1.1 Meeting Customer Needs Flashcards
What is a mass market?
When a business sells to the largest part of the market
What is a niche market?
When a business sells to a smaller segment of the market
What are benefits of a mass market?
- Widest customer base
- low risk
- lower research costs
- economies of scale
What are the benefits of a niche market?
- Low competition
- clear focus/target
- builds up specialist skills
- can charge a higher market price
- high profit margins
- loyal customers
What are the drawbacks of a niche market?
- Lack of economies of scale
- can attract competition
What is a dynamic market?
One that is subject to rapid and continuous change
What is a market map?
Visual tool used by businesses to identify different brands selling similar products on 2 diff variables
Benefits of a market map?
- Gap in the market
- Analyse competitors
- encourages market research
Drawbacks of a market map?
- limited products
- limited variables
- time consuming
- not a measure of success
What are the sources to change?
- Customer tastes
- impact of technology
- impact of new market entrants
What are the benefits of online retailing?
- Open 24/7
- Convenient
- low variable cost
- stock all on display
- national market
Drawbacks of online retailing?
- customer service may be poor
- very competitive
- IT skills needed
- fraud problems
What are the benefits of product orientation?
- Focus on quality
- encourages innovation
- Improves Labour skills
- Improves b2b outsourcing
What are the drawbacks of product orientation?
- Potentially limits market opportunities
- Product obsolesce possibility
- disregards customer needs
Benefits of market orientation?
- improves customer loyalty
- Continuous investment in customer feedback
- responds quickly to the market
What are the drawbacks of market orientation?
- Reactive rather than proactive approach
- not always innovative
- hard to adapt
What is market research?
Collection and analysis of data to inform a business about it’s market
What is primary research?
Data you have conducted yourself
What is secondary research?
Research already conducted for you
What are the benefits of primary research?
- up to date reliable
- no bias
- specific to market
What are the drawbacks of primary research?
- Time consuming
- sampling may not be representative
What are the benefits of secondary research?
- Cheap
- quick
- easy access
- good source of market insights
What are the drawbacks of secondary research?
- Can be unreliable
- not catered to the business
- not always up to date
- specialist reports are expensive
What is qualitative data?
Gathers thoughts and opinions
What is quantitative data?
Gathers data and measures responses (numerical data)
What is the benefit of qualitative data?
- Detailed
- opinions
- Essential for product development
What are the drawbacks of qualitative data?
- Long and the consuming
- requires specialist research skills
- opinions are hard to analyse
What are the drawbacks of quantitative data?
- not detailed
- less specific
- may lack reliability
What are the benefits of quantitative data?
- easy to analyse
- Quicker to gather
- can be compared with previous data
What are the advantages of sampling?
- Avoids bias
- can reduce risks and cost
- sampling is flexible
What are the disadvantages of sampling?
- Not fully representative
- size of sample
- sample may be carried out inaccurately
What is market research used for?
- Anticipate customer needs
- quantify likely demand
- gain insight on consumer behaviour
Use of IT in market research?
- Computers speed up process
- internet data gathering is cost effective
- data is more reliable when not rushed
What is market segmentation?
Segmenting the market into subgroups based on characteristics
What are the benefits of market segmentation?
- advertising is targeted at specific market segment
- most profitable market / customer can be identified
- helps firms improve existing products
What is market positioning?
Where a product is placed in the market relative to competitors
What is a competitive advantage?
Adding a feature to a business that allows it to perform more successfully than others
What is product differentiation?
Having a unique feature that makes the product stand out from other products in the market
What is added value?
The diff between the price charged and the cost of inputs
What are the 5 ways to add value?
- Usp
- quality
- convenience
- branding
- Design
