Paper 1- Theme 1.1- Meeting customer needs ✅

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)
• forecast with primary data, and have skilled staff to interpret data
• establish high brand loyalty

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- 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

Question 10

3 Ways businesses can react/adapt to change in market or competitive environment

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 and create an image in the consumers mind

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 p/s , in order to differentiate it from competition and create a distinct image in the consumers mind

Question 13

Benefits of a business building a brand

Answer 13

• 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 14

Disadvantages of Branding

Answer 14

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

Question 15

Ways to build a brand

Answer 15

• 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 16

how social trends are reflected in changes in branding and promotion

Answer 16

• 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 17

define market research

Answer 17

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

Question 18

examples of primary data

Answer 18

• 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

Question 19

examples of secondary data

Answer 19

• 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
• google

Question 20

what is a trade press, as a form of market research

Answer 20

professional business publishers provide industry and market insight

Question 21

One benefit of primary that is a negative of secondary research

Answer 21

Primary research isn’t available to your rivals

Question 22

uses of market research

Answer 22

• 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)

Question 23

drawback of market research

Answer 23

• 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)

Question 24

how does technology support market research

Answer 24

websites (cookies and polls)

social networks (likes, customer feedback, reviews)

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

google (easy, free)

Question 25

What is market segmentation

Answer 25

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

Question 26

common characteristics that split the market, for market segmentation

Answer 26

demographic - social characteristics (age, gender, personality) geographical- (where they live) income levels - and their profession behavioural - reasons, frequency and method of purchase

Question 27

why is market segmentation useful

Answer 27

- understand needs of wants of each subgroup of consumer so can create separate products for each subgroup • can identity gaps in the market where a subset of customer's needs aren't being targeted --> first mover advantage - targeted and differentiated advertising --> more effective - focus on most profitable markets * small firms can focus on smaller subgroups and specialise * can use price discrimination, as a result

Question 28

cons of market segmentation

Answer 28

* high cost of researching all subsets of market * tailored and targeted advertising expensive --> lack marketing EoS *  production and storage costs higher --> holding more stock * R&D costs of developing new products to suit needs

Question 29

define market orientation

Answer 29

-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 30

pros and cons of market orientation

Answer 30

pro - increase customer satisfaction, as needs met - reduces 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 - ignores competitor actions (may have very smiler product with first mover advantage already

Question 31

define product orientation

Answer 31

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 32

pros and cons of product orientation

Answer 32

pros - more money spent on improving product, not on understanding market (add value) - first mover advantage from new R&D breakthroughs - efficient use of resources - --> focus on distinctive capabilities, so have competitive advantage cons - higher risk as products may not have demand (no market for it) - R&D may prove costly

Question 33

define mass market

Answer 33

a large market, where there are many similar products that suit a large number of customers

Question 34

define niche market

Answer 34

a small subset of a larger market where products are tailored to customers' specific needs and wants

Question 35

features of mass market

Answer 35

- high EoS - minimal differentiation - mass marketing - high competition

Question 36

features of niche market

Answer 36

- lower EoS - higher differentiation - targeted marketing - less competition

Question 37

pros of first mover advantage

Answer 37

- set industry standards - establish brand reputation - create customer relationship - extensive supplier options ---> have high bargaining power over them

Question 38

cons of first mover advantage

Answer 38

- may lead to rushed design or finish (if desperate to be first mover) - competitors may pick apart flaws, improve and enter market with better product - high advertising cost and time consuming ----> educating customers about product, its uses and benefits