1.1 Meeting Customer Needs Flashcards by Unknown Unknown

What is a market?

Place where buyers/sellers connect to exchange goods/services for money.

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Define mass market.

Aimed at general public.

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What are economies of scale?

Average cost per unit of output decreases as production of output increases.

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What characterizes a dynamic market?

Markets constantly changing.

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List reasons for market changes.

Consumer preferences change
Trends
Economies of scale
Competitiveness

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What are the pros of online retailing?

Large sale volume - higher revenue
Everyone equally targeted
Large scale production - economies of scale + lower unit cost

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What are the cons of online retailing?

Lots of direct competition
Similar products need to differentiate by marketing - expensive
Less flexible to demand changes

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Define niche market.

Subsets of main market addressing a specialist need.

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What are the pros of a niche market?

Premium price for exact product
Easier to target customers
Small scale production - flexible to adapt to new trends
Less direct competition

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What are the cons of a niche market?

Demand not always constant
Small product range
Higher unit cost - no economies of scale

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How is market size measured?

Volume of sales
Value of sales

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What is the formula for market share?

Market share = (Sales of product x / Total sales in whole market) x 100

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List positive changes in online retailing.

Open 24/7
Access to global market
Convenient for customers
Target broader market segment

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What are some negative changes in online retailing?

Technical faults
Security issues
Can’t try on product
Hard to build customer loyalty

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Define direct competition.

Two or more businesses selling similar products.

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Define indirect competition.

Businesses selling different products to same type of customers.

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How does competition affect the market?

Priced competitively
Better products
Increase convenience (near customers, online)
Promotion - deals, ads, celebrity endorsements

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What is market orientation?

Business places customer needs at centre of decision making process.

What is quantitative data?

Numerical data.

What is qualitative data?

Consumers’ feelings/thoughts of a product.

List limitations of market research.

Validity
Reliability
Cost/budget
Time

How does ICT impact market research?

Internet (cost effective) - surveys can reach all customers using website
No staff required
Data more likely reliable - not rushed

Define market segmentation.

Dividing a market into identifiable groups of individuals (i.e. market segments).

List types of market segmentation.

Demographic: gender, age, race, economic characteristics
Geographic: Location
Behavioural: Customer loyalty, usage/purchase behaviour
Psychographic: Personality, lifestyle, values, interests

What are the pros of market segmentation?

* Understand customer needs * Customer loyalty * Quick response to changing demand patterns * New products have greater chance of success

What are the cons of market segmentation?

* High cost of market research * Lose focus of products purpose (e.g., adding too much features)

Define product orientation.

Business priorities product quality rather than customer needs.

What are the pros of product orientation?

* Product quality * Technological investment * Economies of scale more easily occurs - lower unit cost

What are the cons of product orientation?

* Outsourcing of production * Fashion/tastes not accounted for * Neglects market change

What is primary market research?

Research conducted by yourself.

What is secondary market research?

Collecting data which already exists.

Define market positioning.

Influence customer perceptions of a brand/product relative to competitors.

What is market mapping?

Segmentation leads to more targeted marketing.

What is the purpose of product differentiation?

Consumers must acknowledge difference to be willing to pay a premium price.

List methods of product differentiation.

* Reputation (restaurant) * Customer service/after sale service (M&S) * Value for money (Lidl) * Product features (cars)

What is a unique selling point (USP)?

A feature that makes a product stand out from competitors.

List ways to add value to products/services.

* Design (differentiation advantage) * Production Quality (differentiation advantage) + efficiency (cost advantage) * Marketing (brand differentiation advantage)

What are the benefits of adding value?

* Increase profit margins by higher costs * Protection against competitors offering lower prices * Customer loyalty

What are the components of the marketing mix?

* Segmentation * Targeting * Positioning * Product * Price * Place * Promotion

List competitive advantages of a product/service.

* Lower costs * Cost Advantage * Unique/superior product * Differentiation advantage

Define competitive advantage.

How a business makes itself stand out by offering lower price / superior quality.

What is cost advantage?

Skilled work/efficient operations to provide low cost value to customers (e.g., Aldi, Ryanair).

What is differentiation advantage?

Resources focused on creating a superior value for customers (e.g., BMW, Waitrose).