Paper 1- Theme 1.1- Meeting customer needs ✅ Flashcards
Define Dynamic market
Market that is constantly changing
- business respond to changing customer needs by improving existing p/s or introducing new ones
Positives of online retailing (for business and consumer)
- breaks geographical barriers
- more price transparency for customers (can get cheaper price)
- business can access more & wider markets
- business don’t pay for rent
Negatives of online retailing (for business and consumer)
- more competitors
- distribution, delivery and storage costs
- customers more vulnerable to fraud
- not all customers can access/ use online retail
Factors causing markets to change
- changes in consumer tastes and trends
- government intervention - legislation changes way the market operates
- increasing digital economy
How competition affects market
- 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
define risk
How to mitigate it
probability that things will not go as planned
- diversify
- take calculated risks
- look for higher returns on risky decisions (made more worthwhile)
- forecast with primary data, and have skilled staff to interpret data
- establish high brand loyalty
Define uncertainty
How to mitigate it
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
Market growth formula
New market size - old market size
—————————————————— x 100
original market size
define product innovation and process innovation
product innovation- creating a new and improved product, which involves new technologies
process innovation - new technologies are used to improve production methods, to reduce costs but maintain or improve quality
3 Ways businesses can react/adapt to change in market or competitive environment
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
Define a brand
A product or service produced by a firm that uses a unique name, design or symbol, in order to differentiate it from competition and create an image in the consumers mind
identified through: logo, name, shape, colour
What is branding
the process of creating a unique name, design or symbol for a p/s , in order to differentiate it from competition and create a distinct image in the consumers mind
Benefits of a business building a brand
- 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
Disadvantages of Branding
- high costs associated with initial promotion of brand and also maintaining of brand
- single bad event can affect all brand’s products
Ways to build a brand
- 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)
how social trends are reflected in changes in branding and promotion
- 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)
define market research
collection and analysis of data to gain a better understanding of the target market-(tastes and trends)
examples of primary data
- focus groups - group of people asked about perception and opinions about a product, advertisement, new idea or packaging
- test marketing - test product on sample, based on reaction –> launch or scrapped
- experiments and consumer panels - experts answer questions about their experience with product
- loyalty cards - can track consumer buying behaviour, allow for further segmentation (target customers with tailored offers)
- observation (watch consumer behaviour)
- interviews (gain reasoning about products)
- surveys
examples of secondary data
- government data - detailed insights into many industries and sectors
- competitor reports on website
- business’ own previous data
- trade press - professional business publishers provide industry and market insight
what is a trade press, as a form of market research
professional business publishers provide industry and market insight
One benefit of primary that is a negative of secondary research
Primary research isn’t available to your rivals
uses of market research
- quantify likely demand levels
- understand needs and wants so product can be tailored
- insight into trends of consumer behaviour –> can identify opportunities
- determine competition levels and discover gaps in market
- minimise risk
- inform marketing mix (pricing, promotion, product and place)
drawback of market research
- can hinder innovation
e. g. Ford said that if he asked his consumers they would’ve wanted a faster horse not a car - predictions aren’t set in stone
- waste of resources if market is constantly changing
- depends heavily on intrepretation of data
- –> therefore skill of management (suggestions not solutions)
how does technology support market research
websites (cookies and polls)
social networks (likes, customer feedback, reviews)
databases (discovering patterns in trends in large dataset AKA data mining)
google (easy, free)
