1.1 meeting consumer needs Flashcards
market definition
buyers and sellers that trade a particular type of product in a particular place
niche marke
where businesses target a smaller segment of a larger marker - where customers have specific needs and wants
mass market
- products in the mass market are aimed at a large group of buyers
- product has a wide appeal and useful to a variety of people
examples of mass and niche market for chocloate
- mass - cadbury - wide range of products which appeal to wide range or customers
- niche - Moo Free - dairy free chocolate
pros and cons to mass market
PROS
- sells to more consumers than niche - higher sales volume
- larger production can reduce costs per unit, leading to higher profits.
- larger market size
CONS
- more competition - many businesses targeting the same consumers
- no brand loyalty
pros and cons to niche market
PROS
- less competition
- specialised products so can charge higher prices
- customer loyalty
CONS
- risky bc selling to a smaller number and narrower range of customers
- vulnerable to market changes ‘all eggs in one basket’
market size definition
total value of sales in a market over a certain time period (total number of consumers)
market share definition and formula
the proportion of the total market that the business holds
- (their sales/ total sales in the total market) x100 = %
branding in mass markets
- essential to make their brand distinctive
- logo, name, statement
- recognisable
dynamic market definition
market changes and evolves rapidly
reasons for a dynamic market (how they change)
- CONSUMER PREFERENCES - trends/technology etc
- INNOVATION - new products emerge eg digital cameras grew and old polaroids declined
- COMPETITION - competitors can enter or leave the market
- LAWS - changes to legalisation eg tax on sugary drinks means a change to product so dont have to pay tax
pros to online retailing
- businesses costs lower - no rent/ staff
- order at any time, anywhere in the world
- customers can compare prices easily - find cheapest option
- eaisly create deals/discounts - appeals to customers
cons to online retailing
- more competition
- cannot physically see product - might not fit/wrong material etc
- cannot speak to staff - less personal/ efficient customer service
- personal details could be leaked
examples of dynamic markets
- film industry —> Netflix
- taxi services —> uber
- camera market —> iphone
direct competition definition
2+ businesses sell SIMILAR products that appeal to the same group of customers - eg Aldi and Tesco
INdirect competition definition
2+ businesses sell DIFFERENT products for the same group of customers - eg italian and india resturants compeat for anyone wanting a takeaway
what does competition affect and how - PPPP
- PRODUCT - good quality, distinctive, unique, innovation
- PROMOTION - promotional campaigns, advertising, branding, events
- PRICE - cheaper than competitors - using competitive pricing stragtegies
- PLACE - easy access - online, apps
how does competition affect the nature of ownership
can be a sole trader and change to operate as a franchise - use name, idea and reputation of an existing buisness
risk definition
- the possibility that something will go wrong
- CONTROLLABLE
- before making a decision, businesses can consider the probability of negative outcome and try to minimise this
uncertainty definition
- unpredictable and uncontrollable events that affect a business
- UNCONTROLLABLE
product orientation
- focuses on design, quality and performance of the product rather than what consumer actually wants
- creates new and innovative products that they HOPE consumers like and buy
- eg apple and new iPhones
market orientation
- selling products that match customer preferences
- invests lots into market research to find out what the customer wants
- charges higher prices bc its tailored to what customers want
- low risk - based on customer feedback
reasons why market research is important
- finds out NEEDS and WANTS and anticipates them for the future
- allows businesses to predict how much demand there will be for products therefore how much it will need to supply
- find out if they buy more online/in-store
- identify competitors
- find SLEPT factors (social, legal, economic, political, technological)
quantitative market research
numerical statistics eg multiple choice questionnaires
- quicker
- easier
- can be statistically ananlysed
- CLOSED QUESTIONS
qualitative market research
- opinions of consumers
- eg ‘how did this product make you feel’
- OPEN QUESTIONS
- more informative and flexible
what is primary and secondary market research
primary - businesses gather new data
secondary - using data already available
types of primary market research
- questionnaires
- surveys
- interviews
- test marketing (launch a product in certain area and record response)
- sampling
pros and cons to primary research
pros
- good for niche markets
- competitors cannot benefit from it
- essential for a new product bc there wont be any secondary research
- specific for purpose
cons
- labour intensive
- slow
- £££££££
types of secondary market research
- government publications
- Internet sources - Statista
- trade magazines
- market reports
pros and cons to secondary market research
pros
- easier
- faster
- cheaper
cons
- unsuitable
- out of date
- may be errors
samples - niche vs mass
- new buisness in niche is RISKY so should spend more on accurate sampling
- business launching product in competitive needs to do less sampling bc it knows that the product is needed by consumers
what could and couldn’t causes BIASES in market research
bias - interviews (personality of the interviewer and person being interviewed)
not bias - anonymous questionaires
ICT (information and communication technology)
- helps market research
- easier, cheaper, quicker
- more info and wider audience
- EG webistes, social networking and data bases
ICT 1 websites - pros and cons
pros
- analyse what times of year/day website is used most
- what people are clicking on when they r on the website
- how much people are likely to spend on the website
- you can look at competitors websites
- read reviews
cons
- if ppl dont buy the product we dont know why
ICT 2 social networking - pros and cons
pros
- firms can post content on social networking sites and monitor their response
- quick and cheap
- track current trends
- eg Facebook, hashtags, tiktok etc
cons
- not all consumers use the sam social media eg less older ppl on tiktok - dif results
ICT 3 databases
- eg loyalty cards - businesses can see names/adreeses and preferences of consumers
segmentation definition
dividing a market into a group of buyers based on characteristics such as hobbies or age
4 different ways to segment a market
- demographic segment: age/gender/socio-economic class
- geographic segment: city/county/country
- income segment: DIOR makeup is targeted at high income and Superdrug at low
- behavioural segment: amount of use/hobbies/lifestyle
pros and cons to market mapping
pros
- reveals gaps in the market
- close competitors
- help make pricing strategies
cons
- based on opinion sometimes
- simplifies things too much
