1.1 Meeting Cutomer Needs

Question 1

What is a niche market

Answer 1

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants
EXAMPLE- vegan food market, sensitive toothpaste

Question 2

What is a mass market

Answer 2

Where a business sells into the largest part of the market, where there are many similar products offered by competitors
EXAMPLE- supermarkets, bottled water

Question 3

Key features of the mass market

Answer 3

• customers for the majority of the market
• customer needs and wants are more general and less specific
• associated with higher production output and capacity and potential for economies of scale
• success usually associated with low cost (highly efficient) operation or market leading brands

Question 4

Benefits of successful mass marketing

Answer 4

• widest potential customer base so more to sell to *
• lower risk so resources focused on one large market *
• low unit costs from economies of scales as selling more
• market research costs relatively low as it is a well known and saturated market

Question 5

Negatives of mass marketing

Answer 5

• market is more saturated so more competition *
  -may have to sell more to make a profit

Question 6

Benefits of targetting niche markets

Answer 6

• Can often sell products for higher prices
• less competition *
• Higher profit margins
• customers are loyal *
• clear focus as targetting particular customers
• build up specialist skills and knowledge

Question 7

Negatives of targetting niche markets

Answer 7

• Lack of economies of scale
• risk of overdependence on a single product/ market * EXAMPLE - blockbuster
• attract competition if successful
• vulnerable to market changes

Question 8

what are the 2 ways of measuring market size one

Answer 8

• Volume of sales, or physical quantity of products sold
• value, total amount spent by customers
  EXAMPLE - McDonalds have 33% of the total value of sales in the fast food market

Question 9

Market share

Answer 9

• Directly affected by the marketing departments success or failure

Question 10

Market share formula

Answer 10

• Means the proportion (%) of a market that is taken by a business, product or brand
  Sales of X / total sales in whole market x 100
  Business revenue / industry revenue

Question 11

Why is branding important

Answer 11

It can instil loyalty in customers
EXAMPLE: using apple over Samsung

Question 12

What is a dynamic market

Answer 12

One that is subject to rapid or continuous changes for example fashion as there are trends that change very often due to social media.

Question 13

What are the 4 key factors when considering dynamic markets

Answer 13

• Online retailing
• factor and trends affecting market changes
• innovation and market growth
• adapting to change

Question 14

Online retailing - dynamic markets

Answer 14

• A dynamic market because it is constantly changing developing, expanding and offering customers new products and new ways to shop
• some online retailers one just on the internet and some like Argos were retail stores and then developed websites

Question 15

Advantages of online retailing

Answer 15

• Provides business access to more consumers, including internationally
• Enables longer trading hours as the business is open 24/7
• Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers
• Businesses can collect data by tracking consumer behaviour which helps with primary market research
• Consumers can receive offers that they are more likely to benefit from
• Consumers can shop at a time that suits them
• Shop is open round the clock
• orders can be taken automatically without the need for staff
• shops can reach international market easily
• low overheads as no need for a shop premises
• stock can be easily withdrawn or updated to keep up with dynamic market changes in tastes
• easy to set up
• flexible so the owner can be anywhere in the world
• opportunities for fast growth

Question 16

Branding

Answer 16

-A brand is a name, image, or logo which helps one product/service stand out from its competitors
-Branding is one of the key ways in which businesses achieve product differentiation
-Brands add value, often making the product/service more desirable to consumers
-Brands influence the position of the business within its market
-Strong brands are more likely to be able to charge higher prices for their products than weaker brands
-The perceived quality of a strong brands products is better than that of weaker brands

Question 17

How do niche and mass markets use branding

Answer 17

Businesses operating in mass markets use branding to stand out from the competition
Businesses operating in niche markets use branding to communicate their offering to a small, well defined group of consumers

Question 18

Disadvantages to online retailing - dynamic markets

Answer 18

• There may be high costs for website development, maintenance, and promotion
• Online retailing is dominated by larger businesses that are more well-known
• High levels of competition mean that it will be expensive to make a website stand out
• There is a lack of personal contact with customers
• Consumers may find it difficult to get the desired level of customer service
• Consumers may find it difficult to return unwanted products
• Online purchasing opens consumers up to credit card fraud
• 71% of customers still prefer to browse online then purchase from a shop
• issues with sending goods back may put customers off
• issues with online security worries put off older customers that are not keen to share bank details
• very competitive market so hard to drive traffic to sites
• owners need IT skills
• problems with fraud /spam
• competitors can be aware of owners business model

Question 19

Online retailing définition

Answer 19

Online retailing involves selling products via the internet

Question 20

What is the aim of marketing

Answer 20

The aim of marketing is to help identify, anticipate and satisfy consumer needs and wants profitably

• Needs are considered to be essential e.g. shelter or food
• Wants are desires which are non essential, even if consumers consider them to be essential e.g Nike trainers

Question 21

What is market research

Answer 21

Market research is essential in helping businesses to identify products/services they can develop in response to the needs and wants that their customers have
Market research is the process of systematically gathering data from consumers which can be used to influence the business decisions

Question 22

EXAMPLES OF HIGHLY DYNAMIC MARKETS

Answer 22

• Film industry → disrupted by online streaming services such as Netflix
• taxi services → disrupted by mobile apps such as Uber
• camera market → disrupted by smart phones such as go pro compared to iPhones

Question 23

Innovation

Answer 23

About putting a new idea or approach into action and is commonly described as the commercially successful explanation of ideas
Application of new inventions into marketable products or services

Question 24

Invention

Answer 24

Formulation of new ideas for products or processes

Question 25

Examples of invention vs innovation

Answer 25

Light bulb → torch
Wheel → car
Ink → pen

Question 26

Types of innovation

Answer 26

Product innovations → launching new or improved product or service on to the market
EXAMPLE - electric cars, air fryers, wireless headphones
Process innovation → finding better or more efficient ways of producing existing products or delivering existing services
EXAMPLES - Apple Pay

Question 27

What are the factors and trends affecting markets

Answer 27

• population changes : whether pop gets bigger or smaller or changes in demographic
• households and families: divorces or more people buying houses
• education: more people going to university
• labour market: levels of unemployment

Question 28

How have environmental trends affected business

Answer 28

• renewable energy
• recycling
• being green
• animal welfare

Question 29

How does competition affect the market

Answer 29

• businesses needs to be more efficient
• businesses needs to listen to consumers needs and wants
• businesses need to be less wasteful
• businesses must produce good quality items

Question 30

What is the difference between risk and uncertainty

Answer 30

Risk- when the potential outcomes of a decision are known
Uncertainty - none of the outcomes are known in advance

Question 31

Why is market research important

Answer 31

Because customers differ in terms of
- benefits they want
- amount they are willing or able to pay
- media they see
- quantities they buy
- time and place that they buy

Question 32

What insights does market research provide

Answer 32

• dimensions of the market
• needs and wants and expectations of customers
• market segments

Question 33

What is production/marketing orientation

Answer 33

Production - business develops products based on what it is good at doing
Marketing- business responds to customer needs and wants and designs products accordingly

Question 34

Advantages of market orientation

Answer 34

• markets are more dynamic
• customers are more demanding eg expecting high levels of customer service
• barriers to market entry getting lower

Question 35

Primary research - what is it and benefits/ drawbacks and sources

Answer 35

• data collected first hand for a specific research purpose
  ✅
• specific to what you need directly focused
• up to date
  -can be kept private
  ❌
• time consuming and costly
• risk of survey bias
• sampling may not be representative

Main Sources include: focus groups, online surveys, face to face surveys

Question 36

Secondary research - what is it and benefits/ drawbacks and sources

Answer 36

-data that already exists and which has been collected for a different purpose
✅
- often free and easy to obtain
- good source of market insights
- quick to access and use
❌
- quickly out of date due to dynamic markets
- not tailored to businesses needs
- specialist reports often quite expensive

Main sources are: google, market research reports and competitors websites

Question 37

market mapping

Answer 37

A market map illustrates the range of positions that a product can take in a market based on two dimensions that are important to consumers eg. Price and quality

Advantages
- helps spot gaps in the market
- useful for analysing competitors
- encourages use of market research

Disadvantages
- just because there is a gap doesn’t mean there is demand
- not a guarantee of success
- market research may not be reliable

Question 38

Product differentiation

Answer 38

Arises when customers perceive a distinct difference between your product and the alternatives provided by competitors

Purpose of product differentiation
- positioning v competition → source of competitive advantage
- protect and build brand → build intangible value and strengthen customer loyalty
- add more value → strong differentiation should allow a higher price

Question 39

Unique selling points

Answer 39

Something that sets a product apart from its competitors
- source of competitive advantage
- help make demand more price inelastic
- lead to higher profits

Question 40

Quantitative research

Answer 40

Addresses questions such as ‘how many’ and ‘how often’
Based on larger samples so more statistically valid
Benefits