Paper 1- Theme 1.1- Meeting customer needs (& branding)

Question 1

Define Dynamic market

Answer 1

Market that is constantly changing

- business respond to changing customer needs by improving existing p/s or introducing new ones

Question 2

Positives of online retailing (for business and consumer)

Answer 2

• breaks geographical barriers
• more price transparency for customers (can get cheaper price)
• business can access more & wider markets
• business don’t pay for rent

Question 3

Negatives of online retailing (for business and consumer)

Answer 3

• more competitors
• distribution, delivery and storage costs
• customers more vulnerable to fraud
• not all customers can access/ use online retail

Question 4

Factors causing markets to change

Answer 4

• changes in consumer tastes and trends
• government intervention - legislation changes way the market operates
• increasing digital economy

Question 5

How competition affects market

Answer 5

• pricing of products
• buying power of customer (if competition is high)
• selling power of business (if competition is low)
• ability for new firms to enter market

Question 6

define risk

How to mitigate it

Answer 6

probability that things will not go as planned

• diversify
• take calculated risks
• look for higher returns on risky decisions (made more worthwhile)

Question 7

Define uncertainty

How to mitigate it

Answer 7

when business are unable to predict external shocks or future events

diversify
contingency plans in place
buffer stock and cash
become agile in decision making and action taking

Question 8

Market growth formula

Answer 8

New market size - old market size
—————————————————— x 100
original market size

Question 9

define product innovation and process innovation

Answer 9

product innovation- new technologies are used to create new products

process innovation - new technologies are used to improve production methods, to reduce costs but maintain or improve quality

Question 10

Ways businesses can react/adapt to change

Answer 10

offensive - try to increase sales or develop new markets (first mover advantage)

defensive- react to what competition does and maintain market share

mixture of both

Question 11

Define a brand

Answer 11

A product or service produced by a firm that uses a unique name, design or symbol, in order to differentiate it from competition

identified through: logo, name, shape, colour

Question 12

What is branding

Answer 12

the process of creating a unique name, design or symbol for a product or service, in order to differentiate it from competition

Question 13

What is competitive advantage

Answer 13

a feature of a business that allows it to perform more successfully than others in a market

Question 14

Benefits of a business building a brand

Answer 14

• create customer loyalty- repeat purchases
• brand adds value - can charge higher prices (less advertising spend when established)
• brand extension- adding products to a recognised brand name means loyal or familiar customers or more likely to try it
• brand personality- take on a persona with human characteristics (more relatable for customer)
• reduced price elasticity of demand- demand stays consistent

Question 15

Disadvantages of Branding

Answer 15

• high costs associated with initial promotion of brand and also maintaining of brand
• single bad event can affect all brand’s products

Question 16

List the types of brands

Answer 16

Product brand
Service brand
Corporate brand
Umbrella brand
Own label brand - retail outlet assign branding to a range of products (essential Waitrose)
Global brand -operates worldwide

Question 17

Define an umbrella brand

Answer 17

• a brand is assigned to more than one product

e. g. Mondelez produces Cadbury’s dairy milk and Cadbury’s oreo

Question 18

Define a corporate brand

Answer 18

brand the promotes the name of their corporate entity

e.g. Nestle promote all their products with their name - Nestle Cheerios

Question 19

Ways to build a brand

Answer 19

• advertising- creates familiarity with brand through repetition, encourages new customers to try product
• establish USP- how a business differentiates from competition, creates brand loyalty as customers return for your niche
• sponsorship- can establish brand in mainstream sport and media, can create a personality
• social media use - humanising the brand and can connect with consumers, heavily increase brand awareness (50% of world pop on social media)

Question 20

how social trends are reflected in changes in branding and promotion

Answer 20

• viral marketing - strategy that encourages people to pass on messages about a product electronically to to others
• social media - enable content to be shared and created
• emotional branding - using emotions of a consumer to build a brand
• aim to develop emotional relationship with consumer and brand (brand loyalty)

Question 21

define market research

Answer 21

collection and analysis of data to gain a better understanding of the target market-(tastes and trends)

Question 22

One benefit of primary that is a negative of secondary research

Answer 22

Primary research isn’t available to your rivals

Question 23

uses of market research

Answer 23

• quantify likely demand levels
• understand needs and wants so product can be tailored
• insight into trends of consumer behaviour

Question 24

drawback of market research

Answer 24

• can hinder innovation

e. g. Ford said that if he asked his consumers they would’ve wanted a faster horse not a car

Question 25

how does technology support market research

Answer 25

websites (cookies and polls)

social networks (likes, customer feedback, reviews)

databases (discovering patterns in trends in large dataset AKA data mining)

Question 26

common characteristics that split the market

Answer 26

demographic - social characteristics (age, gender, personality)

geographical- (where they live)

income levels - and their job roles

behavioural - reasons, frequency and method of purchase

Question 27

why is market segmentation useful

Answer 27

• targeted advertising
• focus on most profitable markets
• understand needs of wants of each subgroup of consumer so can identify new products

Question 28

What is market segmentation

Answer 28

when a business splits the market into subgroups of consumers with common characteristics

Question 29

Define market mapping

Answer 29

-used by businesses to position their brand against different variables (price, quaking) to compare their product to their competitors

Question 30

purpose of product differentiation

Answer 30

• to prevent direct competition

* enable business to increase price

Question 31

how products can be differentiated

Answer 31

• actual product differentiation
- unique function, design, performance

• psychological factors
- consumers ‘consume’ brand and product due to persuasive advertising (endorsements and sponsorships)

Question 32

define adding value to a product

Answer 32

• increasing the gap between cost of supplies and the price a product is sold at by creating an attractive image or quality product

Question 33

define market orientation

Answer 33

-outward looking approach to new product development where key focus is consumer needs and wants

• adapt based on consumer needs
• informed by market research

Question 34

pros and cons of market orientation

Answer 34

pro- more likely to produce a product customer will want to buy
-reduces but not eliminate the risk of product development

con- hard for dynamic markets

• costly and time consuming
• may move away from distinctive capabilities, as focused on fulfilling market
• research may not guarantee success

Question 35

define product orientation

Answer 35

inward looking approach to product development where focus is the business’s key strengths and what products can be made with there firm’s production process

• informed by R&D
• product of higher quality

Question 36

pros and cons of product orientation

Answer 36

pros- more money spent on improving product, not on understanding market (add value)
- first mover advantage from new R&D breakthroughs

cons- products may have a lack of demand (no market for it)

Question 37

define product differentiation

Answer 37

the actual or perceived differences of a product or service that convince customers to buy it over substitutes