1.1 Meeting customer needs Flashcards
Give the definition of a mass market
A large market in which products with mass appeal are targeted.
Give four characteristics of a mass market
Lots of competition
Standardised products
Lower prices
Lots of customers- large market size
Give the definition of a niche market
A smaller market (subsection), usually within a large market or industry.
Give four characteristics of a niche market
Limited competition
Small number of customers (Small market size)
Higher prices
More differentiated/customisable products
What is meant by online retailing?
When a business sells their goods and services online/through a website
What are the advantages of online retailing to the customers?
More convenient as open 24/7, no travel, delivered to door.
What are the advantages of online retailing to the business?
Open 24/7- more sales
May not need a retail store- lower costs
Can sell worldwide- bigger target audience
What are the disadvantages of online retailing to the customer?
Can’t try before they buy
May have to pay delivery costs
May be a hassle for returns
What are the disadvantages of online retailing to the business?
Cost of setting up the website
May have to process more returns because customers can’t try before they buy
What is meant by a static market?
A market that doesn’t experience much change over time.
What is meant by a dynamic market?
A market that is ever changing.
What is meant by competition?
When two or more businesses act independently to supply goods and services to the same group of customers.
What is meant by direct competition?
When businesses produce similar products that appeal to the same group of consumers.
What is meant by indirect competition?
Occurs when different businesses make or sell products that are not in direct competition but compete for the same expenditure.
How might firms compete with one another?
Product/service offered
Pricing
Distribution- where they sell their product
Nature of ownership
Marketing including advertising
What is meant by risk?
Something that can be planned for- probabilities of outcomes are known or at least understood and considered.
What is meant by uncertainty?
This is caused by unexpected external factors outside of the business control, even though sometimes these factors can be predictable.
What are the two ways to measure the size of the market?
Sales volume
Sales value
How do you calculate market share?
(Total sales of the business / Total sales of the market) x 100
Define the term product orientation.
Product orientation is when a business prioritises a product’s design quality or
performance rather than meeting customer preferences to guide production and
marketing decisions.
Define the term market orientation
This is when the business prioritises customer preferences when producing or marketing their product/service.
Define the term secondary market research.
This is data that already exists. Sometimes referred to as desk research.
Define the term primary market research
This is data that is collected first hand. Sometimes referred to as field research
Give five examples of primary research
Surveys, Observations, interviews, test marketing, focus groups/consumer panels.
Give four examples of secondary research
Market reports, government data, internet sources, trade publications
What is meant by quantitative data?
Quantitative data is numerical and can be analysed statistically.
What is meant by qualitative data?
Qualititative data is based upon opinions and judgements.
What is the purpose of effective market research?
Reducing risk
Understanding customer preferences and behaviour
Enabling a business to identify customer needs and wants
Spotting trends in the market
Understanding competitors
Understanding key features of the business environment
Give two benefits of gathering primary market research
Up to Date
Specific to the business needs
Give two limitations of gathering primary market research
Expensive
Time consuming
Give two benefits of gathering secondary market research
Quick
Cheap
Give two limitations of gathering secondary market research
Out of date
Not specific to the business needs
What is meant by sampling?
Sampling is a process in statistical analysis where researchers take a predetermined number of observations from a larger population.
Define the term bias
inclination or prejudice for or against one person or group, especially in a way considered to be unfair.
What is meant by market segmentation?
Grouping customers who share similar characteristics
Give three ways a business could segment the market
Age, Gender, income, hobbies/interests, location, ethnic origin, occupation, lifestyle
Why might a business segment the market?
Narrow down the target audience
Provide a product/service more closely in line with customer needs
What is market mapping?
Market mapping refers to evaluating business ideas and products/services by
setting out the features of a market or product on a diagram.
Each axis represents two polar features; for example: high quality versus lower quality; mass versus niche market; modern versus traditional; functional versus
aesthetic
What is the purpose of producing a market map?
To identify a gap in the market
To reposition a product
What is meant by a competitive advantage
Give three ways a business can gain a competitive advantage
Price
Adding value
Innovation
Reliability
Quality
Reputation/image
Advertising/marketing/branding
Convenience
Customer service
What is meant by product differentiation?
When a firm makes their product different to others on the market by giving it distinguishing features.
What is meant by adding value?
The difference between the price charged and the total cost of inputs required to make a product/service.
Give three ways a business can add value
Design
USP
Convenience
Quality
Branding
What is the main benefit to a business of adding value?
Being able to charge a higher price.
