1.1 MEETING CUSTOMER NEEDS

1.1.1 THE MARKET

MASS MARKETING (lower price)

- The marketing of a product to ALL possible customers the same way

NICHE MARKETING (higher price)

- The marketing of products to a PARTICULAR, SMALL SEGMENT of the market e.g. billboards/online advertising -> more tailored and beneficial and most likely to recieve a positive response e.g. Billy and Maggot -> healthy food for dogs.

MARKET SIZE

- Is a calculation or estimation of the total sales of all businesses in the market. which can be completed via the following:

VALUE - total amount spent by consumers

X

VOLUME - physical quantity of products produced and sold

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1.1.1 THE MARKET

MARKET SHARE

- is the proportion of a particular market that is held by a business or a product. shown as a percentage.

     SALES OF A BUSINESS

     -------------------------------------         X100

TOTAL SALES IN THE MARKET

WHAT IS A BRAND?

A brand is a Name, Term, Sign, Symbol, Design or any other feature that allows consumers to identify the goods and services of a business and to differentiate from those of the competitiors.

The 2 Main Types Of Brands:                                                                                           MANUFACTURER BRANDS: brands created by producers of the products or services         OWN LABEL BRANDS: products or services manufactured specifically for retailers 

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1.1.1 THE MARKET

WHAT IS A BRAND? (continued)

A brand helps BUILD LOYALTY and ADDS VALUE towards the business alowing them to charge higher prices.

OTHER BENEFITS:

BRAND EXTENSION: consumers familiar or loyal to the brand are more likely to be willing to try new products;

e.g. Virgin Media Customers join Virgin Active

BRAND VALUE: the brand name itslef adds value to the product;

e.g. Holister Jacket vs non - branded Jacket

BRAND PERSONALITY: brands almost take on a persona of their own.

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1.1.2 MARKET RESEARCH

PRODUCT ORIENTATION

- is an inward approach to new product developement where the key focus is on what products can be made and the production process

- informed by scientific research and technical development (R&D)

- the business will concentrate on producing high quality products and then later look to create a market for them

- most common with technologically advanced products were the consumer does not have the technical knowledge or insight to realise that this product could  exist or that they would want it

MARKET ORIENTATION

- is an outward looking approach to new product development where the key focus is on what products the consumer wants (informed by market research)

- the business will concentrate on understanding the needs of the consumer and then adapting or producing products to meet these needs.

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1.1.2 MARKET RESEARCH

MARKET RESEARCH

- the collection and analysis of data and information to inform a business about its market

- DATA collected and analysed is used to:

  • identify and anticipate customer needs and wants
  • quantify likely demands
  • gain insight into consumer behaviour

PRIMARY MARKET RESEARCH [field research]

- involves the collection of first hand data that did not exist before and therefore it is original data

SECONDARY MARKET RESEARCH

- is research that has already been undertaken by another organisation and therefore already exist

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1.1.2 MARKET RESEARCH

PRIMARY RESEARCH                                                   SECONDARY RESEARCH

- surveys and questionaires                                         - national and local govt

x postal                                                                           - market researching organisation

x telephone                                                                        x MORI

x face - to - face                                                              - professional bodies

x online                                                                               x ACCA

                                                                                         - newspapers and magazines

SECONDARY RESEARCH:

- may not be necassary to you 

- may be outdated

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1.1.2 MARKET RESEARCH

QUALITATIVE and QUANTITATIVE data

QUALITATIVE

- in depth

- time consuming

QUANTITATATIVE

- statistical 

- not in depth

LIMITATIONS OF MARKET RESEARCH

- accuracy of research                                    - data may be outdated

- financial and opportunity costs                    - BIAS: questionnair bias, sampling bias,                                                                                          respondant bias e.g. exaggeration

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1.1.2 MARKET RESEARCH

VALUE OF SAMPLING

SAMPLING - a group of subjects that has been chosen from a larger group, the population, for investigation

THE VALUE OF SAMPLING DEPENDS ON

- the sample technique used

- how the sample was carried out

- the size of the sample

TYPES OF SAMPLING TECHNIQUES

RANDOM - any individual chosen entirely by chance and has an equal chance of being selected

QUOTA - split into segmented subgroups e.g. age

STRATIFIED - combination of the two above

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1.1.2 MARKET RESEARCH

MARKET SEGMENTATION

  • occurs when the market is split into subgroups of consumers with similar chasracteristics
  • this helps to identify different types of consumer and different needs

SEGMENTATION METHODS INCLUDE:

- demography    - income

- geographic      - behavioural

1. DEMOGRAPHIC SEGMENTATION

  • identifies subgroups of the population based on theit demographic profile or characteristics

     x race    x age    x gender    x religion    x level of education

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1.1.2 MARKET RESEARCH

GEOGRAPHIC SEGMENTATION

- these define market categories based on where people live e.g. regions, cities, neighbourhoods

  • people in different geographical areas display  different  characteristics and needs e.g.

       x south east of england is generally warmer than scottland

       x tastes and traditions vary between countries

 BEHAVIOURAL SEGMENTATION

- characterises subgroups based on the behavioural patterns of the consumer rather than their characteristics

x reasons for making purchases e.g. needs, emotional, rewards; frequency of purchase e.g. heavy user or light user; brand loyalty; method of purchase e.g. online

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1.1.2 MARKET RESEARCH

INCOME SEGMENTATION

- identifying subgroups of the market based on their levels of income and profession

x a comman method uses socio-economic groupings

A - Higher managerial such as chief executives and directors

B - Intermediate managerial such as solicitors, accountants and doctors

C1 - supervisory, clerical or junior professionals such as teachers and junior managers

C2 - skilled manual such as plumbers, electricians and carpenters

D - semi and unskilled workers such as window cleaners

E - pensioners, casual workers, students and unemployed

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1.1.2 MARKET RESEARCH

USE OF ICT TO SUPPORT MARKET RESEARCH                                                                           - information communication technology has many uses in supporting both the collection and analysis of research data:

1.Websites

2.Social Networking

3.Databases

WEBSITES:                                                                                                                                          - invite feedback through blogs; cookies; online polls and surveys

SOCIAL NETWORKING                                                                                                                      - reviews; blogs; likes/dislikes; viral marketing; customer feedback

DATABASES                                                                                                                                        - data mining; trends

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1.1.2 MARKET RESEARCH

BENEFITS OF MARKET SEGMENTATION 

There are a number of benefits for a firm that uses market segmentation as part of its market research:

- advertising can be targeted to specific market segments so that advertising spend is more effective

- the most profitable and least profitable customers can be identified

- least profitable workers can be avoided

- it becomes easier to identify new products

- it helps the firm improve existing products and customer service

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1.1.3 MARKET POSITIONING

POSITIONING

- is where a product is placed in the market relative to its competative

- it can be achieved by changing elements of the marketing mix {place, price, product, promotion} to meet the needs of the target  market

INFLUENCES ON POSITIONING INCLUDE:

  • internal constraints e.g. budgets
  • internal strengths e.g. creativity and innovation
  • market conditions e.g. degree of competition
  • external enviroment e.g. state of the economy
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1.1.3 MARKET POSITIONING

MARKET MAPPING?

- the market map illustrates the range of POSITIONS that a product can take in a market based on two dimensions that are important to a consumer

  • it is a diagrammatic technique that enables businesses to display the perceptions of customers
  • compares different variables regarding products and consumers
  • it can be used to analyse consumer buying habits and preferences

             - for example it may compare the price of a good with the quality of that good

  • it can be used to identify what segment of the market is under provided for and looks at producing a product to fill that gap
  • typically, products are compared between all competitors within a market
  • gives a firm real insight into the competition within the same market as its own product
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1.1.1 THE MARKET

DYNAMIC MARKET

- a market which has rapid or continuous change

  • online retailing
  • market change (the development of an iphone)
  • innovation and market growth
  • adapting to change

- The environment is dynamic

  • Social trends
  • Changes in technology
  • Competitive environment
  • Consumer taste
  • Businesses have to adapt their marketing in response to these changes 
  • A business that fails to keep up with trends in the market will soon lose competitiveness
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1.1.1 THE MARKET

ONLINE RETAILING

- The process of buying and selling goods and services over the internet

  • Also known as e-commerce or e-tail

- Offers greater convenience to the consumer

  • Can shop 24/7
  • Breaks down geographical barriers

- Offers opportunities to businesses

  • Lower overhead costs
  • Access to a wider market

- May be used as part of a multi-channel distribution strategy

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1.1.1 THE MARKET

HOW MARKETS CHANGE

FACTORS:

demographics 

technology 

competition

enviroment

ethics

social

economy

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1.1.1 THE MARKET

INNOVATION AND MARKET GROWTH

- Market growth is the percentage increase in the size of the market

> Calculated as: change in size of market / original size x 100

  • Innovation is when a new idea or invention is launched onto the market normally with a view to financial gains

HOW COMPETITION AFFECTS THE MARKET

  • the price a business is able to charge
  • the buying power of the supplier
  • availability of substitute e.g. coca coca and pepsi cola
  • willingness and ability of new firms to enter the market

RISK AND UNCERTAINTY                                                                                                      both deal with unknowns and both decision making involves both risk and uncertainty.          taking a risk is measurable, umncertainty is not measurable therefore the outcome is unpredictable

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1.1.3 MARKET POSITIONING

WHAT IS MARKET MAPPING

  • The market map illustrates the range of "positions" that a product can take in a market based on two dimensions that are important to a customer

SOME POSSIBLE DIMENSIONS

Low Price       HighPrice

Basic Quality   High quality

Low volume    High volume

Necessity     Luxury 

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1.1.3 MARKET POSITIONING

EXAMPLE OF A MARKET MAP:

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1.1.3 MARKET POSITIONING

TAKING CARE WITH A MARKET MAP

ADVANTAGES

- Helps spot gaps in the market

- Useful for analysing competitors

- Encourages use of market research

DISADVANTAGES

- Just because there is a 'gap' doesn't mean that there is demand

- Not a guarantee of success 

- How reliable is market research?

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1.1.3 MARKET POSITIONING

COMPETITIVE ADVANTAGE OF A PRODUCT OR SERVICE

- Competitive advantage is a feature of a business that allows it to perform more successfully than others in the market

  • Same quality of product at a lower price
  • superior product achieved through differentiation

- Factors contributing to a competitve advantage include:

  • Product differentiation
  • Ability to add value
  • Operational efficiency
  • Position relative to competitors
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1.1.3 MARKET POSITIONING: MICHAEL PORTER

MICHAEL PORTER'S COMPETITIVE ADVANTAGE

X Michael Porter's generic strategy states that a firm can enjoy a competitive advantage if it is either:

  • Lowest Cost

OR

  • Hghest differentiation
  • Porter's basic premise is to be one thing or the other and not stuck in the middle  
  • He emphasises the danger of the middle ground, almost as if it is a "no mans land" where     there is little protection                                                                                                  
  • He believes that firm must put their flag in one camp and remain clearly focused on this
  • Marketing messages must be clear and non contradictory:
  • TESCO: "Good food that costs less"          M&S: "its not just food its M&S food"
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1.1.3 MARKET POSITIONING: MICHAEL PORTER

PORTER'S GENERIC STRATEGY

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1.1.3 MARKET POSITIONING: MICHAEL PORTER

LOW COST

  • Porter states that a strategy of low cost can be successful in either a mass or niche market
  • He refers to this as cost leadership, in the mass market, and focused cost leadership, in a niche market
  • Cost leadership means being able to offer your product or service at the lowest cost possible

- Price is a key element in the marketing mix

- Both operational and finacial objectives must focus on cost minimisation

- A firm that operates with the lowest cost can charge the lowest prices but does not  necessarily have to

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1.1.3 MARKET POSITIONING: MICHAEL PORTER

DIFFERENTIATION

  • Porter states that a strategy of differentiation can be successful in either a mass or niche market
  • He refers to this as differentiation, in the mass market, and focused differentiation, in a niche market
  • Differentiation means being able to offer a product or service that stands out from the competition

- Product - has to appear better than the competition, USP, patents

- Promotion - create desire, exclusitivity, brand loyalty

- Operational objectives will focus on R&D and innovation

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1.1.3 MARKET POSITIONING: MICHAEL PORTER

PRODUCT DIFFERENTIATION

- Is having a unique feature that makes a product stand out from other products in the marketplace

- A unique selling point (USP) is a feature that distinguishes a firms product from those of its competitors

  • Firms try to make their product different to the competition by adapting the actual product in some way or by distinguishing the product through advertising and branding

- Product differentiation allows a firm to:

  • charge a premium price
  • gain brand loyalty
  • add value
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1.1.3 MARKET POSITIONING: MICHAEL PORTER

ADDING VALUE

  • Added value can be measured in term of financial worth
  • The total value of inputs to a car might be worth £6000 in terms of metal, wages etc
  • The firm sells the car for £10000
  • Adding value of £4000

INPUT  ->  +  PROCESS  ->  =  ADDED VALUE  ->  OUTPUT

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