1.1 meeting customer needs Flashcards
Define a mass market
A large number of customers which is undifferentiated and sells products/ services to suit a large number of customers
What are some advantages of mass markets
Cheaper to advertise
Causes Economies of scale
Huge potential number of customers
What are some disadvantages of mass markets
Fierce competition
A USP is needed to stand out (can lead to higher costs)
Define Economies of Scale
Where unit cost falls as the businesses level of production increases
Why do big businesses benefit from economies of scale
As they make higher levels of output, meaning the price per unit falls
What is the formula for unit costs
= Total costs/output
What is a Niche market
A smaller part of a large market with products tailored to fit customers specific needs
Give an example of a Niche market
Electric Tesla cars in the large market of cars
Does a business have to be in one market
No a business may have a big product portfolio which are in the Niche or mass markets
A niche market can become a mass market (like vegan food)
What are advantages of Niche markets
Have a specific target market
Less competition than mass markets
Can charge more for products
What are the disadvantages of Niche markets
Less customers than in a mass market
No economies of scale
The production cost is higher
How can market share be measured
Volume (number sold)
Value (revenue of all products in the market)
What is the formula for market share
Sales of product/ Total market sales X 100%
What is the formula for market size
Change in market size / original market size x 100%
What is a brand
Is a product with a unique character, for instance in design or image. It is consistent and well recognised
What are the advantages of branding
Inspire customer loyalty
Can lead to repeat sales and good word of mouth marketing
Charge higher prices
Can develop barriers of entry(new businesses cannot gain market share)
Can lead to a high market share
A brand itself can have monetary value
Can add to new product development
What are the examples of branding
Logo Tag line/ slogan Design Mascot Theme tune Sponsorship(consistent of brand image) Advertising (what is the brand image)
What is a monopoly
A company that has over 25% market share.
The CMA control competition and market share
What is brand extension
Is where the strength of the brand can be exploited to develop new products
E.g. Oreo biscuits and oreo ice cream
What is brand stretching
Is when the brand is used for a diverse range of products, not necessarily connected.
An example is virgin airlines and virgin broadband
Define a dynamic market
Ones characterised by constant change or process
What are examples of dynamic markets
Technological market
Stock market
FOREX market
Online retail
What are examples of market changes
Acronym
Political Environmental Social Technological Legal Economic
What are external factors effect on a business
A business cannot change external factors.
They come with risks and opportunities which can be planned for
Uncertainties of external factors means businesses have no contingency plan
What is the negative effects of increased competition
Less customers
Costs increase (develop tech, more advertising)
Less sales revenue
Less profits
What does increased competition depend on
Strength of competition
Customer loyalty
Market share
What are the potential positive effects of increased competition
Make business operations better Competitive and high quality products Increased production and productivity Leads to innovation Reduced unit costs
What is production
The quantity of products made in a given time period - total output
What is productivity
How much is produced per person in a given time period - output per person
Define risk
The probability or chance that hoped for outcomes will not occur. Can be predicted, measured or quantified
Define uncertainty
You cannot predict the possibility of future outcomes
Define product orientation
Is where a business develops products based on what it is good at making or doing, rather than what the customer wants
Define market orientation
Is where a business prioritises identifying the needs and wants of the customer and creating products to satisfy them
Define primary research
New research conducted for a particular purpose
Advantages and disadvantages of primary market research
Address the specific needs of the business
Data is up to date
Can help to understand the customer psychology
Expensive to do properly
Risk of bias
May be small scale, not reliable enough
Define secondary research
Uses pre-existing data that has been gathered for another purpose
What are the advantages and disadvantages of secondary market research
Often free
Provides a good market overview
Usually based on a large scale, reliable research
May be out of date
Not tailored to suit specific needs
Define Quantitative research
Research conducted to provide statistically reliable data. Can be put into numerical data
Define Qualitative research
Research aimed at providing insights. Is not numerical and often peoples opinions
Define product proposition
The total mix of benefits represented by a product and offered to a customer
What are examples of primary research
Surveys and Questionnaires
In depth interviews
Focus group
Observations
What are the examples of secondary market research
Internet
Trade press
Government statistics
Past internal sales figures
What are the two main limitations of market research
Sample size to small : consumer representation is too small to much a decision
Sample bias - certain views may skew the overall total populations views
What are the 3 uses of ICT to support market research
Company websites - gather data on browser interests
Social media - can see consumer attitudes to a product/service
Database - gives data on customer behavioural patterns
Define market segmentation
The process of dividing a market into smaller sections which contain customers with similar needs and wants
How can market research help segment a market
Unearths insights to allow firms to maximise sales and profits
What are the ways of segmenting a market
Age
Income
Gender
Geographical location
What are the benefits of segmenting a market
Products and services can de designed to suit target market
Meeting customers specific needs and wants allows higher prices to be charged
Promotional activity is easier to target
Define market positioning
Deciding exactly what image you are trying to create for your product relative to its competitors
Define market mapping
A technique that analyses markets by looking at the features that distinguish different products or firms
What can a marketing map allow a business to do
Spot a gap in the market
Define a competitive advantage
A way of standing out from competitors
What does Porters generic strategies show
That there are two ways of gaining a competitive advantage : Cost leadership (price) Product differentiation (quality,USP, range of products)
Define product differentiation
Attempting to make your product different, in the minds of customers, to any other rival in the market
What are the advantages of product differentiation
Develop brand loyalty
Meets customer needs
Can charge higher prices
Define added value
The difference between the cost of bought - in goods and services and the selling price of a product
Define extrapolate
To predict future outcomes based on information already known
