1.1 Meeting Customer Needs
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- Created by: Amy.w
- Created on: 11-12-21 14:08
What is the mass market?
The market aimed at the general population, e.g regular toothpaste
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What is the niche market?
A subset of the main market which addresses a specialist need, e.g. Sensodyne toothpaste for sensitive teeth
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What is a homogeneous market?
Similar products that compete in a market, e.g. different brands of yoghurt
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Advantages of operating in a mass market?
- Economies of scale
- Straightforward as everyone i easily targeted
- Large volume of sales means high revenues
- High revenues can be pumped into R&D
- Straightforward as everyone i easily targeted
- Large volume of sales means high revenues
- High revenues can be pumped into R&D
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Disadvantages of operating in a mass market?
- High competition
- Homogeneous products need to be differentiated through marketing; expensive
- High volume production may not be flexible enough to keep up with changes in demand
- Homogeneous products need to be differentiated through marketing; expensive
- High volume production may not be flexible enough to keep up with changes in demand
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Economies of scale
Producing more products for a lower cost
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Advantages of operating in a niche market?
- Can charge premium price
- Easier to target customers
- Small scale production can be flexible
- Lower competition
- Easier to target customers
- Small scale production can be flexible
- Lower competition
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Disadvantages of operating in a niche market?
- Demand may not be constant therefore very risky
- Higher unit costs so no economies of scale
- Higher unit costs so no economies of scale
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Why is it profitable to operate in a niche market?
Customers are willing to pay a higher price to get exactly the right products
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What is market size?
Total of all sales of all producers in that market.
It can be measure in two ways:
- Volume of sales (quantity of products sold)
-Value (total amount spent by customers)
It can be measure in two ways:
- Volume of sales (quantity of products sold)
-Value (total amount spent by customers)
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Market share formula
(the proportion (%) of market that is taken by a business, product or brand)
sales of x
----------------------------------- x100
total sales in whole market
sales of x
----------------------------------- x100
total sales in whole market
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What does a business do with the information about market size?
The business can work out if the market is expanding or contracting
They can calculate their market share in relation to competitors
They can look at other markets e.g. China or emerging economies and see if they are worth entering
They can calculate their market share in relation to competitors
They can look at other markets e.g. China or emerging economies and see if they are worth entering
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What is a dynamic market?
A dynamic market is one that is subject to rapid or continuous change
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Why is online retailing a dynamic market?
Online retailing is a dynamic market as it is constantly changing due to advances in technology
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Advantages of online retailing?
-Shops open 24/7
- Orders can be taken automatically without the need for staff
- Can reach international markets easily
- Low overheads as no need for a shop premises
- Stock can be easily withdrawn or updated to keep up with dynamic markets
- Orders can be taken automatically without the need for staff
- Can reach international markets easily
- Low overheads as no need for a shop premises
- Stock can be easily withdrawn or updated to keep up with dynamic markets
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Disadvantages of online retainling?
- Issues with sending goods back can put customers off
- Issues with online security may put off older customer and those not keen on sharing bank details
- Owners need IT skills
- Hard to drive traffic to sights
- Issues with online security may put off older customer and those not keen on sharing bank details
- Owners need IT skills
- Hard to drive traffic to sights
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How does competition affect the market?
- More competition means a business needs to be very efficient
- Business needs to listen to consumer needs and wants
- A business must be less wasteful
- A business needs to produce a good quality product or service to prevent customers going elsewhere
- Business needs to listen to consumer needs and wants
- A business must be less wasteful
- A business needs to produce a good quality product or service to prevent customers going elsewhere
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What is business risk?
The possibilty that a business will have lower than anticipated profits or experience a loss rather than taking a profit
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What is lack of job security?
Starting up a new business may result in someone leaving a secure job. This is a financial risk as there is no guaranteed income to ensure bills and other costs are covered
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What is financial risk?
A business owner may put their life savings into a business which could be lost if the business fails
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What is uncertainty?
When businesses are unable to predict external shocks or future events
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What is uncertainty with spending decisions?
As uncertainty about future economic conditions changes over time, it can affect spending decisions
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What is product orientation?
When the business only looks at a product or the production processes when deciding what to make next
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When can a business be product orientated?
- When there is low competition in the market
- When there is limited customer knowledge
- When there is a low disposable income of consumers, when funds are limited customers will buy what is available
- When there is limited customer knowledge
- When there is a low disposable income of consumers, when funds are limited customers will buy what is available
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What is market orientation?
When the consumers are the most important factor when providing products for the market, the business has a sensitivity to customers requirements. A market orientated business will focus on the needs of the consumer
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What are questionnaires
- Questions that can be asked to potential customers.
- They can be open or closed questions and
- They can gather both qualitative and quantitative data
- They can also be used to measure customer satisfaction so the business can see what they can imp
- They can be open or closed questions and
- They can gather both qualitative and quantitative data
- They can also be used to measure customer satisfaction so the business can see what they can imp
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What are observations?
- A business can observe customers when they shop from them
- For example, a restaurant can observe customers reactions when they try a new product
- A retail shop can observe where customers are first drawn to when they entering the store, and the route
- For example, a restaurant can observe customers reactions when they try a new product
- A retail shop can observe where customers are first drawn to when they entering the store, and the route
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What is an interview?
- Can measure reactions to new tasks or ideas that the business is having
- They can be held face to face or over the phone
- They can be held face to face or over the phone
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What is a test market?
If a new product is invented, the product may be offered to a carefully chosen sample and based on the reactions, the product will be either launched or scrapped
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What is a focus group?
A group of target market demographic respondents are chosen to take part in a product trial
They may use the product over time and then get together in a group to discuss their thoughts on the product
They may use the product over time and then get together in a group to discuss their thoughts on the product
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What is primary research?
- Primary research is collecting data first hand
- This means NEW data is gathered for the benefit of the business
- This data will be specific to the needs of the business
- This means NEW data is gathered for the benefit of the business
- This data will be specific to the needs of the business
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What is secondary market research?
- Secondary research is gathering data which already exists
- It is also known as desk research
- It is also known as desk research
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What are government sources?
- Office of national statistics (ONS) is very useful demographic information and data on the market or industry that the business is in
- Information can be used to make decisions about expanding overseas for example
- Department for Business, Energy &
- Information can be used to make decisions about expanding overseas for example
- Department for Business, Energy &
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What are trade publications?
- Trade journals cater to a very specialist market
- Information on competitor activity such as promotions
- News specific to the industry
- Helps small businesses stay in touch with trends in the market
- Information on competitor activity such as promotions
- News specific to the industry
- Helps small businesses stay in touch with trends in the market
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What are market reports?
- Mintel has a global team of trend analysts constantly assessing change in culture, economy and society.
- Reports cost £1,000 - £3,000
- Data can be used from the reports to create ad campaigns and to get first mover advantage in a marketplace
- Sav
- Reports cost £1,000 - £3,000
- Data can be used from the reports to create ad campaigns and to get first mover advantage in a marketplace
- Sav
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What are internet sources?
- The Internet is an ideal way to research competitor websites, articles, publications, annual accounts etc.
- It is a useful method of quickly gaining industry information
- Social networks, blogs, and other forms of social media have emerged as foru
- It is a useful method of quickly gaining industry information
- Social networks, blogs, and other forms of social media have emerged as foru
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What is qualitative research?
- Gathers and explores feelings and thoughts of customers
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What is quantitative research?
Gathering and measuring responses that can be displayed in charts and graphs
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What is market segmentation?
Splitting the market into smaller groups to target people more specifically
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How can a business segment by location?
- A business may decide to sell its product in just one country, one region (like the Midlands), or in an even smaller area
- A business may target its product at rural rather than urban areas
- A business may target its products depending if the mark
- A business may target its product at rural rather than urban areas
- A business may target its products depending if the mark
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How can a business segment by demographics?
- Statistical data relating to the population and particular groups within it
- For example market segmentation helps book publishers target customers as we won’t all read the same books
- For example market segmentation helps book publishers target customers as we won’t all read the same books
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How can a business segment by lifestyle?
- Customers can be grouped according to the way they lead their lives and the attitudes they share
- Young professionals may drive a sports car because of the image they want to project
Parents have to provide for their children so they will need a fam
- Young professionals may drive a sports car because of the image they want to project
Parents have to provide for their children so they will need a fam
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How can a business segment by income?
- The population can be segmented according to annual salary (e.g. £15,000, £30,000 etc.) or type of job and social class
- The population can also be divided into; low income, middle income and high income
- Establishing a group's disposable income is
- The population can also be divided into; low income, middle income and high income
- Establishing a group's disposable income is
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How can a business segment by age?
- Market segmentation could be on age groups;
- 0-10, 11-16, 17-19, 20-25, 26-35, 36-50, 51+
- Each age group will have different needs and wants in terms of products and services and the business can develop a targeted marketing strategy to appeal to
- 0-10, 11-16, 17-19, 20-25, 26-35, 36-50, 51+
- Each age group will have different needs and wants in terms of products and services and the business can develop a targeted marketing strategy to appeal to
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How can a business segment by gender?
- Many products are aimed at either men or women
- A business may produce or adapt its products to ensure they can be marketed effectively
- For example razors made originally for men now adapted for women
- A business may produce or adapt its products to ensure they can be marketed effectively
- For example razors made originally for men now adapted for women
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What is market mapping?
The process of finding the variables which differentiated brands in a market and then plotting them onto a map
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Why do business use market mapping?
- To identify a gap in the market
- It can be used by start up businesses to identify where they can position themselves to offer a product that doesn't already exist
- It can also be used by traditional brands to reposition itself in the market
- It can be used by start up businesses to identify where they can position themselves to offer a product that doesn't already exist
- It can also be used by traditional brands to reposition itself in the market
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How can a business earn a competitive advantage through price?
- Some businesses chose a low cost model to compete on price
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How can a business earn a competitive advantage through added value?
Adding value is additional features or economic value that a company adds to its products and services before offering them to customers
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How can a business earn a competitive advantage through innovation?
A business can improve their products to gain a competitive advantage
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How can a business earn a competitive advantage through reliability?
Customers want a product that won't break on them
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How can a business earn a competitive advantage through quality?
Products need quality to match the price that they charge
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What is product differentiation?
Where a product is different from the competition
Consumers must be able to perceive this difference and may be willing to pay a premium price for the product
Consumers must be able to perceive this difference and may be willing to pay a premium price for the product
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What are 4 methods of product differentiation?
- Reputation
- Customer service
- Value for money
- Product features
- Customer service
- Value for money
- Product features
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What is added value?
The difference between the price that is charged for a product and the cost of inputs required to make the product or service
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How can businesses differentiate their products through design?
They can develop new technology or design features to make their product unique
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How can businesses differentiate their products through production?
The business can differentiate by optimizing efficiency and quality
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How can businesses differentiate their products through marketing?
The business ca create an image for themselves that makes the product more desirable
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How can a business use ICT to support market research?
Websites can automatically generate customer questionnaires. Social networking can create bonds between the consumer and the brand Databases provides the retailer with a multi-million user database
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What are the limitations of market research?
Accuracy - A large sample size can still have inaccuracies and take a long time. Small ones may not represent the population.
Bias - Samples may be biased and therefore won't be as reliable
Bias - Samples may be biased and therefore won't be as reliable
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Other cards in this set
Card 2
Front
What is the niche market?
Back
A subset of the main market which addresses a specialist need, e.g. Sensodyne toothpaste for sensitive teeth
Card 3
Front
What is a homogeneous market?
Back
Card 4
Front
Advantages of operating in a mass market?
Back
Card 5
Front
Disadvantages of operating in a mass market?
Back
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