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Business > 1.1 - Meeting customer needs > Flashcards

1.1 - Meeting customer needs Flashcards

1
Q

What is a market?

A

A place where a business exchanges their product or service to buyers

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2
Q

What is the mass market? Give an example

A

A market for products and services that are aimed at a larger section of the whole market. For example, Apple Watch.

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3
Q

What is the niche market? Give an example

A

A market for goods and services that are aimed at a small section of the whole market. For example, luxury items such as Rolex.

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4
Q

What are some characteristics of the mass market?

A
  • customers form the majority
  • needs and wants are more ‘general’
  • it is associated with higher production output.
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5
Q

What are some benefits of operating in a mass market?

A
  • wider potential customer base = high sales volume = higher revenue.
  • lower risk - resources are focused on one large market
  • larger scale production = economies of scale & lower average unit costs
  • market research costs are low.
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6
Q

What are some drawbacks of operating in a mass market?

A
  • lots of competition
  • may need to differentiate product which can be expensive
  • not flexible to demand changes due to high volume production.
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7
Q

What are some benefits of operating in a niche market?

A
  • less competition
  • builds up specialist skills and knowledge
  • can often charge higher prices = higher profit margin
  • creates customer loyalty
  • flexible
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8
Q

What are some drawbacks of operating in a niche market?

A
  • lack of economies of scale as higher unit costs
  • risk of over dependence on a single product or market, limited opportunities
  • likely to attract competition IF successful
  • risky as demand may not be constant
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9
Q

How can market size be measured?

A

Can be measured through either:
- sales volume
- value (total amount spent by customers)

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10
Q

Market size formula

A

Number of target users x predicted sales

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11
Q

Market share formula?

A

Sales of x / total sales in whole market (x 100)

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12
Q

What is a brand? Give examples

A

The creation of an identity that distinguishes that firm and its products from others. For example, shapes, symbols, colours, logos

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13
Q

What are the benefits of building a brand?

A
  1. Brand value - brand name adds value to the product, less money to be spent on advertising.
  2. Brand extension - Customers familiar with or loyal to the brand are more likely to be willing to try new products.
  3. Brand personality - brand takes on a persona of its own, more recognisable.
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14
Q

What are some examples of brand personalities?

A
  • Durable e.g. Dyson
  • Luxurious e.g. Rolls Royce
  • Sporty e.g. Nike
  • Value for money e.g. Aldi
  • Exciting e.g. Lego
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15
Q

What are the pros of online retailing?

A
  • shop is open round the clock
  • no need for staff
  • low overheads, no need for shop premises
  • shop can reach international markets easily = fast growth
  • flexible, owner can be anywhere in the world.
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16
Q

What are the cons of online retailing?

A
  • most customers will browse rather than purchase
  • owners need IT skills
  • competitors will be aware of owners business model, prices and activity
  • competitive market
  • customers may be put off by returning process or worries about scams.
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17
Q

What is product innovation?

A

The process of creating a new product or improving an existing one to meet customer needs.

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18
Q

What is process innovation?

A

The improvement of existing production process or addition of new processes to address challenges within the production chain.

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19
Q

What are the benefits of product innovation?

A
  • added value = better quality
  • higher prices and profits
  • can build customer loyalty
  • enhanced reputation
  • increased market share
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20
Q

What are the benefits of process innovation?

A
  • reduced costs = higher profits
  • improved quality
  • more responsive to customer service
  • greater flexibility
21
Q

What is market growth?

A

An increase in demand/ sales for a particular product or service.

22
Q

How may competition affect the market?

A
  • More competition means a business will have to be more efficient
  • Also means the business needs to listen to customer needs and wants = find a gap in the market.
  • Means a business must differentiate their product
  • May lead to price wars
  • Homogeneous markets means businesses must compete on non-price factors e.g. more promotions
23
Q

What is risk?

A

The possibility that things will go wrong. E.g. Risk in making in making business investments

24
Q

What is uncertainty?

A

The unpredictable and uncontrollable events that affect a business. E.g. uncertainty about the sales success for a new product

25
Q

What is product orientation?

A

Business develops products based on what it is good at doing.

26
Q

What is market orientation ?

A

Business responds to customers needs and wants and designs products accordingly.

27
Q

What are the benefits of market research?

A
  • helps with decision making - reduces risk/cost of making poor decisions
  • to develop a marketing plan based on data gathered on the 4p’s
  • to react and prepare for changes in the market
  • to become market orientated - meet customer needs
28
Q

What are the drawbacks of market research?

A
  • can be expensive as you may have to employ a researcher.
  • can be time consuming
  • may be not be reliable
29
Q

What is primary research?

A

Data collected first hand for a specific research purpose.

30
Q

What is secondary research?

A

Data that already exists and has been collected for a different purpose.

31
Q

What are some examples of primary research methods?

A
  • Questionares/ surveys - can be used to measure customer satisfaction which tells the firm where to improve
  • Observation - firm may observe buyer behaviour e.g. if they buy in groups or alone
  • Consumer panels - group of experts selected by agency who answer questions about a good/ service
32
Q

What are some examples of secondary research methods?

A
  • Annual reports - includes info as a balance sheet and profit and loss statements which gives investors a good idea about financial health of a business
  • Specialist organisations publications - E.g. mintel reports who constantly asses change in culture, economy and society. Are expensive.
33
Q

What are the benefits and drawbacks of primary research?

A
  • more detailed insights into customer views
  • kept private - not publicly available
  • time consuming and costly to obtain
  • risk of survey bias
  • sampling may not be representative
34
Q

What are the benefits and drawbacks of secondary research?

A
  • free and easy to obtain
  • quick
  • competition can access it
  • can quickly become out of date
  • not tailored to business needs
35
Q

What is quantitative research?

A

Research that uses mathematical analysis, data and stats

36
Q

What is qualitative research?

A

Research based on opinions, attitudes, beliefs and intentions.

37
Q

What are the benefits and drawbacks of quantitative research?

A
  • data is relative easy to analyse
  • provides insights to relevant trends
  • focuses on data rather than explaining why things happen
38
Q

What are the benefits and drawbacks of qualitative research?

A
  • essential for important new product development and launches
  • focused on understanding customer needs, wants, expectations
  • expensive to collect and analyse
  • based around opinions - risk of unrepresentative data
39
Q

What is market segmentation?

A

The process of dividing the market into groups of customers with similar characteristics

40
Q

What is demographic segmentation?

A

The method of splitting customers into sub-groups based on factors like gender, age, income and social class.

41
Q

What is geographic segmentation?

A

Different customers may have different needs depending on where they live. Geographical segmentation can be influenced by climate, culture, population etc

42
Q

What is psychographic segmentation?

A

The method of dividing customers into sub-groups based on shared psychological factors such as likes and dislikes, values, interests and attitudes.

43
Q

What is behavioural segmentation?

A

The method of splitting customers into sub-groups based behavioural patterns such as usage rate, loyalty and desired benefits.

44
Q

What are the benefits of market segmentation?

A
  • able to understand characteristics and needs of customers
  • can identify a target market to specialise in
  • can chose promotional strategies to their target market = cost effective
45
Q

What are drawbacks of market segmentation?

A
  • business needs to stay up to date with needs of customers in the market segment.
46
Q

What are the benefits of market mapping?

A
  • helps spot gaps in the market
  • used for analysing components
  • encourages use of market research
47
Q

What are the drawbacks of market mapping?

A
  • a gap in the market does not mean there is a demand for that specific thing
  • no guarantee of revenue/ success
48
Q

How may a business add value to a product or service?

Note: Big Dogs Upset Queens Cats

A
  • branding
  • design
  • USP
  • quality
  • convenience

Business (9 decks)

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