Meeting Customer Needs Flashcards
What is a market
A place where buyers and sellers meet
What is a niche market?
A subset of the main market and addresses a specialist need
What are the advantages of a niche market?
Charge premium prices
Easier to follow trends
Less competitive
What are the disadvantages to a niche market?
Very risky as demand may not be constant
Higher unit costs so economies of scale
What is a mass market?
A market aimed at the general population
What are the advantages to a mass market?
Large production so the average unit price is lower
Large amounts of sales means high revenues and high revenues can be pumped into research and development
What are the disadvantages to a mass market?
Lots of competition
Mass markets have homogenous products meaning its hard to find a difference compared to other products
What is market size?
The total sales of all the producers in the market
What is a market share?
The proportion of a market that is taken by a business
What is a dynamic market?
A market that is constantly changing
Advantages to online retailing?
Open 24/7 so they can get an optimal amount of sales
Orders can be taken automatically so no need for staff
Shop can reach international markets easily
Low overheads, 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Stock can be easily withdrawn or updated to keep up with dynamic market changes in tastes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
Opportunities for fast growth
Disadvantages of retailing
Very competitive market
Problems with fraud / spam / viruses
Issues with sending goods back may put customers off
What is business risk?
The possibility a business will have lower than anticipated profits or experience a loss rather than taking a profit
What influences business risk?
Raw material cost, competition, the overall economic climate and government laws
What is uncertainty?
When businesses are unable to predict external shocks or future events
How can a business protect itself from uncertainty?
To control fluctuating interest rates they may take out a long term fixed rate of interest-makes it easier to budget
What is product orientation?
When a business only looks at the product or the production process when deciding what to make next
What is a market orientated business?
A market orientated business will focus on the needs of the consumer
What is primary market research?
Collecting data yourself
What are the main primary research methods?
Surveys, observation, focus groups
What is secondary research?
Gathering data which already exists
What is qualitative research?
Seeks to gather and explore feelings and thoughts about a product from consumers
What is quantitive research?
asks questions to a large sample – to provide valid useful data for the business
What are the limitations of market research?
Sampling, size and bias
What is sampling?
The process of choosing the right people to be part of the research
What is sample size?
the number of people who are interviewed during the research-needs to be large enough that the data has statistical validity.
What is bias?
when research findings cannot be trusted because of the way the research has been carried out
What is market segments?
an identifiable group of individuals or part of a market where consumers share one or more characteristics or needs
What is market mapping?
The process of finding the variables which differentiate brands in a market and then plotting them on a map to indenting a gap in the market.
What is a competitive advantage?
An advantage a business has over its competitors allowing it to create more revenue than the average revenue for the industry
How can a business have a competitive advantage through price?
some businesses choose to use a very low cost model and compete on price
How can a business have a competitive advantage through added value?
Creating multiple different products from one item
How can a business have a competitive advantage through innovation?
Coming up with an idea to improve the current best product in a industry
How can a business have a competitive advantage through reliability?
Customers want to have an item they can rely on and will last
How can a business have a competitive advantage through quality?
Customers want the best quality items possible
How can a business have a competitive advantage through reputation?
Creates a trust and bias from customers for you
How can a business have a competitive advantage through advertising?
A business can advertise to raise awareness of the brand, remind customers or inform them of product features
How can a business have a competitive advantage through branding?
Creates exclusive appeal
What is product differentiation?
Where the product is different from the competition in some way
What is added value?
the difference between the price that is charged to the customer and the cost of inputs required to create the product or service
