1.1 Meeting Customer Needs Flashcards
Pros and cons of identifying their target market
Pros - focus your market research, may produce better research results for your money, focus tour marketing
Cons - miss out some potential customers
Definition of Coherent
Forming a unified whole
Definition of Market
Ant place where Uber and sellers come together to trade goods and services for money
Definition of Market Size
Value - the total value of all goods sold in the businesses
Volume - the physical quantity or numbers of customers
Definition of Market Share
The proportion of a market a single business or brand is responsible for
Market Share calculation
( Sales of one brand/total sales in the market ) x 100
Definition of Mass Markets
Markets where goods are produced in large quantities
Definition of Niche Market
Markets where goods are produced in smaller quantities
Smaller specialised markets
Pros and cons of Mass Markets
Pros - huge number of potential customers, economies of scale, higher revenue, the higher revenue can be put into research and development
Cons - can be large amount of competition, may need to spend high amounts on advertising to stand out from the competition, high volume production not flexible to chains consumer demand
Pros and cons of Niche Markets
Pros - a lack of competition, allow them to charge premium prices, can easily target customers, small flexible production allows them to respond to changing customer demand
Cons - can be too small to survive as demand may not be constant and product can go out of fashion quickly there is more risk, small companies may face competition from large manufactures and get pushed out of the market, high production costs due to lack of economies of scale
Definition of E-Commerce
Buying and selling of goods and services over an electronic network
How do markets change
The size
The nature
New markets
Definition of Market Research
The action/activity of gathering information about consumers’ needs and preferences
Benefits of a market research orientated business
More likely to create products that consumer want - less product failures
More accurate and defined promotion
Can anticipate market changes - allows flexibility
Definition of Primary Research
Data which is obtained first hand
Definition of Secondary Research
Collection of data that already exists
Definition of Quantitative Data
Research that can be interpreted in numerical form
Definition of Qualitative Data
Research that is based on thoughts, feelings and emotions
Definition of Competition
Other companies in the market who sell similar products
Definition of Risk
The possibility of something bad happening
Difference between risk and uncertainty
Risk is a decision and something you can control whereas uncertainty is related to external factors and you cannot control it
Definition of Product Orientation
An approach to business that places emphasis on the production process and the product
Definition of Market Orientation
Places emphasis on placing the consumer at the centre of the decision making process
Pros and cons of Product Orientation
Pro - less spending on market research, create a reputation for high quality, can find a competitive advantage/USP
Con - could be hard to sell to consumers as they haven’t been consulted, can lead to many product failures, development cost can be high, can be seen as inflexible
Pros and cons of Market Orientation
Pro - less product failures, more accurate and defined promotion, anticipate market changes
Con - Market research is expensive, not all research is useful
Why do companies conduct market research
Identify and anticipate customer needs and wants
Quantifiable the likely demand for a product
Provide an insight into customer behaviour
To assess the behaviour of competitors
Pros and cons of Primary Research
Pro - information is specific to your business, provides detailed feedback, up to date, find out exactly what you need, easier to analyse
Con - very expensive, takes a long time to collect, maybe bias in questionnaire or interview
Pros and cons of Secondary Research
Pro - cheaper, huge amount of information available, quick to collect, gives a good overview of the market
Con - not specific to your business, can take a long time to find what you need, can take longer to analyse, can be out of date
Definition of Market Segmentation
Part of a whole market where a particulate customer group has similar characteristics
What are the 4 type of market segmentation
Geographic
Demographic
Psychographic
Behavioural
Pros and cons of market segmentation
Pros - different product for different segments - increase revenue, loyal customers, business avoid wasting promotional resources
Cons - Psychographic and behavioural segmentation will cost a lot it can be too simplistic, have use as many types of segmentation as possible, some segmentation methods do not apply to all products, can end up narrowing down your target market
Definition of Market Positioning
The view consumers have about the quality, value for money and image of a product in relation to those of their competitors
The different categories used to position a product
Quality
Value for money
Status
Practicality
Healthy
Environmental impact
Methods of market positioning
Benefits of the product
Unique selling point
Attributes of the product
Origin of the product
Classification
Definition of Market Mapping
Find out how consumers perceive their brand
Allows them to position their brand in the market or find gaps in the market
Results of this research can be shown in a perceptual map
Limitations of Market Maps
Only 2 attributes can be looked at one time
Research is expensive to gather using primary research
Might be relevant for individual brands and not a whole image of a business
Some maps may only be based on marketing departments opinions and not market research
Definition of Competitive Advantage
When a business stands out form their competitors
Business offers a customer better value, either by lowering prices or providing greater benefits and service which justifies higher prices
How do businesses create a competitive advantage
Product design
Product quality
Promotion
Customer service
Delivery times
Flexibility
Ethical/environmental stance
Focusing on a market segment
Economies of scale
Methods of adding value
Bundling
Customer service
Speed of response to customers
Packaging
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