1.1 Flashcards
what is a market?
any place where buyers and sellers can meet e.g. amazon.co.uk or a shopping mall
what is the aim of marketing?
to help identify, anticipate and satisfy consumer needs and wants profitably
what is market research?
the process of systematically gathering data from consumers which can be used to influence the business decisions
what are mass markets
products are aimed at broad market segments
Mass marketing occurs when businesses sell their products to most of the available market
Production usually happens on a large scale
what is a niche market?
products are aimed at a subset of the larger market e.g. gluten free products
characteristics of mass markets
Products are less unique as they are aimed at broad market segments
Low average costs due large scale production economies of scale
Low prices lead to greater affordability and higher sales volumes
Low prices lead to lower profit margin
characteristics of niche markets
Products are more specialized and unique as they are aimed at narrow market segments
High average costs due to small scale production
They do not benefit from economies of scale
High prices make products less affordable and lead to lower sales volumes
High prices can allow businesses to earn higher profit margin
sales revenue formula?
Sales revenue = price x quantity sold
market share formula?
(sales of a business / total sales in a market) x 100
what is a brand
name, image, or logo which helps one product/service stand out from its competitors
Branding is one of the key ways in which businesses achieve product differentiation
Brands add value, often making the product/service more desirable to consumers
Adding value is the process by which firms increase the price that the consumer is willing to pay
what is a dynamic market?
a market that is subject to rapid or continuous changes
advantages of online retailing
Provides business access to more consumers, including internationally
Enables longer trading hours as the business is open 24/7
Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers
Businesses can collect data by tracking consumer behaviour which helps with primary market research
Consumers can receive offers that they are more likely to benefit from
Consumers can shop at a time that suits them
disadvantages of online retailing
There may be high costs for website development, maintenance, and promotion
Online retailing is dominated by larger businesses that are more well-known
High levels of competition mean that it will be expensive to make a website stand out
There is a lack of personal contact with customers
Consumers may find it difficult to get the desired level of customer service
Consumers may find it difficult to return unwanted products
Online purchasing opens consumers up to credit card fraud
what changes can cause a market to become dynamic?
Changing consumer tastes and preferences
Changing demographics
The amount of competition
Changing legislation
what is product innovation
Product innovation involves the adaptation or improvement of existing products
what is process innovation
Process innovation involves the adaptation or improvement of existing processes
what are some ways a business can adapt to change?
Create flexible business structures, especially in terms of operations and people management
Meet customer needs, by carrying out market research and communicating with customers
Invest in staff training, new products and processes
Innovate so as to gain the first mover advantage
what is direct competition?
occurs when the business is targeting customers with the same product as a competitor
what is indirect competition?
occurs when firms sell different products but compete with each other for the customers disposable income e.g. cinema and theatre companies are in indirect competition
how does competition benefit the customer?
Businesses offer lower prices
Businesses produce better quality products
Businesses provide better customer service
what is product orientation?
n approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer
The emphasis will be on creating a product first and then finding a market
The business has a belief that the product is superior i.e. it will sell itself
what is one problem with product orientation?
over time your business may move further and further away from what the market is looking for, thus increasing the risk of business failure
what is market orientation?
an approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs
Consumers are at the centre of marketing decisions
Products will be developed which respond to consumer needs
what is the result of market orientation? (its positive)
the firm will benefit from increased demand, increased profits, and a valued brand image as its products become more desirable
what is market research?
the objective collection, compilation and analysis of information about a market
does does market research help businesses?
to reduce risk when launching new products or entering new markets
Anticipate future needs and wants of consumers (demand)
To identify competitors and gauge their potential strengths and weaknesses
primary research method - surveys
asking respondants questions, and results are extrapolated to be true for the wider population
primary research method - test marketing
free samples are provided to the target market to gauge their response to the product
primary research method - observation
hiring someone to stand in a specific place and study consumer behaviour
primary research method - focus groups
free discussion led by marketing specialist to collect detailed feedback on all aspects of the marketing mix
advantages of primary market research
information gathered is focused on the needs of the business
information is more in depth
research is more up to date and can be used to ask specific questions
disadvantages of primary market research
sample size may be too small (so unrepresentative of all customers leading to unreliable results )
bias may lead respondants to answer in a particular way
may need to hire a specialist market research agency (expensive and time consuming )
what is secondary research
the collection, compilation andd analysis of data that already exists
advantages of secondary market research
information is already available so is quicker
cheaper to collect leading to lower costs
suitable for small businesses
disadvantages of secondary market research
may lack relevance
may be factually correct
can be expensive to purchase from a specialist
may be out of date
what is market segmentation?
the process in which a single market is divided into sub markets, which represent slightly different sets of consumer characteristics, usually based on things like gender, income and lifestyle
advantages of market segmentation
products can meed the needa of different types of consumers
less expensive and wasteful
increases loyalty if the consumer feels that their needs are being met (leads to repeat purchases)
disadvantages of market segmentation
not everyone in a segment will behave in the same way
requires more detailed market research
a segment may tbe identified but be too small and unprofitable to cater for
what is market mapping
a tool for identifying the position of a product in the market
twi dimensional diagram that shows characteristics of a product to that of its rivals
limitations of market mapping
a gap in the market may not be profitable to fill (low quality high price )
may require primary researxh which can be expensive
only two ctiteria which might be too simple
markets are dynamic so may only provide insight at a specific point in time
usefullness of market maps
market gaps can be identified (which may enable a business to come up with ideas for new products)
simple to construct and can offer a visual illustration
what is a competitive advantage?
the features of a business and its products that are percieves as superior to its rivals by customers
what is product differentiation
an attempt by a business to distinguish its products from those of competitors
may be tangible, or a perception that is created in the consumers mind
how does product differentiation help a business
increases demand for products
increases brand loyalty
allows to charge higher prices
what is added value
the value that a business adds to a product or service
/
the difference between the price the business paid for ingredients and the price the business charged to their customers (eg people are willing to pay moore for a potato if it was packaged as chips than they woukd for a bag of potatoes)
what are some methods of adding value?
marketing and branding
function and features
customer service
customisation
packaging (exciting opening experience)
