1.1 - Meeting Customer Needs Flashcards
What is a market?
where buyers and sellers meet to exchange goods, e.g.
- financial markets
- housing markets
- commodity ( raw materials e.g. coal, coffee) markets
What is Marketing?
a management process involves in identifying, satisfying consumer requirements for profitably.
What does Marketing involve?
- range of activities that help a business sell its products
- identifying and designing the needs and wants of the customers
- understanding the threats form competitors
- charging the right price
- persuading customers to buy the product
- making products available at a convenient location
What is a Mass Market?
a very large market in which products with mass appeal are targeted
What is a Niche Market?
a smaller market, usually within a large market or industry
What are some benefits of being in a mass market?
- opportunities for large sales
- possibility of economies of scales
What are some drawbacks of being in a mass market?
- Highly competitive
- Requires large investment in marketing –> in 2013 Coke spend $3.3bn on global marketing
What are some benefits of being in a Niche market?
- Opportunity to charge higher prices
- First in the market advantages
What are some drawbacks of being in a Niche Market?
- Risky for a business in a small market
- Vulnerable to large businesses entering the market ( who can also afford to charge lower prices)
What is Market Size?
is measured by either values of products sold or volume of products sold and is used to calculate market shares
What is Market Share?
the proportion of total sales in a particular market for which one or more business or brands are responsible. Expressed as a percentage and can be calculated by value or volume.
What is the Market Share Formula?
Sales of a business/Total sales in the market x 100
What can the Market Share Formula be used in comparison with?
- compared to last years figures
- compared to market shares in other countries
- compared to competitors
What can businesses do with market share information?
- Set new objectives
- replicate what the market leaders are doing
What is a Brand Name?
the name given to a product e.g. Coca-Cola
What may branding be used for?
- differentiate the product from there rivals
- create customer loyalty
- help product recognition
- develop an image
- charge a premium price when brand becomes strong
What is a Dynamic Market?
markets that change
- Music industry –> tapes, CD’s, MP3
- Movie Industry –> VHS, DVD’s, Blu-ray, streaming
- Drinks industry –> moving away from sugary drinks
if businesses dont adapt they fail e.g. Blockbuster, Woolworths
What is E-commerce?
conducting business transactions online
What is Online retailing or e-tailing?
the retailing of goods online
what are some benefits of E-tailing?
- More access from people –> 24/7, and travel distance, some people dont like shopping or cant physically get to shops
- Lower costs –> not as many staff wages (no staff wages)
- Easier to get person information and then use it to target products and offers
- It can be updated easily, ie ‘deal of the day’ imaging
When do new markets occur?
- with a brand new product e.g. flat screen TVs, mobile phones
- In ‘emerging markets’ –> BRICS/ MINT Market
Why does Growth occur in new markets?
- Economic Growth –> more disposable income leads to growth
- Innovation –> new products the tablets or 3D printers, but also variations/ improvements i.e. Click and Collect
- Social changes –> fewer marriages, more single parent families
- Changes in legislation –> e.g. ban on tobacco advertising and smoking in public places
- Demographic changes – its growing also other people
How do businesses adapt to change?
- Flexibility –> having a flexible culture , with multi-skilled staff, flexible machinery and operations
- Market research –> this should be ongoing with current and potential customers
- Investment –> in new product development and also in training and new, flexible machinery
- Continuous Improvement –> in all aspects, more efficiency - saves money better customer service - means repeat purchases
- Develop a niche –> if that market does change and you cant specialize in what you do do
How do businesses attract customers?
- lowering prices
- Making products appear different
- better quality
- better promotion
- Extra’s e.g. customer service
Those all come at a costs and reduces profits!
How do businesses deal with competition?
- some businesses may decide to take over their competition
- they may try ways to beat competitors e.g. big advertising campaigns, Laws are in place to stop unfair competition
Who benefits from competition?
- customers benefit from this competition as they get more choices
- Government –> when competition doesnt exist they can be exploiter, High prices and little innovation
What are external factors which could impact a businesses?
- Competition
- Consumer tastes change because of a social trend
- New government legal policies
- New technology
- Natural disaster i.e. floods
- The economy going into a recession
What is a Product-Orientated business?
more historical businesses, they make products they think customers will want to buy and that will sell well
What is a Market-Orientated business?
This business is one which continually identifies, reviews and analyses customer needs, they must address the marketing mix
How does Market-Orientated businesses have advantages over product orientated businesses?
- it can respond move quickly to changes in the market
- it will be in a stronger position to meet challenger of new competition entering the market
- it will be more able to anticipate market changes
- it will be more confident that the launch of a new product will be a success
What makes a business become product or market orientation?
- The Nature of the product–> new technologies, customers pharmaceuticals - product-based
- Policy decisions –> is the business objective market share or safety
- The views of those in control –> an engineer or marketer
- The nature and size of the market –> if production costs are high - market orientated to ensure you’re launching a product costumers want
- The degree of competition –> highly competitive - market
What does the Market segmentation acronym AGARISE stand for?
- Age
- Gender
- Area
- Religion
- Income
- Socio-economic groups
- Ethnicity
- Life-style
- Life stage e.g. newly-weds
- psychographic –> ethical financial product (attitudes, opinions and lifestyle
- Behavioral –>loyalty , time and data consumption helps with marketing, usage rates
What are the socio-economic groups?
A- Upper Class B- Middle Class C1 - Lower Middle Class C2 - Skilled working Class D - Working class E - The poor
What are the advantages of market research?
- meet the needs o what your researching
- qualitative and quantitative data
What are disadvantages of market research?
- time-consuming
- expensive
- telephone –> if they know their home they are going to be less honest
- human behaviour
- postal surveys–> people may not reply
- consumer panel –> need to gather a wide range of people
What is Market Research?
the process of gaining information about customers, competition and market trends through collecting primary and secondary data
What can Market Research tell a business?
- what features customers what
- how much they are willing to pay
- where they shop
- what age and gender they are
- who the main competitors are
- if the market is shrinking or growing
What is Primary research?
the gathering of new information, called primary data, which has not been collected before
Examples of Primary research…
- Questionnaires and Surveys
- Hall tests
- Observation
- Focus groups
- Experiments
What is Secondary research?
the process of gathering secondary data, which is information that has already been gathered, such as sales records or government statistics
Examples of Secondary Research…
- Newspapers
- sales records
- government statistics
- Internet
- market research companies
- office of national statistics
Advantages to Primary research?
- more accurate
- up to date
- specific to needs
- effective at collecting qualitative data
- direct customer contact
Disadvantages to Primary research?
- time consuming
- high costs
Advantages to secondary research?
- quicker
- costed less money
- effective at collecting quantitative data
Disadvantages of secondary research?
- more general
- no specific to needs
What is Qualitative data?
information collected by obtaining people’s opinions, judgments and attitudes
What is Quantitative data?
data that can be expressed as numbers and can be statistically analysed
How can businesses analyse customers buying habits?
- finding information about customers
- using their own experience
- looking at existing businesses and trying competitors products
- observation and surveys
How is ICT useful for a company website?
-can be designed well and easy to use
-Cheap to administer and open 24/7
Easy to collect reviews and easy to view competition and compare
-Comparing can also be easily done by checking prices of using price comparison websites
How is Social Media useful to a business doing market research?
- Provide numerous ways to analyse data and trends
- Better than simple questions which can be misinterpreted, its about interaction and observation
What is the benefits of using ICT for market research?
- Broad reach
- Ability to target more specifically
- Free or Low cost e.g. social media
- Personal–> aimed as if it is at each individual customer
- Fast –> information ca be collected very quickly from large numbers of people
- easy –> High level I.T. skills and complex equipment are not needed
How does Databases help support market research?
- you can purchase databases full of customer info
- business will have large databases to analyse
- it must meet DPA requirements
What is Market positioning?
the perceptions consumer have about products e.g. quickly status and value for money
What affect your perceptions of a product?
- the benefits offered by a product
- the unique selling point (proposition)
- The attributes of the product ( M&M’s melt in your mouth not your hands)
- The origin of the product
- The classification of the product (jaffa Cake/Biscuit, I can’t believe its not butter)
What can happen to a businesses products when the markets change?
they can reposition
- Burberry –> Hooligans , to high end
- Aldi –> cheap, best value for money
What is a Market Map?
- perceptual map or positioning map
- typically a two dimension diagram that shows two of the attributes or characteristics of a brand and those of a rival brands in the market
What is Product as part of the Marketing Mix?
- sell the product customers want–> meet the customer needs
- have the correct attributes and features that customers want
- to differentiate their products from the competition
What is Place as part of the Marketing Mix?
- is the way the product gets distributed
- how it gets from the producer to the consumer
- Even which shelf the product sits on
- businesses have to consider the channel they go through e.g. online or through retail stores
- For examples, a luxury suit might be sold in a upmarket boutique
What is Promotion as part of the Marketing Mix?
- Promotion is the communication between the business and customers to make them aware of its product as well as:
- advertising
- sales promotions
- sponsorship
- public relationship
What is Price as Part of the Marketing Mix?
- the value customers place on the product
- higher quality products normally charge more
- Customers are wiling to pay more for special features
- Price is very subjective because it depends on many factors such as commodity prices and the price set by competitors
Why arent Market Maps useful?
-is only 2D and require lots of primary research (expensive)
What is the purpose of differentiation?
- Trying to get your product to stand out, giving it a competitive edge
- It could be as simple as the packaging trying to give perceived difference or advertising
- Charge a premium price
- Stand Out
- Extend product range
- Overcome competition - aim gain market share, with large scale business, you can lower costs and gain more Economies of Scale
How to add value to a Product or service?
- Bundling - offering a package
- Good Customer service
- Speed of response to customers e.g. dry cleaning
- Packaging
- Frequent buyer offers –> reward cards
- Customisation - putting a customers logo or brand in the product
