1.1 Meeting Customer Needs

Question 1

Define the mass market

Answer 1

A market aimed at a general population

Question 2

Define niche market

Answer 2

Subset of main market, usually to fill a need

Question 3

Define market share and state the formula

Answer 3

The proportion of a market controlled by a single brand/ company

Market share = (sales of a product business / total market share) X 100

Question 4

State the advantages and disadvantages of a mass market

Answer 4

+large size market
+economies of scale
+widespread availability
-low profit margins
-highly competitive
-less variety

Question 5

State the advantages and disadvantages of a Niche market

Answer 5

+customer loyalty
+less competition
+larger profit margins
-smaller market
-low economies of scale

Question 6

Define ‘economies of scale’

Answer 6

a proportionate saving in costs gained by an increased level of production

Question 7

What is a dynamic market?

Answer 7

A market that is subject to rapid and continuous change

Question 8

Give an example of a dynamic market and the ads and dis-ads of it

Answer 8

An example is online markets

+often around the clock
+flexible as owner can work from anywhere
+low overheads, no need for a shop premise

-71% of customers still prefer to browse online than to buy from a shop
-Issues with returning goods puts people off
-Owners need IT skills

Question 9

How does competition affect the market?

Answer 9

-More competition means business’ must produce a good quality product or service.
-More competition means business’ must differentiate its self.

Question 10

Define ‘risk’

Answer 10

Potential outcomes of a decision are known

Question 11

Define ‘uncertainty’

Answer 11

Non of the outcomes are known in advance.

Question 12

What is the difference between market orientation and product orientation?

Answer 12

Market orientation- business responds to customer needs and wants

Product orientation- business developed products based on what it is good at doing

Question 13

What is primary research and give examples

Answer 13

Original data gathered first hand by the researcher for a specific project.

For example: surveys, interviews, focus groups, loyalty cards

Question 14

What is secondary research and give examples

Answer 14

Gathering pre-existing data and reporting, analysing and interpreting that.

For example: Annual reports, government sources, trade journals

Question 15

State the positives and negatives of secondary research

Answer 15

+often free and easy to maintain
+good source of market insight
+quick to access and use
-out of date quickly
-not tailored to business needs
-specialist reports often quite expensive

Question 16

State the positives and negatives of primary research

Answer 16

+Directly focused on research objectives
+kept private
+More detailed insight
-Time consuming and costly to maintain
-Risk of survey bias
-Sampling may not be representative

Question 17

What is quantitative research and list the positives and negatives

Answer 17

Based on data and addresses questions such as who?, What? There are larger samples sizes and collects data through surveys

+data relatively easy to analyse
+provides insight into relevant trends
+can be compared with data from other sources
-Focuses on data rather than explaining why
-Doesn’t explain the reasons behind numerical trends
-May lack reliability if sample size and method isn’t valid

Question 18

What is qualitative data and state the positives and negatives

Answer 18

Based on opinions and addresses questions such as why?, how?, would?

+essential for new development and launches
+can highlight issues that need addressing
+focused on understanding customers
-expensive to collect data
-Risk the sample may not be representative

Question 19

State 2 limitations to carrying out market research

Answer 19

Budgetary constraints- Business may not be able to afford primary research

Legal and ethical constraints- Data protection act has a number of implications of withholding personal data

Question 20

What is market segment and what are the segments?

Answer 20

A process companies use to break their potential customers into different sectors.

Demographic, geographic, behavioural and life stage