1.1 Meeting Consumers Needs Flashcards
1
Q
What is a market?
A
A physical or online place where buyers by goods or services in demand, in exchange of currency from sellers
2
Q
What are the two ways to measure market size?
A
Sales volume ( quantity of units sold)
Value (sales)
3
Q
What is market size?
A
Potential sales of a firm
4
Q
What does market share show?
A
How the overall market is split between existing competitors. It is a good indicator of competitive advantage
The key is to look for significant +/- changes
5
Q
How is market share calculated?
A
Based on market value, but volume can also be used
Size of each company share (value or volume) / total market value x 100
6
Q
Wha tsp the equation for market share?
A
(Sales / market sales) x 100
7
Q
What is a dynamic market?
A
A market that changes. The pace and nature of change varies considerably by market
8
Q
Key sources of change in a dynamic market:
A
- customer tastes and preference
- impact of technology on what customers buy and how they buy
- impact of new market entrants
9
Q
dynamic market with businesses with monopoly power
A
might not face the same dynamic pressures as businesses in more competitive markets
10
Q
what is the aim of marketing?
A
to help identify, anticipate and satisfy consumer needs and wants profitably
11
Q
what is market research?
A
process of gathering data from consumers which is used to influence the business decisions
12
Q
characteristics of a mass market?
A
- Products are less unique
- Low average costs due large scale production economies of scale
- Low prices lead to greater affordability & more sales
13
Q
characteristics of a niche market?
A
- Products are unique as they’re aimed at narrow market segments
- High average costs due to small scale production don’t benefit from economies of scale
- High price make products less affordable, lead to less sales
14
Q
advantages of online retailing
A
- access to more consumers
- Enables longer trading hours,business open 24/7
- Cheaper to run as it lowers fixed & variable costs
- collect data by tracking consumer behavior (primary research)
- Consumers can shop at a time that suits them
15
Q
disadvantages of online retailing?
A
- high costs for website development, maintenance, promotion
- dominated by larger businesses that are well-known
- High levels of competition
- lack of contact with customers, dont get desired level of customer service
- difficult to return products
- credit card fraud
16
Q
the effect with Changing market conditions
A
offer new opportunities for firms, but pose threats. The changes cause markets to be dynamic
17
Q
what is product innovation
A
involves the adaptation or improvement of existing products
18
Q
what is Process innovation?
A
involves the adaptation or improvement of existing processes
19
Q
what factors can Market growth be caused by?
A
- Increasing population sizes can increase demand in markets
- Increasing incomes can increase demand in markets
- Changing tastes & preferences can cause the market to grow
20
Q
how can a business thrive in a dynamic market?
A
Recognizing and adapting to market changes
21
Q
strategies to adapt to change include:
A
- Create flexible business structures, in terms of operations & people management
- Meet customer needs, via market research
- communicating with customers
- Invest in staff training, new products and processes
22
Q
what is direct competition
A
occurs when the business is targeting customers with the same product as a competitor
23
Q
what is indirect competition
A
when firms sell different products but compete with each other for the customers disposable income
24
Q
Competition results in many benefits for the customer, such as
A
offer lower prices
better quality products
better customer service
25
The difference between risk and uncertainty
Risk is the potential threat to business success
Uncertainty is when outcomes are difficult to predict
26
how can risks be internal and external?
how can they be measured?
can be from inside the business (internal) or outside the business (external)
They can be measured and prepared for using risk management
27
what is product orientation
marketing that focuses on the characteristics of the product rather than the needs of the consumer
28
characteristics of product orientations
- creating a product first & then finding a market
- business thinks the product will sell itself
- over time your business may move away from what the market is looking for, increasing the risk of business failure
29
what is Market orientation
marketing that focuses on the needs of consumers & uses this to design products that meet customer needs
30
characteristics of market orientation?
- Consumers are the centre of marketing decisions
- Products are developed to respond to consumer needs
- firm will benefit from increased demand & profits, valued brand image as its products are desirable
31
Niche marketing
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants
32
effective market research will help the business
- reduce risk when launching new products/ entering markets
- Anticipate future needs and wants of consumers
- understand consumer behaviour
- identify competitors potential strengths and weaknesses
33
Mass marketing
Where a business sells into the largest part of the market where there are many similar products offered by competitor
34
Advantages of mass market
- products with universal appeal
- strong brands
- exploit eos to get high profits
- lower risk, resources focused on one large market
35
Niche marketing advantages
- less competition
- clear focus
- builds up specialist skill and knowledge
- premium price
- high profit margins
- loyal customers
36
Niche market disadvantages
- lack of economies of scale
- risk of over dependence on a single product
- attract competition of successful
- vulnerable to market changes
37
definition of innovation
putting a new idea or approach into action
38
Benefits of product innovation
- high price and profit
- opportunity to build early customer loyalty
- increased market share
39
Benefits of process innovation
- reduced costs
- greater flexibility
- high profits
- improved quality
40
insights provided by effective market research
- competitor strategies
- needs, wants, expectations of customers
- market segments
41
primary research advantages
- specific
- relevant
- up to date
42
primary research disadvantages
- expensive
- time consuming
- risk of survey bias
- sampling may not be representative
43
secondary research advantages
- cheap
- easy
- good source of market insights
44
secondary research disadvantages
- old date
- not specific
45
benefits of qualitative data?
- focused on understanding customers needs and wants
- highlight issues that need addressing
- essential for new product development and launches
46
drawbacks of qualitative data?
- expensive to collect and analyze- require specialist research skills
- based round opinions - sample may not be representative
47
an example of qualitative data?
focus group - people who are asked about their opinions towards a product/ service etc...
48
benefit of quantitative data
- data easy to analyze
- numerical data provides insights into relevant trends
- can be compared with data from other sources
49
drawbacks of quantitative data
- focuses on data rather than explaining why things happen
- doesn't explain the reasons behind numerical trends
- may lack reliability is sample size and method is not valid
50
what is sampling
involves gathering of data form a sample of respondents. the results of which should be representative of the population ( target market) as a whole
51
benefits of sampling
- a small sample (if representative) can provide useful research insights
- using sapling before making marketing decisions can reduce risks and costs
- sampling is flexible and relatively quick
52
drawbacks of sampling?
- biggest risk = sample is unrepresentative of population, leading to incorrect conclusions
- risk of bias in research questions
- less useful in market segments where customer tastes are frequently changing
53
benefits of using social media for market research
- Source of primary and secondary research
- Software can highlight customers opinions of the product or brand
- Surveys easy to set up and analyse results in real-time
54
benefit of using Data Mining for market research
- secondary research
- Relies on data that is already there
- Quick & automated
55
What is market segmentation?
Market segmentation involves dividing a market into parts that reflects different customers needs and wants
56
How are markets segmented into different categories
- demographic, e.g. age, g,endear, family
- geographical, e.g. nations, regions
- behavioural/ lifestyle
- income
57
Benefits of effective market segmentation:
- focuses resources on parts of a market where the business can succeed
- allows a business to grow share in markets
- helps with new products development focused on needs of customers in the segments
- helps make the marketing mix more effective, e.g. better targeting of promotion
58
Drawbacks of market segmentation:
- data not always , available, up-to-date or reliable
- you can identify a segment but that doesn’t mean you can reach customers in it
- markets are increasingly dynamic- fast- changing; so too are the segments
59
Advantages of market mapping?
- helps spots gaps in market
- useful for analysing competitors
- encourages use of market research
60
Disadvantages of market mapping
- just because there is a gap in the market doesn’t mean there is a demand
- not a guarantee of success
- how reliable is the market research
- still need further research
61
Possible positions strategies:
- offer more for less
- offer more for more
- offer more for the same
- offer less for much less
62
What is product differentiation
Is when customers perceive a distinct difference between your product and the alternatives provided by customers
63
The 3 purposes of product differentiation
- positioning vs competition
- protect and build a brand
- add more value
64
Positioning vs competition
- source of competitive advantage
- ideally hard to copy
65
Protecting and building a brand
- strengthen customer loyalty
- build intangible value
66
benefits of adding more value
- strong differentiation should allow a higher price
- high profit margins
67
What is a USP
Something that sets out a product apart from its competitors in the eyes of customers, both new and existing
68
Features of USP
- helps make demand more price in elastic
- higher profit
69
Requirements for effective product differentiation:
- deliver things that are important to customers
- communicated and visible to customers
- not easily copied by competitors
- affordable by the target customers
70
What is value proposition?
Businesses deciding how to compete in their target segments
71
Who defines market position
Customers, the place a product occupies in customers mind relative to competing products
72
What is marketing (positioning) map
Illustrates the range of “positions “ that a product can take in a market based on two dimensions that are important to customers
73
Possible dimensions of a market map
- low vs high price
- high vs low quality
- healthy vs unhealthy
- heavy vs light
- complex vs simple
