1.1. Meeting Customer Needs Flashcards
A Market
A market is any place where buyers and sellers can meet, e.g. amazon.co.uk or a shopping mall
The aim of marketing is to help identify, anticipate and satisfy consumer needs and wants profitably
Needs are considered essential, e.g. shelter orfood
Wants are desires which are non-essential, e.g. Luxury products
Market Research
Market research is the process of systematically gathering data from consumers which can be used to influence business decisions
Niche Markets
In niche markets, products are aimed at a subset of the larger market, e.g. gluten free products
- Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market
- Production usually happens on a small scale
PROS: - Better meet consumer needs leading to higher levels of customer satisfaction which builds brand loyalty.
- Brand loyalty makes it so you can raise prices which increases profit margins
CONS: - Limited oppotunity for market growth.
- Inability to obtain economies of scale means higher costs and this means Higher Prices = Lower Demand and if you maintain price = Lower Profit Margins.
Mass Markets
In mass markets, products are aimed at broad market segments, e.g. Kellogg’s Corn Flakes is an example of a breakfast cereal aimed at the mass market
- Market segments are groups of consumers who share similar characteristics, e.g. age, lifestyle, etc.
- Mass marketing occurs when businesses sell their products to most of the available market
- Production usually happens on a large scale
PROS:
- A business seeking high sales that can exploit economies of scale to get low unit costs so is able to charge lower prices.
CONS:
- Mass production which requires finance to implement. ( High Costs )
Market Share & Equation
The percentage of total sales in a market that is held by a particular company or product.
Equation:
( Sales of a business / Total sales in the market ) × 100
Dynamic Market
A dynamic market is a market that is subject to rapid or continuous changes. e.g. Phone Market / Apple / Samsung
Competition Affects The Market
Competition occurs when at least two businesses are providing goods/services to the same target market.
Competition can be direct or indirect
Direct competition occurs when the business is targeting customers with the same product as competitor
Indirect competition occurs when firms sell different products but compete with each other for the customers disposable income e.g. cinema and theatre companies are in indirect competition
The Difference Between Risk & Uncertainty
Risk is the potential threat to business success
Uncertainty is when outcomes are difficult to predict
Primary Research
PROS / CONS
Original Research you did yourself. e.g. Surveys , Focus Group
PROS:
- more up to date and can be used to ask specific questions, so will be more relevant
- Will not be available to rivals
CONS:
- Time Consuming
- Expensive
Secondary Research
PROS / CONS
Using existing data already created. e.g. Internet , Goverment Publications , Marketing Firms
PROS:
- Quick and Instant
- Cheaper to access
CONS:
- Competition will have access to same info
- May be out of date
Market Segmentation
PROS / CONS
single market is divided into submarkets or segments
PROS:
- Recognises that consumers are not all identical
- May increase loyalty if the consumer feels that their needs are being met, which can lead to repeat purchases
CONS:
- Segmentation requires more detailed market research ( Expensive )
- A segment may be identied but it may be too small and unprofitable to cater for
Market Mapping
Market Mapping is a tool to analyse competition in a specific market.
PROS:
- Identify potential gaps in the market
- identifies areas in the market which may be saturated / overcrowded
CONS:
- Only 2 variables ( Oversimplistic )
- Gap in the market will not garentee success ( demand might be low )
- Poor accuracy of market map = poor decisions
Methods Of Adding Value
The extra value the business creates through its
Production / Distribution / Marketing Process
Production - Improve product design / features + USP
Distribution - Offer in a more convenient location / Time / Situation
Marketing Process - Brand Image
All ways:
- Marketing and branding
- Functions and features
- Customer service
- Customisation
- Packaging
Product Differentiation
PROS & CONS
When the marketing department distinguish a product from its rivals
USP - Unique Selling Point
Brand Image
Features / Functionality
PROS:
- Increase Sales / Revenue / Market share
- Avoid Competing On Price maintain higher Rev
CONS:
- To ensure effective differentiation ( Increases Costs )
