexible in responding to changes in demand.
Advantages of niche marketing
- Less competition and stronger customer loyalty because products target specific needs.
- Ability to charge higher prices due to the specialised nature of the product.
- Marketing efforts can be focused, reducing waste.
Disadvantages of niche marketing
- Sales volumes are lower and growth potential may be limited.
- Unit costs are higher as economies of scale are harder to achieve.
- Demand in a niche can decline rapidly if tastes change.
Examples and applications
Consider how a well‑known company launches a new smartphone. Market research identifies what customers want in terms of screen size, camera quality and battery life. The firm then designs a product to meet those needs, prices it based on production cost and competitors’ offerings, and makes it available through shops and online platforms. Pre‑launch advertising and promotional events create excitement and encourage early adoption.
Mass marketing can be seen in everyday products like fizzy drinks, where companies sell millions of identical cans to consumers around the world and rely on television adverts and sponsorship to build brand recognition. Niche marketing occurs when a business targets a specialised group, such as gluten‑free bakery products for people with coeliac disease. By focusing on a small segment, the company can tailor ingredients and packaging to the customers’ needs and charge a premium price.
