1.1 meeting customer needs Flashcards
What is a market?
A market is a place where buyers and sellers can meet.
What is the aim of marketing?
To help identify, anticipate and satisfy customer needs and wants whilst being profitable.
What is market research?
The process of systematically gathering data from consumers which can be used to influence business decisions.
What is a mass market?
Where a business sells into the largest part of the market, where there is large amounts of competition
What is a niche market?
A smaller segment of a larger market, where customers have specific wants and needs.
What are characteristics of a mass market?
Less unique products
Low average costs (economies of scale)
Lower profit margins due to lower prices
What are the characteristics of a niche market?
More specialised and unique products
High average costs (Do not benefit from Economies of scale)
Larger profit margins
How is market size measured
Sales volume- number of products sold
Sales value- price*quantity sold
What is market share
Proportion of the total sales of a product/service compared to the market as a whole.
What is the formula for Market share
Sales of a business / Total sales in the market *100
What is a brand?
A name, image or logo which helps products/ services stand out from its competitors.
What are characteristics of brands?
Unique and protected by law
Brands add value
Brands influence the position of the business within its market
What is a dynamic market?
A market that is constantly and rapidly changing
What is online retailing?
selling products via the internet
Advantages of online retailing?
Larger amount of potential consumers
Longer trading hours
Lower costs (lower rent)
Business can collect data by tracking consumer behaviour. (primary market research)
Disadvantages of online retailing
High costs for website development and maintenance
Dominated by larger business
Lack of personal contact with consumers
May have difficulty keeping a high level of customer service
How/why do markets change?
Changing consumer tastes and preferences
The amount of competition
Changing demographics
Changing legislation
What is product innovation?
Adaptation or improvement of existing products
What is market growth?
measurement of change in the entire market expressed as a percentage of the original size.
Factors affecting market growth
Increasing population
Increasing incomes
Changing tastes and preferences
How may businesses adapt to change?
Create flexible business structures
Meet customer needs
Invest in staff training, new products and processses
Innovate to gain the first mover advanatge
What is the first mover advantage?
Competitive advantage gained by being the first business to introduce a new product/service to the market.
what is direct competition?
The business is targeting customers with the same product as the competitord
What is indirect competition
Firms sell different products but compete with each other for the disposable income of consumers. e.g. cinema and theatre companies
How does competition benefit the consumer?
Businesses offer lower prices
Businesses produce better quality products
Business provide better customer service
Difference between a risk and uncertainties
Risk are able to be calculated and prepared for. Whereas, uncertainties cannot as they are unexpected.
What is a risk?
Potential threat to a business success
What is risk maangement?
The process of identifying and preparing for potential threats to business success.
What are uncertainties?
Outcomes are difficult to predict
Examples of risks
Technical failures
Cyber security threats
Loss of key staff
Currency fluctuations
Examples of uncertainty
Will the economy go into recession?
Will energy prices continue to rise?
What will happen to interest rates?
What is product orientation
An approach to marketing that focuses on the characteristics of the product rather than the needs of the consumer.
Tools of product orientation
Product research
Product testing
product focus
What is market orientation?
Approach to marketing that focuses on the needs of consumers and uses this information to design products that meet customer needs
Tools of market orientation
Market research
Market testing
Customer focus
What is market research
The objective collection, compilation and analysis of information about a market
Market research can be quantitative and qualitative. True or False
True
What is qualitative data?
Data based on thoughts and opinions
What is quantitative data?
Numerical data
What is primary market research
Process of gathering information directly from consumers in the target market.
Methods of primary market research
surveys
observation
Interviews
Test marketing -free samples
Focus groups
Advantages of primary market research?
Focuses on the specific needs of the business
Businesses can get in depth information
More up to date and can be used to ask specific relevant questions
Disadvantages of market research?
Sample size may be unrepresentative of all customers
Bias- people interviewing may guide respondents to an answer
Expensive and time consuming
What is secondary market research?
The collection, compilation and analysis of data that already exists
methods of secondary market research
Market reports
government reports
Advantages of secondary market research
Information is already available and so is quicker to collect (than market research)
Information is often free or cheaper
Suitable for small businesses that cant spend large amounts on marketing
Disadvantages of secondary market research
May lack relevance or may even be incorrect
Information may be out of date
Can be expensive to purchase market specific data.
The use of ICT to support market research
Company websites
Databases
Social networking/media
How do company websites help market research?
Allow businesses to collect primary data cheaply through tracking consumer searches
How do databases support market research?
Uses to store large amounts of customer information for example customer emails which can be used to send surveys to customers later on
How does social networking/media help market research?
Able to gather information about consumers via social media such as twitter and tiktok. Can also be used to run quick polls with followers.
What is market segmentation
the process in which a single market is divided into sub markets. e,g. healthy crisps, party crisps and value crisps
Advantages of market segmentation
Recognises that consumers are not all identical
Products and marketing can be altered to meet different needs of different groups of consumers
Less expensive and wasteful
Disadvantages of market segmentation
May be difficult to identify a segment
Requires more detailed market research
A segment may be too small and unprofitable
What is market positioning
The process a business goes through when launching a new product or service
Definition of market mapping
A tool for identifying the position of a product within a market
What is a market map
A two dimensional diagram that shows the attributes or characteristics of a product in comparison to rivals products
only two criteria can be chosen. e.g. quality and price
Advantages of market mapping
Market gaps can be identified
comparisons can be made between a businesses products and its rivals
Disadvantages of market mapping
A gap in the market may exist because it is not profitable to fill
May require primary market research which is expensive
only two criteria can be chosen
What is competitive advantage
Refers to the features of a business and its products that are perceived as superior to its rivals by customers.
What does distinctive mean
Means that it is different from the competitors
How can a business develop a competitive advantage
Faster delivery
Better customer service
Cheaper prices
Better designs
More ethical
Better brand image and reputation
What is product differentiation
An attempt by a business to distinguish its products from those of competitors
What is the point of product differentiation
It can help you gain a competitive advantage
Unique selling point
What is the definition of adding value
The difference between the price that is charged to the customer and the cost of inputs required to create the product or service
What are ways to add value?
Marketing and branding
Product differentiation
Options for customisation
Convenience of the product e.g. how easy is it to order
Design
Functions and features
