1.1 Meeting Customer Needs

Question 1

Mass market

Answer 1

Makes products and/or services for all customers. Mass market is larger and the types of products will be generalised.

Question 2

Niche market

Answer 2

The niche market appeals to a much smaller market. The niche market will be smaller than the mass market. The niche market provides products and/or services that focus on a specialist want or need.

Question 3

Examples of mass markets

Answer 3

McDonalds, Burger King, Subway

Question 4

Examples of niche markets

Answer 4

LEON (healthy fast food chain)

Question 5

Mass markets advantages

Answer 5

More customers, higher outout leveks = economies of scale, can build a strong market presence.

Question 6

Mass markets disadvantages

Answer 6

High levels of competition, lower profit margins.

Question 7

Niche markets advantages

Answer 7

Less competition, specific market, can develop specific expertise, higher profit margins, customer loyalty.

Question 8

Niche markets disadvantages

Answer 8

No economies of scale, vulnerability due to an undiverse product portfolio.

Question 9

What is a brand?

Answer 9

A brand is a good or service that has something which is unique & recognisable. This could be from the way that the product is designed or a different feature. More likely to be strong if it’s easily recognised and distinctive.

Question 10

Retailers

Answer 10

Try and stock well-known brands on their shelves. However, to try and boost profits, retailers are developing their “own-label” brands. These products undercut big brands by being cheaper but are more expensive than the basic products.

Question 11

Online retail

Answer 11

Online retail is a dynamic market as it continues to change and develop in terms of how customers can purchase goods and services. Eg: Amazon and eBay were both founded in the 90s and have both transformed the retail market.

Question 12

How markets change

Answer 12

Markets can change and develop as a result of advances on technology and as a result of changing tastes and preferences of customers. For example, smartphone and tablet markets are dynamic as there are often rapid changes and advances in technology. Apple added touch and face ID in quick succession.

Question 13

Innovation

Answer 13

Businesses can use innovation to increase or maintain their competitiveness. It creates change within markets as it involves the introduction of new and improved products and services. One example of that is Dyson.

Question 14

Responding to the external market

Answer 14

Businesses must identify and respond to changes within the external market. Businesses operating within dynamic markets must be able to respond to changing customer tastes and preferences. Eg: Blockbuster failed to do this, and got taken over by Netflix.

Question 15

Impact of competition

Answer 15

Competition can affect a business’ costs and demands as the presence of competitors may reduce demand for a business’ product of service. Competition can force businesses to reduce their prices or increase their sales & marketing spend.

Question 16

Impact of competition - rising costs

Answer 16

The presence of a competitor can increase business costs as a business may increase itsspending on promotion and advertising or may invest in research and development to improve the products offered for sale.

Question 17

Risk of failure

Answer 17

Starting a new company is very risky as they are most likely to fail in their early days. They face the risk that consumers may not want to buy their product, especially if it is a brand new product.

Question 18

Financial loss

Answer 18

Starting a new business often requires a lot of investment. Failure can often mean a large financial loss for the entrepreneur.

Question 19

Lack of security

Answer 19

Entrepreneurs often lose the security that they had with their job in terms of a regular wage or salary. This means that if the business isn’t making any profit, the entrepreneur may have no money to live off.

Question 20

Uncertainty

Answer 20

Uncertainty is when a business cannot know how a situation will turn out. This is mostly because the business does not have enough information.

Question 21

Brexit

Answer 21

Brexit has caused uncertainty for businesses. This is because they do not know how they will be affected by Britain leaving the EU.

Question 22

Uncertainty vs Risk

Answer 22

Uncertainty is where a business is unable to foresee problems. Risk is where there is a chance that something could go wrong & not end up as expected. With uncertainty, it is hard to even have any expectations of what the future will be like.

Question 23

Demand

Answer 23

Market research into customers’ demands is important for business success. Insights into customers’ wants and needs can help a business to improve the product, spot market opportunities and stay competitive. Insights into overall demand trends can help a business to spot opportunities for growth and potential threats from new products/technology.

Question 24

Competition

Answer 24

Market research into competitors can help a business understand the major threats in the market and then prepare the business to deal with these threats. Market research for established fashion labels like H&M would identify the threats that come from online platforms like ASOS or Boohoo.

Question 25

Target market

Answer 25

Market research into a business’ target market will give the business insights into their customers’ wants and needs and how they are changing over time.

Question 26

Qualitative research

Answer 26

Qualitative research generally collects information about opinions and views rather than things that can be quantified.
For example, research into whether customers think the customer service at Waitrose is good is qualitative research.

Question 27

Quantitative research

Answer 27

Quantitative research collects factual information on things that can be quantified and recorded easily.
For example, research into the number of cans of Coca Cola sold in the UK last year is quantitative research.

Question 28

Sampling

Answer 28

When a business is carrying out market research, sampling may be used to reduce the costs associated with market research. Sampling occurs when a business selects a sample of the population to save collecting data from everybody in that population.

Question 29

Advantages of sampling

Answer 29

Sampling reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody.

Question 30

Disadvantages of sampling

Answer 30

Sampling may not accurately reflect the full target market if the sample is not chosen properly.

Question 31

Technology

Answer 31

Technology can be used to analyse market research data by completing calculations and creating graphs and charts which can be used by managers and leaders.