meeting customer needs Flashcards
what is niche marketing?
where a business targets a smaller segment of a larger market where customers have specific needs and wants
what is mass marketing?
where a business sells into the largest part of the market where there are many similar products offered by competitors
4 key features of mass market
1- customers form majority of market
2-customers needs and wants are less specific
3-higher production output and potential for economies of scale
4- associated with low-cost operation or market leading brands
4 aims of mass marketing
1- create products with universal appeal
2- aim for leadership of the largest market segment
3-build a strong brand that’s associated with product
4-exploit economies of scale to earn high profits
benefits of successful mass marketing?
1-widest potential customer base
2-lower risk as it has a large market
3-low unit costs from economies of scale
4-market research costs relatively low
6 advantages of niche marketing
-less competition
-clear focus
-builds up specialist skill
-charge higher prices
-profit margins often higher
-loyal customers
4 disadvantages of niche marketing
-lack of economies of scale
-risk of over dependence on a single product or market
-likely to attract competition if successful
-vulnerable to market changes
what’s market growth?
a key indicator for existing and potential market entrants
what’s market share ?
explains how overall market is split between existing competitors
-good indicator of competitive advantage
what’s a dynamic market?
-a changing market
-the pace and nature of change varies considerably between markets
what are the key sources of change in markets?
-customer tastes and preferences
-impact of technology
-impact of new market entrants
what’s the role of innovation?
-puts a new idea / approach into action
-commonly describes as ‘the commercially successful exploitation of ideas’
definition of invention
-formulation of new ideas for products or processes
definition of innovation
practical application of new inventions into marketable products or services
what are the two types of innovation
-product innovation
-process innovation
what is product innovation?
launching new or improved products onto the market
what’s process innovation?
finding better or more efficient ways to produce existing products or deliver existing services
what are the benefits of process innovation ?
-reduced costs
-improved quality
-more responsive customer service
-greater flexibility
-higher profits
benefits of product innovation
First move advantage which includes:
-higher prices and profit
-added value
-builds early customer loyalty
-enhanced reputation as an innovative company
-public relations
-increased market share
how does competition affect the market?
-battle for market share-battle to gain or protect share and threat to new market entrants
-pricing-price wars which adds competition and stronger competitors often set market price
-battle for competitive advantage-product differentiation-key parts of competition
what’s competitive advantage?
-the ability of a business to add more value for its customers than it’s rivals and attain a position of relative advantage
-there’s a better advantage if companies offer better value, quality or service
what’s risk?
-possibility that things will go wrong
what’s uncertainty ?
the unpredictable and uncontrollable events that affect a business
why conduct market research ?
-to find out about the market
what’s product orientated?
-when a company decides not to carry out any market research
what’s market orientated?
-a product that’s launched after market research
-far more likely to be successful
what is primary research?
-gathering new information specifically for the purposes identified by the business
-obtained by field research such as interviewing
important for new business as there will be little secondary data for company to utilise
disadvantage of primary research?
-failure to ask enough people may mean data doesn’t represent views of typical customers
-asking too many people of one group won’t represent the whole market
-poorly designed questionnaires may use suggestive or leading questions which may encourage people to give a particular answer to certain questions
what is secondary research?
-research that uses information that has already been gathered for another purpose
-eg sales information
disadvantage of secondary research?
-info may be outdated so could be less accurate than up to date info
-info may not be exactly what’s needed as it was originally collected for another purpose
-may not be reliable
benefits of market research?
-knowing customer needs - don’t waste money of products that won’t sell
-estimating likely demands- so firms don’t make too many or too few products
-helps entrepreneurs to understand if the market is big enough to make it a success
-finding out about competitors location, products and prices
what’s quantitative data?
factual, often numerate data that aims to be statistically representative of the whole market
what qualitative data?
contains opinion and is unlikely to have been gathered on a large enough scale to give statistically reliable data
what do customers differ in terms of?
-benefits they want
-amount they are able to pay
-media they see
-quantities they buy
-time and place they buy
what does market research show us?
-dimension of market
-competitor strategies
-needs, wants and expectations of customers and how these are changing
-market segments
why is market orientation crucial to marketing success?
-markets are much more dynamic
-customers are become more demanding
-barriers to market entry are getting lower
positives of quantitive research
-data is easy to analyse
-numerical data provides insights into relevant trends
-can be compared with data from other sources
negatives of quantitive research
-focuses of data rather than explaining why things happen
-doesn’t explain the reasons behind numerical trends
-may lack reliability if sample size and method isn’t valid
positives of qualitative data
-focuses on understanding customer needs and wants
-can highlight issues that need addressing-tests elements of marketing mix
negatives of qualitative data
-expensive to collect and analyse
-requires specialist research
-based around opinion
-always a risk the sample is not representative
what are focus groups?
-form of qualitative research
-groups of people are asked about their perceptions, opinions, beliefs and attitudes towards a product, service, concept or ide
what’s sampling in market research?
-involves the gathering of data from a sample of respondents, the results should be representative of the population as a whole
positives of sampling
-small sample size can still provide useful insights
-can reduce risks and costs if used before making marketing decisions
-flexible and relatively quick
negatives of sampling
the biggest risk is the sample being unrepresentative of the population which leads to incorrect conclusions
-risk of bias in research question
-less useful in market segments when customers tastes and preferences change frequently
how is IT used in market research ?
-source of primary and secondary research
-software can quickly highlight what customers are saying about the product or brand
-surveys are easy to set up and analyse results
-wide range of powerful software applications to manage social media research and integrate with other business systems
what are market maps?
-a grid that shows the range of possible positions for two features of a pricy in a market
-may reveal gaps in a market
advantages of market maps?
-helps spot gaps in market
-useful for analysing competitors
disadvantages of market maps?
-just because there’s a ‘gap’ doesn’t mean there is demand
-how reliable is the market research?
-subjective
