Theme 1 - Marketing ( meeting customer needs)

Question 1

What is marketing?

Answer 1

Marketing is how u promote a product

Question 2

What is a mass market?

Answer 2

A mass market is a market that is aimed at the general population and have a wide range and number of consumers.

Question 3

What are the benefits and drawbacks of Mass markets?

Answer 3

Benefits:
-A wide range of standard products to a large range of consumers
-sell to more consumers
-sales volume is higher
-benefit from economies of sale
-high revenue
- products sold cheaper

Drawbacks:
-Needs lots of capital
-New/small businesses find it hard to succeed
-lots of competition
-Homogenous products need to be differentaited which can be expensive
-high volume production may not be flexible enough

Question 4

What are niche markets?

Answer 4

Niche markets are a small specalized market for particular products or services and have a smaller number of and range of consumers

Question 5

What are the benefits and drawbacks of a niche market?

Answer 5

Benefits:
-Less competition
-Can charge higher prices
-Sell specialised products
-easier to target customers
-Small scale production more flexible

Drawbacks:
-Can quickly lose sales if there is a change in market
-Very risky as demand isnt constant
-Higher unit costs so no economies of scale
-Smaller market size so fewer potential customers.

Question 6

What is Market size?

Answer 6

Market size is the total value of ales in a market over a certain period (a year).

Question 7

What is Market share?

Answer 7

Market share of a business is the proportion of the total market that a business holds

calc: (Sales of a product/Total market sales X 100)

Question 8

Why is Branding important within a market?

Answer 8

Branding creates a clear and obvious logo name or statement that customers can instantly recognise and differentiate from competitors.

Question 9

What is a dynamic market?

Answer 9

A dynamic market is a market that changes and evolves rapidly

e.g changes in consumer preferences, trend changes, innovation, e-commerce

Question 10

What is online retailing?

Answer 10

Online retailing is selling products via the internet

e,g through apps/websites

Question 11

What are the benefits and drawbacks of online retailing?

Answer 11

Benefits:

• A businesses costs are lower as it doesnt need
  to have a physical shop or hire as many staff and lower costs allow it to sell lowered prices and make more profit
• Customers can order any time they want and from anywhere in the world
• Customers can easily compare prices between different firms and find lower prices

Drawbacks:

• Businesses face more competition as customers can easily shop around. Firms try to combat this by making shopping expierences easier ( saving details)
• Some consumers like to see products before they buy and some like to speak to staff ( Free returns and online chat services)
• Businesses need to make sure their customers personal details are protected from cyber criminals and that tehy arent processing fraudulent transactions

Question 12

What is direct competition?

Answer 12

Direct competition is when two or more businesses sell similar products that appeal to the same group of customers.

Question 13

What is indirect competition?

Answer 13

Indirect competition is when two or more businesses sell products that are different but they are competing for the same customers.

Question 14

How does competition effect the marketing mix?

Answer 14

Product- competition means that firms need to make sure that the product theyre providing is good quality over competitors. Also need to make sure that their products distinctive from competitors. requires lots of innovation

Promotion- Firms need to try really hard to get their product noticed and encourage customers to buy them over competitors. lots of promotional campaigns and advertising and heavy branding.

Pricing- Firms in competitive markets often use competitive pricing strategy meaning prices are based on competitors pricing or penetration pricing where they set low prices intially

Place- make sure their place is easy or easier for customers to acess over competitors products ( selling online.)

Question 15

How does competition affect the nature of ownership within a business?

Answer 15

New and smaller businesses struggle to survive in these competitive markets and stand out from bigger firms and win market share and will need to get investors to help raise more funds

Question 16

What are risks in a business?

Answer 16

A risk is when something could go wrong

When taking a risk a business needs to consider the different probablities of outcome and how to minimise the chance of a negative outcome occuring.

Question 17

What are uncertainties within a market?

Answer 17

Uncertainties are unexpected events

Firms know they could happen but its very difficult to predict if or when they will happen

( natural events)

Question 18

What is product orientation?

Answer 18

Product orientation is when a businesses approach where a company focuses heavily on the design quality or performance rather than what the customers want

Question 19

What is Market orientatition ?

Answer 19

Market orientation is when the business focuses heavily on selling products that match customers needs and preferences

Question 20

What is quantitative market research?What

Answer 20

Quantitative research produces numerical statistics ( facts and figures) often using questionaires with predetermined answers

Question 21

What is qualitative research?

Answer 21

qualitative research is based on the opinions of the consumers and doesnt produced numerical data often involving questions like how does this product make u feel

Question 22

What is primary research and how is it collected?

Answer 22

Primary research is collecting data by yourself and that hasnt been collected before

can be collected by:

• Questionaires or surveys
• Observations
  -focus groups
• test marketimg
  -sampling

primary data is specific and good for niche markets

Question 23

What is secondary research and how is it collected

Answer 23

Secondary research involves using data that has already been collected by someone else

Question 24

What is a representative sample

Answer 24

A representative sample is a subset of a larger population that accurately reflects the same demographic characteristics of the larger population.

• the sample needs to represent the market it must have similar proportions of people in demographics
• A larger sample will lead to a more representative sample therefore more accurate

Question 25

What is Bias?

Answer 25

Bias in business refers to the systematic errors in thought that affect the way people perceive and communicate information

• Market research needs to avoid bias to increase the amount of accruacy
• Questionaires/surveys should avoid bias questions
• Interviewers can be bias and influence the decision of the interviewee as they assume their answers arent socially acceptable

Question 26

Why do businesses use ICT to help them with market research?

Answer 26

Technology makes market research easier, cheaper and quicker.

It can be used to get alot more information than traditional research methods and it is easier to reach a wider sample of people

Question 27

How do businesses use Website for market research?

Answer 27

A business can use its own website for market research

• using the website as a platform for short surveys
• analysing the activity of people using the website ( what time of year/day they use the website, what visitors are clicking on when they use the website, how much visitors are likely to spend)

Question 28

What is Market segmentation?

Answer 28

Market segmentation means dividing a market into groups of buyers

consumers in each segment share one or more characteristic

Question 29

What are demographic segments ?

Answer 29

Age, Gender, socio-economic class

Question 30

What are geographic segments?

Answer 30

The market can be divided according to neighbourhood, city, county, country or world region e.g asia

A method used by multinational company as their customers have a range of cultures and lifestyles

Question 31

What are income segments?

Answer 31

Income segements e.g chanel makeup is aimed at customers with high incomes and superdrugs own brand is aimed at customers with a lower income

Question 32

What are behavioural segments ?

Answer 32

Behavioural segments are the ampunt of use e.g mobile phone suppliers market differently to heavy and light users

Lifestyle e.g busy young workers might need alot of quick microwavable meals

Hobbies and interests e.g snacks foods with high protein may be aimed at people who like playing sports

Question 33

What is a market map

Answer 33

A market map shows extremes for two measures that are important to customers
e.g low price vs high price, low quality vs high quality

laid out as a matrix and the products are positioned on it according to where they are judged to like between the two extremes

Question 34

What do market maps do?

Answer 34

Market maps can reveal gaps in the market

Market maps can show a business who its closest competition are

Market maps can show how much customers expect to pay

Question 35

What is an competitive advantage ?

Answer 35

A competitive advantage is a condition which allows a firm to generate more sales or be more profitable than its rivals

Question 36

What does a business need to do to gain a competitive advantage?

Answer 36

Lower costs-producing a similar product to a competitors product but at lower price

Product innovation- a business can aim to be the first in the market to introduce new functions for an existing good or create new unique product

Advertising and Marketing- the more a firm advertises a product the more sales

Product differentaition- a business distinguishes their product from competitors

Reliability and Quality- some consumers are willing to pay more for a product that is more reliable and better quality

Good customer service- polite, knowledgable staff can make a customer more likley to make a purchase

Convience- Anything the firm can do to make the buying expierence quicker and easier.

Question 37

What is a USP?

Answer 37

A USP is an aspect of the product that makes it really stand out from competitors

Question 38

What is added value to a business?

Answer 38

Firms can gain a competitive advantage by adding value

adding value means increasing the difference between the cost of making the product and the price of the customer pays

Question 39

What is the equation for added value ?

Answer 39

Added value = price product is sold for - cost of making the product

Question 40

How can added value be achieved ?

Answer 40

Added value can be achieved by increasing the cost of selling price or reducing the costs of making the product

Question 41

What is supply and demand?

Answer 41

Supply is the quantity of a product that suppliers are willing and able to supply to a market at given price at a particular time.

Effective demand is the quantity of a product that consumers want and are able to buy at a given price and particular time.

Question 42

What is the demand curve?

Answer 42

The demand curve

• usually slopes downwards
  -it shows as the price of a product increases the demand decreases
• at a higher price fewer buyers a willing to pay the price

Question 43

What is the supply curve ?

Answer 43

The supply curve

-usually slopes upwards
- shows the relationship between the price and quantity supplied
- the higher the price charged for a product the higher the higher the quantity supplied
-

Question 44

What is the equilibrium price?

Answer 44

Equilibrium price is when the amount demanded matches the amount supplied

when the quantity that buyers demand is the same as the quantity the sellers wish to supply

Question 45

What is a surplus?

Answer 45

A surplus occurs when the price increases

if the price of a product was increased this would cause movement to the right along its supply curve and left on the demand curve

This would mean the quantity demanded would be less than the quantity supplieds so would be excess supply a surplus

Question 46

What is a shortage?

Answer 46

A shortage occurs when a price decreases

If the price of a product was decreased this would result in a movement to the left along its supply curve and right along the demand curve so there would be excess demand so a shortage in the market

Question 47

What factors influence demand

Answer 47

Substitutes- the demand for a particular brand or product type can be affected by price change of a substitute product

Complementary products-these are products which are used together e.g printers and ink price of printers increase demand for ink would decrease

Consumer income- a higher income would lead to an increase in demand for luxury products

Fashion, consumer tastes and consumer preferences- demand relies on what consumers want

Advertising and Branding- aims to increase demand for a product

Demographics- changes in population would lead to changes in demand

Seasonal changes- demand for goods and services can change as the season changes

External shocks- The threat of war, diseases and extreme weather

Question 48

What factors influence supply?

Answer 48

Cost of productipm- if the cost of production increases then the profit made from selling price will decrease, fall in supply

Indirect taxes- these are taxes on goods and services gov can influence supply by changing taxation

Subsidies- a subsidy is money given to a business by government to help it with costs and encourage more supply.

New technology- can lead to more efficient production techniques and therefore cost savings. lower costs increase supply

Weather conditions- a severe change in weather can affect the supply of goods and services

External shocks- this includes shocks such as wars which can affect supply.