1.1 - meeting customer needs Flashcards
mass market
market is aimed at the general public e.g. regular toothpaste
niche market
subset of the main market and addresses a specialist need e.g. sensodyne toothpaste
homogenous
of the same kind
similar products that compete in the market
mass-market characteristics
- product is sold to all consumers in the same way
- many products can be sold on a global scale with just a few language tweaks
- example = car market
advantages of mass markets
- large scale production = lower unit costs
- straightforward = equally targeted
- large volume of sales = high revenues
- high revenues = pumped into research
disadvantages of mass markets
- lots of competition
- homogenous products need to be differentiated
- high volume production = not flexible
niche market characteristics
- aimed at people with high incomes
- not everyone will buy it
advantages of niche markets
- charge premium prices
- easier to target customers
- small-scale production
- less competition
disadvantages of niche markets
- risky
- higher unit costs
profitability of niche markets
- profitable market to be in
- profits can signal more competitors to enter the market
- small range of products
- market may be limited
market size
- total of all sales of all producers in that market
- measured through volume of sales and value
calculating market share
sales of a product/total sales in whole market x 100
dynamic market
a market that is subject to rapid or continuous changes
reasons for dynamic markets
- tastes and fashion
- online retailing
advantages of online retailing
- always available
- orders are taken automatically
- international market
- no need for premises
- stocks can be withdrawn
- easy to set up
- flexible
- fast growth
- easily updated
disadvantages of online retailing
- sending products back
- online security
- competitive market
- owners need IT skills
- problems with fraud
- competitors can be aware of owner’s business activity
business risk
the exposure a company has to factors that will lower its profits or lead it to fall
uncertainty
situations in which businesses face risks that can’t be measured or calculated
production orientation
a business develops a product based on what it is good at doing
marketing orientation
a business responds to customer needs and wants, and designs products accordingly
market research
- primary research = data collected firsthand (surveys & questionnaires)
- secondary research = data that already exists
quantitative research
concerned with data and addresses questions such as when, who and why
qualitative research
based on opinions, attitudes, beliefs, and intentions
benefits of primary research
- directly focused on research objectives
- kept private
- more detailed insights
drawbacks of primary research
- time-consuming and costly to obtain
- risk of survey bias
- sampling may not be representative
benefits of secondary research
- often free and easy to obtain
- good source of market insights
- quick to access and use
drawbacks of secondary research
- can quickly become out of date
- not tailored to business needs
- specialist reports are often quite expensive
benefits of qualitative research
- essential for important product development and launches
- focused on understanding customer needs, wants, and expectations
- can highlight issues that need addressing
- effective way of testing elements of the marketing mix
drawbacks of qualitative research
- expensive to collect and analyse
- based on opinions
benefits of quantitative research
- data easy to analyse
- numerical data provides insights into relevant trends
- can be compared with data from other sources
drawbacks of quantitative data
- focuses on data and doesn’t explain why things happen
- doesn’t explain reasons behind numerical trends
- may lack reliability if sample size and method aren’t valid
sampling
involves gathering data from a sample of respondents, the results of which should be representative of the population as a whole
benefits of sampling
- small sample can provide useful insights
- can reduce risks and costs
- flexible and relatively quick
drawbacks of sampling
- sample can be unrepresentative of population = can lead to incorrect conclusions
- risk of bias
- less useful in market segments where customers’ tastes & preferences are changing frequently
market segmentation
- involves dividing the market into parts that reflect different customer needs and wants
segments
- demographic
- geographic
- income
- behavioral
benefits of market segmentation
- focuses resources on parts of a market where the business can succeed
- allows a business to grow shares in markets
- helps with new product development
- helps make the marketing mix more effective
drawbacks of market segmentation
- imprecise science
- doesn’t mean customers can be reached
- markets are increasingly dynamic
market mapping
process of finding the variables that differentiate brands in a market and then plotting them on a map
uses of market mapping
- identifying gaps in the market
- identify which products to produce
- to reposition
competitive advantage
- an advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry
product differentiation
where a product is different from the competition in some way
methods of differentiation
- reputation
- customer service
- value for money
- product features
added value
the difference between the price that is charged to the customer and the cost of inputs required to create the product or service
ways to add value
- design
- production
- quality
- marketing
benefits of adding value
- more value = higher prices
- customer loyalty
- protection against competitors
