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Business > 1.1 - meeting customer needs > Flashcards

1.1 - meeting customer needs Flashcards

1
Q

What are the 2 types of markets?

A
  • Mass markets
  • Niche markets
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2
Q

What is a mass market?

A

Products in a mass market are aimed at a large group of buyers. The product has a wide appeal and is useful to a variety of people.

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3
Q

What is a niche market?

A

Products in aniche market are aimed at a specific group of buyers. The product is specialised to meet the particular requirements of buyers in the niche market.

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4
Q

What are the advantages for a business operating in a mass market?

A
  • Sales volume in mass markets is higher than in nice markets
  • Businesses in mass markets are more likely to benefit from economies of scale
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5
Q

What are the disadvantages for a business operating in a mass market?

A
  • Businesses need a lot of capital to meet the large sales volume, so new or small businesses can find it hard to succeed in mass markets.
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6
Q

What are the advantages for a business operating in a niche market?

A
  • There is a lot less competition in niche markets than in mass markets
  • Businesses in niche markets can charge higher prices than mass markets since they sell specialised products
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7
Q

What are the disadvantages for a business operating in a niche market?

A
  • Businesses in niche markets can be risky since they sell to a smaller number and narrower range of customers
  • If there is a change in the market that affects what customers want to buy, they could quickly lose sales and struggle to survive
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8
Q

What is market size?

A

Market size is the total value of sales in a market over a certain time period

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9
Q

What is market share?

A

The market share of a business is the proportion of the total market that the business holds.

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10
Q

What is branding?

A

Branding creates a clear and obvious logo, name, or statement that customers can instantly recognise.

It helps consumers to differentiate a business’s product from that of its competitors.

Businesses in mass markets have to focus heavily on branding since there are more businesses selling similar products, so they need to stand out.

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11
Q

What is a dynamic market?

A

A dynamic market changes and evolves rapidly. Most markets are dynamic.

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12
Q

What are the different ways a market can change and evolve?

A
  • Consumer preferences change
  • Innovation means that new products or processes emerge
  • The ways in which customers want to shop can change
  • Competitors can enter or leave the market
  • There can be changes in legislation
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13
Q

What is online retailing?

A

Online retailing is selling products via the internet (through apps or websites)

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14
Q

What are the benefits of online retailing?

A
  • A business’s costs are lower as it doesn’t need to have a physical store or hire as many staff
  • Customers can order at any time and often from anywhere in the world
  • Customers can easily compare prices between different firms and find the lowest prices
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15
Q

What are the drawbacks of online retailing?

A
  • Businesses face more competition as customers can easily shop around
  • Some consumers like to see products before they buy and some like to speak to staff
  • Businesses need to make sure their customers personal details are protected frpm cyber criminals
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16
Q

What are the 2 types of competition?

A
  • Direct competiton - when two or more businesses sell similar products that appeal to the same group of customers
  • Indirect competiton - when two or more businesses sell products that are different, but they are competing for the same customers
17
Q

How does the level of competiton a firm facts affect the decisions it makes about its marketing mix?

A
  • Price - firms in compettive markets often use a competitive pricing strategy, which means prices are based on competitors prices
  • Product - a competitive market contains lots of similar products, so the business needs to make sure it is high quality to stand out
  • Place - In a competitive market, businesses need to make sure its as easy for customers to access their product as it is to access competitors products
  • Promotion - competition means that firms have to try really hard to get their products noticed and encourage customers to buy them over competitor products.
18
Q

What are the 2 types of oreintations a business could be?

A
  • Product orientated
  • Market orientated
19
Q

What does product oriented mean?

A

If a business is product orientated then when making production and marketing decisions it focuses most heavily on the design, quality or performance of its products.

20
Q

What does market orientation mean?

A

Market orientation is when a business focuses most heavily on selling products that match customer preferences. It invests lots in market research to find out what customers want and are willing to buy.

21
Q

What is market research?

A

Market research is the collection and analysis of market information. It can include looking at the market as a whole, the compeititors in the market and their products, and the consumers in the market.

22
Q

Why is effective market research important to a business?

A
  • Market research finds out what customers need and want
  • It allows a business to predict how much demand there will be for its products
  • Market research allows a business to learn more about how consumers behave in relation to a product
  • Businesses use market research to wokr out how much consumers would be prepared to pay for a product
  • Identifying competitors and what they are doing
23
Q

What are the 2 types of market research?

A
  • Quantitative market research - produces numerical statistics, multiple choice questionaires
  • Qualitative market research - based on the opinions of consumers and doesn’t produce numerical results

Quantitative market research gives data that can be statistically analysed, which makes the analysis quicker and easier. Qualitative market research may be more informative.

24
Q

What can market research be?

A

Market research can be:

  • Primary market research
  • Secondary market research
25
Q

What is primary market research?

A

Primary market research is where a business gathers new data.

It can be collected through questionaries, surveys, observations, focus groups.

primary market research is specific to the purpose it’s needed for. This is great for niche markets

26
Q

What is secondary market research?

A

Secondary market research involves using data that’s already available.

This includes information from government publications, reliable internet sources, trade magazines, market reports.

Secondary data is much easier, faster, cheaper than primary data.

Secondary data could be unsuitable, it may have errors or be out of date.

27
Q

What is segmentation?

A

Segementation means dividing a market into groups of buyers - consumers in each segment share one or more characteristic.

Market research helps a firm to segment a market by revealing more about the types of consumers in the market.

28
Q

Why is segmenting a market beneficial to a business?

A

Segmenting a market allows businesses to target their marketing towards specific groups of buyers.

29
Q

What are the different ways a business can market a segment?

A
  • Demographic segments - age, gender, socio economic class
  • geographic segments - the market can be divided according to neighbourhood, city, county, or world region
  • Income segments - aiming at high or low income consumers
  • Behavioural segments - amount of use, lifestyle, hobbies and interests
30
Q

What is market mapping?

A

Market mapping compares two features of products or brands. A market map shows extremes for two measures that are important to customers. e.g. low price v high price, low quality v high quality

It’s laid out as a matrix, and the products or brands are positioned on it according to where they are judged to lie between each pair of extremes.

31
Q

Why are market maps beneficial to a business?

A
  • Market maps can reveal gaps in the market
  • market maps can show a business who its closest competitors are
  • if the sales of a product are declining the business might use a market map to find out how customers view there products and then try to reposition on the map
  • Market maps can show how much customers expect to pay
31
Q

What are the disadvantages of market maps?

A
  • Market mapping can simplify things too much
  • The positions of products and brands on a market map are usaully a matter of opinion
32
Q

What is a competitive advantage?

A

A competitive advantage is a condition which allows a firm to generate more sales or be more profitable than its rivals

33
Q

How can a business achieve a competitive advantage?

A
  • Lower costs
  • Product innovation
  • Advertising and marketing
  • Product differentiation
  • Reliability and quality
  • Good customer service
  • Convenience
34
Q

What is adding value?

A

Adding value means increasing the difference between the cost of making the product and the price that the customer pays.

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