1.1 Meeting customer needs

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  • Created by: AmyBennet
  • Created on: 27-03-17 01:43
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  • 1.1 Meeting customer needs
    • 1.1.1 The Market
      • Mass markets and niche markets
        • Mass markets
          • A mass market is where a business sells to the largest part of the market, where there are many similar products on offer
          • Advantages of a mass market
            • Economies of scale
            • Appeals to more people so less risky
            • Customer needs and wants are less specific
            • Likely to promote more widely
          • Disadvantages of a mass market
            • Lots of competition
            • Can't charge very high prices as they have to remain competitive
            • Need to sell more due to narrower profit margins
            • Hard to differentiate
        • Niche markets
          • Where a business targets a smaller segment of a larger market where customers have specific wants and needs
          • Advantages of a niche market
            • Less competition
            • Clear focus
            • Builds market expertise
            • Can charge a higher price
            • Profit margins are higher
            • Customers tend to be more loyal
          • Disadvantages of a niche market
            • Lack of economies of scale
            • Risk over dependence on a single product or service
            • Likely to attract competition if successful
        • Market size
          • Value
            • Total spent by customers buying products
          • Volume
            • Physical quantity of products sold
        • Market share
          • (Sales of a business/ total sales in the market) x 100
        • Uses of Branding
          • Differentiates products from competiton
          • Create customer loyalty
          • Helps product recognition
          • Develops an image
          • Charge a premium price
      • Dynamic markets
        • Online retailing
          • Benefits of online retailing
            • Retailers can market their goods towards people who prefer to shop from home.
            • Easier to gather personal information from customers
            • Selling overhead costs are lower
            • Marketing costs can be lower
            • Open 24/7
            • Can reach more customers
            • Stores can be updated more frequently
            • Can buy from anywhere in the world
        • How markets change
          • New markets
          • The nature of markets
          • The size of markets
        • Innovation and market growth
          • Innovation is where businesses can create new needs and wants and meet them with new products
          • What causes growth in existing markets?
            • Economic growth
            • Innovation
            • Social change
            • Changes in legislation
            • Demographic changes
        • Adapting to change
          • Flexibility
          • Market research
          • Investment
          • Continuous improvement
          • Developing a niche
      • How competition affects the market
        • Businesses
          • lower prices
          • Make products seem different to those of competitors
          • Offer better-quality products
          • Advertise more powerfully
          • Offer extras like better customer service
          • May try to reduce competition by taking over competitors
          • May try to cause obstacles for rivals
        • Consumers
          • Benefit when there is more competition in a market
          • More choices
          • Lower prices
          • Higher quality
          • Government ensures there's competition
      • Risk and uncertainty
        • Risk is where an action is taken where the outcome is unknown, resources are committed which can be lost
        • Uncertainty is due to external influences, beyond the control of a business, that impact the market
    • 1.1.2 Market Research
      • Product and market orientation
        • A product-orientated business is one which focuses on the production process and the product itself
        • A business that is market-orientated is one which continually identifies the needs of customers
          • Can respond more quickly to market changes
          • Can anticipate market changes
          • Can judge whether a product will be a success more easily
          • Can respond more strongly to competition
      • Primary and secondary market research used to:
        • identify and anticipate customer needs and wants
        • quantify likely demand
        • Gain insight into customer behaviour
      • Limitations of market research
        • Human behaviour- the opinions and behaviours of the consumers surveyed may change from what they say during research
        • Sampling and bias- not everyone in the population can be asked and the sample may not be representative of the total population's views
        • Questions need to be carefully written to avoid being leading
      • The use of ICT to support market research
        • Company websites- these can provide access to online surveys, these can be targeted to consumers depending o their perceived interests
          • these are cheap to administer and can be made available to respondents 24/7.
        • Social networking- this helps a firm gain an insigh into the mind of the consumer
        • Databases- allows information to be stored which can sort people ito demographics
    • 1.1.3 Market positioning
      • Market mapping
      • Competitive advantage of a product or service
        • A set of unique features of a company and its products which are perceived by customers as significat and as superior to competition
        • Can be developed in a number of ways:
          • Product quality
          • Product design
          • Promotion
          • Customer service
          • Delivery times
          • Economies of scale
          • Flexibility
          • Ethical stance
          • Focus on a particular market segment
      • The purpose of product differentiation
        • Flexible pricing: A business can charge a higher price if they seem different to competition
        • Recognition: A brand can gain recognition in the market if they differentiate
        • Brand development
        • Overcoming competition
        • Extended product range: Businesses can serve more than one market in the same industry
      • Adding value to a product or service
        • Where a product provides extra features for a customer that exceed expectations.
        • A business may add value by putting together a package of benefits
        • Very good customer service can help to add value
        • Packaging and branding ca add value by making a product seem more expensive
        • Frequent buyer offers reward customers for purchasing
        • Customisation
  • Can be developed in a number of ways:
    • Product quality
    • Product design
    • Promotion
    • Customer service
    • Delivery times
    • Economies of scale
    • Flexibility
    • Ethical stance
    • Focus on a particular market segment

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