1.2.1 Customer Needs

Question 1

What are customer needs?

Answer 1

• price
• quality
• choice
• convenience

Question 2

What is the the importance of identifying and understanding customer needs?

Answer 2

• generating sales
• business survival

Question 3

How can businesses understand customer needs?

Answer 3

• Family needs - customers with children will have different needs from a couple with no children
• Personal tastes and preference - all customers have personal preferences based on style, colour, function and personal taste
• Financial needs - people with different incomes will choose to buy products and services at different price points
• Emotional needs - some customers may have strong emotional connections to certain brands and products

Question 4

Explain the impacts on a business if it does not meet customer needs:

Answer 4

• customers will be less likely to buy from the business - this means that the business will get fewer sales - this leads to lower profits (if costs stay the same) - therefore this lowers their market share/competitiveness in the market
• high costs - this may be due to the business having spent a lot of money buying/making a product(s) that customers do not want to buy - this leads to the wasting this money and making a loss - therefore this increases the chances of the business falling into debt/going bankrupt and having to close down
• needing to pay a lot for advertising - this means that they will have to try and persuade customers that the product is good quality and advertise its features - therefore there will be a high breakeven point - leads to it becoming more difficult to make profit
• poor reputation - means the customers will not buy from the business and may post negative comments on social media - leads to losing market share as customers start to use rival businesses

Question 5

Customer needs:

Answer 5

things that customers require when purchasing a product or service - they are necessities