MERRYLAND INTERNATIONAL SCHOOL
BUSINESS STUDIES GRADE: IX NOTES
CHAPTER: 10 MARKETING, COMPETITION AND CUSTOMERS
1. Define the term Marketing.
Marketing is identifying customer wants and satisfying them profitably.
2. What is the role of marketing?
a) Identifying customer needs: To find out what kind of services customers wants, the prices
they are willing to pay, what after sales services they expect and where and how they want to
buy goods and services.
b) Satisfying customer needs: Customer wants the right product, in the right place and at the right
time. Failure of these can lead the business facing the risk of closure.
c) Maintain Customer loyalty: Keeping close contacts with customers and fulfilling their needs
and wants will make a good customer relationship as well as building customer loyalty. It is
much cheaper for a business to try to keep existing customers than trying to gain new
customers.
d) Gaining information: By building customer relationship and building long term relationships
so that their changing needs can be understood. Gaining information of customers will help the
businesses to understand why customers buy products and how they use them.
e) Anticipate changes in customer needs: by anticipating the changing trends in customer
demands or gaps in the market so that businesses can produce goods which are not currently
available.
3. Define the term Market share.
Market share is the percentage of total market sales held by one brand or business
4. Why Consumer spending pattern change?
a) Consumer tastes and fashions change - fashions may keep changing and consumers may want
products of different style.
b) Changes in technology - when technology changes, new products arrive in the market and
consumers buy them not because the old products are not working. So consumers might spend
more to obtain such products.
c) Changes in income - when the income is less, consumers buy cheaper products and when the
economy grows and income increases, consumers buy expensive products. When in an
economy if unemployment rate is high, people will buy cheaper products and vice versa.
d) Ageing population - the structure of the population keep changing and this affects the demand
for various products. Older people demand different products than what is demanded by the
young people. The age structure of people in many countries is changing to a greater percentage
of older people. This has led to demand of anti-ageing face creams for women.
e) Price of competitors’ products - most businesses are in competitive markets. If a product is very
similar to the competitor’s product, consumers will most likely to buy the product that has the
lowest price.
f) Spending on advertising and other promotional activities- most advertising and promotional
activities of businesses are aimed at persuading consumers to buy their products instead of
competitor products.
5. What is a competitive market? Why some markets are more competitive than the others?
A competitive market is one where there are numerous producers that compete with one another in
hopes to provide the goods and services as consumers want and need.
a) Globalization: Due to globalization the market for products are increasingly sold all over the
world.
b) Transportation: With improvement in transportation it is easier and cheaper to transport
products from one part of the world to another.
c) Internet: With the help of internet and e-commerce consumers can search for the products and
can buy from overseas market.
6. 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.
7. 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.
8. 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.
9. 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 specialised segment of a much a larger market.
10. 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
11. 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.
12. 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.
13. 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 specialises in just one product, may fail if the product is no longer in demand.
14. 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.
15. 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.
16. What are the potential benefits of segmentation to a business? (explain)
a) Higher rate of success
b) Increases profitability
c) Creates and provides market opportunities
d) Higher customer satisfaction
e) Know the customer better
17. 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.
18. 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.
