Businesses and their Customers

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Primary Research
Gathering new and in-existing data from people.
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Advantages of Primary Research
Because the company itself is gathering the data, it is only beneficial to that business. It can adapt to that particular business depending on what the data says.
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Disadvantages of Primary Research
Could be rushed/unreliable by the people doing it. Have to hire staff to conduct the research so it is expensive and time-consuming.
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Secondary Research
Gathering existing data from the internet, newspapers, reports etc.
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Advantages of Secondary Research
Quicker than Primary Research and less expensive.
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Disadvantages of Secondary Research
Not necessarily reliable/up to date sources or data. Already existing and public so other competitors can benefit from the same data.
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Quantitative Market Research
The collection of information about the market based on numbers.
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Advantages of Quantitative Market Research
It can be easily compared as numbers. Can be visually displayed in graphs or charts. Can identify trends (decreases).
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Disadvantages of Quantitative Market Research
Personal opinions cannot be displayed (do not get the 'why'). Could be unreliable and invalid e.g. sample size is too small.
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Qualitative Market Research
The collection of information about the market based on subjective factors such as opinions and reasons.
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Advantages of Qualitative Market Research
Can get personal opinions (can get the reason 'why'). More detailed to help with decision making. Use to modify decisions.
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Disadvantages of Qualitative Market Research
Harder to compare as everyone has a different opinion. Can't display as graphs or charts. Costly and time-consuming. Hard to come to a conclusion.
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Why do firms believe that regular market research is necessary?
Firms can find out what their customer's needs and wants are and whether it changes regularly. This gives them a good idea on whether or not they need to adapt their business or change products in order to satisfy customers so increasing sales.
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Functions of Focus Groups
Focus groups can give the company personal opinions on their business and more detailed answers. It is a primary research method which tests on a group of potential customers.
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Sampling
It is a method of primary research which tests a group of respondents or factors whose views or behavior should be a representative of the target market as a whole.
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Random Sampling
Each member of the target market has an equal chance of being chosen.
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Quota Sampling
A group consisting of several different segments sharing common features (e.g. age or gender). Non-randomly selected and a fixed percentage of the total target population.
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Target Sampling
Respondents selected according to particular features (e.g. age or gender). However, unlike quota sampling sub-groups and sizes are chosen specifically.
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What does SWOT stand for?
A business technique which helps to identify the Strengths, Weaknesses, Opportunities and Threats for a business.
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What is the Marketing Mix?
This is all the activities needed to market a product which includes the 4p's: Price, Product, Promotion and Place.
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What is the purpose of Advertising?
It introduces a new product to market, boosts the sales of an existing product by reminding consumers of its presence, it can be used to target a new segment and increase market share and it can provide information about a product.
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Why is price important in the Marketing Mix?
It is important because it will provide the company conducting the research what potential customers are willing to pay, what competition are offering for similar/identical products and costs of the actual product.
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Factors that affect the price
The cost of manufacturing the product, what the competition are offering for the same or similar products, what customers are willing to pay for the product, the type of product being marketed.
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Pricing Strategies-Competitor-based Pricing
Accepting what competition is charging for their products and adapting your pricing n order to gain an advantage.
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Pricing Strategies-Penetrative Pricing
When a business sets a low price at the beginning in order to enter an existing market and then increasing it later on when they are established in that market.
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Pricing Strategies-Skimming
When there is little or no competition (a new market) a business sets a relatively high price at the start and later on decreasing it when more competition enters the market.
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Pricing Strategies-Role of Supply and Demand
When there is a high demand of a particular product, then the business will charge a higher price. It takes into account the demand of the product and sets a price according to this.
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Pricing Strategies-Destruction Pricing
A strategy which is designed to destroy competitor's sales or even closing them down.
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Pricing Tactics-Psychological Pricing
Setting prices just below a whole number so consumers think the price is much less e.g. £2.99.
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Pricing Tactics-Loss Leader
A business that charges a few products that are extremely low prices and won't make a profit in order to attract people to buy these cheaper products and then going on to buy other items at normal price.
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How do Strategies change overtime?
If a company entered a market and depending on whether it was a competitive market or not, they might use Penetrative Pricing or Skimming and then move on to more consistent strategies such as competitor-based or cost-based pricing.
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Why is Promotion important in the Marketing Mix?
If not promoted correctly, customers may get the wrong idea about the product or not even know about it at all. Also, it introduces the product into the market but is an on-going process as customers needs to be reminded of the product.
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How does it link with the other P's in the Marketing Mix?
It links in with rice because it makes customers aware of the price whilst promoting and they can advertise the price in an attractive way with pricing tactics. It links in with product as it is promoting the product so customers are aware.
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Types of Advertising-Informative Advertising
This type is purely factual and gives out information. An advantage would be that it is clear and correct details about events or products. A disadvantage is that it doesn't persuade any customers-they would only buy or go if interested.
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Types of Advertising-Persuasive Advertising
Persuades members of the public to purchase whatever is advertised. An advantage is that it convinces people and buying this product, there lives would be better. But, the information may be exaggerated so people may be unhappy with the product.
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Types of Advertising-Generic Advertising
Advertising for a whole industry or a certain type of goods regardless where it is sold. An advantage is that it could attract customers that are actually interested. A disadvantage is that it may not appeal to other consumers.
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Sales Promotion-Special Offers
The customer is attracted to the product because of the low price or good offer and sales would therefore increase (e.g. buy one get one free).
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Sales Promotion-Discounts
This is where a percentage of the original price of the product is taken off so customers would be attracted by this as it will be a lower price (e.g. half price or 10% off).
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Sales Promotion-Customer Loyalty Cards
These encourage customers to shop at the same store because they get a build-up of points after shopping from that shop and can get money off, cash, presents etc.
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Sales Promotion-Price Guarantees
Customers are attracted to stores that offer prices that 'cannot be beaten' as they think they are getting the best price possible for the product.
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Why is Product important in the Marketing Mix?
If a company does not get this part right, they cannot promote or price it correctly if people do not like it. So this is a delicate part because the launching and profit-making of the product would be impossible if the product is wrong.
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The Product Mix
It is a blend of related products that can be marketed together to similar market segments. For example, a customer may be shower gel and then buy related products like shaving cream or razors from the same brand as they are familiar with the company
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The Product Range
It is a set of variations of specific product made to appeal to different market segments e.g. Kelloggs offer 'Frosties' for children and 'Special K' for health conscious people which shows a range of products but appeal to different market segments
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Branding
It involves create a unique name and image for a product that can be remembered by consumers. Branding aims to establish a differentiated presence in order to stand out so includes having a consistent colour, logo, packaging, etc.
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Product Packaging
It is important as it is the first thing the consumer sees so it has to be unique. It also has to co-ordinate with any advertising so consumer's recognise it and be practical so the product can be easily transferred and well protected.
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Product Differentiation
The process of making a product distinct from others in its market and to make it appeal to consumers. This may mean that the company will not only have ti make it different from competitors but their own products too.
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Design Innovation
This is important because when designing the product and packaging, the company has to produce a creative and innovative idea that will attract customers to their product.
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Why is Place important in the Marketing Mix?
It is where people are going to sell your product or service so it has to be appropriate for what the company is selling (e.g. a haircut would be sold at a salon). Also, Place ensures that the company considers where best they would get sales.
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Location-Local
If in the local town or village, the company will attract loyal, local customers and the whole village will know about it but will probably not attract tourists as they are more likely to visit a town-centre or city.
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Location-Town Centres
The company will attract tourists, passers-by as well as locals so in theory more sales however, there is more competition as the stores are in close proximity of each other.
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Location-Out of Town
Few people will know where this store is as it is in an unpopulated area so they won't attract passers-by. But there is more space and less competition but they will have to rely on advertising a lot more.
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What is e-commerce?
E-commerce is essentially trading over the internet and has become extremely popular over the past few years.
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Why is there a pressure to change to e-commerce?
Leading online stores such as eBay, Yahoo and Dell have been successful with sales so it tempts other businesses to change. Also, online websites such as Amazon have much lower prices on some products than chain stores so people shop online.
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Impact of using e-commerce
For businesses there will be more competition as they are competing on a global scale. For the consumer, it is quicker and more convenient to use as they don't even have to leave the house to shop.
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Advantages of e-commerce for businesses
It opens the market nationally and internationally so an increase in customers and in theory sales. Also, it reduces costs as they don't have to buy high street stores or planning permission.
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Disadvantages of e-commerce for businesses
Stiffer and a lot more competition because they are competing on a global scale. The move to e-commerce won't be cheap and may be difficult to do.
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Advantages of e-commerce for consumers
Greater choice because they aren't limited to shops. Competition is on an international scale so prices should be cheaper.
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Disadvantages of e-commerce for consumers
Fraud is more likely as some websites take your money but do not give you the product. Returning goods can be inconvenient or even impossible.
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Market Segmentation
The classification of customers or potential customers into groups or sub-groups (market segments), each of which responds differently to different products or marketing approaches.
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Types of Segmentation
Age, Gender, Culture/Ethnicity, Income, Socio-economic groups, Geographic location.
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Mass Market
A product or service aimed at lots of people e.g. family cars.
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Niche Market
Aimed at smaller groups of people (specialized products).
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Test Market
If a company is unsure how a new product will sell so they sell the product in a particular area or certain group to test whether the consumer like the product.
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Product Life-cycle-Stage 1:Research and Development
Takes place before the product is on the market. Market research and testing of the product will be carried out. This stage can be lengthy and expensive as no income is being made.
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Product Life-cycle-Stage 2:Introduction/Launch
This stage focusing on promoting and marketing the product in order to enter the market and make the public aware of it. At this point sales would be slow and wouldn't be making a profit as it has to cover the costs of the research.
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Product Life-cycle-Stage 3:Growth
Sales are growing rapidly as now people are aware of the product. Many would have tried it and would be starting to achieve a degree of loyalty. At this stage sometimes prices can be reduced especially if there is competition. Profit is made now.
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Product Life-cycle-Stage 4:Maturity
At this stage, sales are maintained and the product has an established price in the market. But, competition is more intense so it is difficult to increase sales so the product is heavily advertised once more.
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Product Life-cycle-Stage 5:Saturation
The highest point in the life of the product. Although competition is intense, no new competition is likely. The weakest products will drop out the market which may prolong this stage. Profits won''t increase. Sales have been pushed but new customers
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Product Life-cycle-Stage 6:Decline
Sales have fallen so much that the product is not making a profit. Advertising would not be successful but the company may push once more for sales. It can be a lengthy process and the company will have a new product to replace the declining one.
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Extension Strategies
A technique that companies use ti extend the life of a product. This could changing the product, exporting it or increasing advertising.
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Extension Strategies-Product
This could include altering the product, adding new features such as different colours, or introducing variations of the product in order to attract new customers.
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Extension Strategies-Price
Companies could lower the price which would attract customers looking for a cheap price for a certain product, therefore increasing sales for a period of time.
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Extension Strategies-Place
Companies could export the product and by introducing the product abroad, it will attract lots more customers and increase sales for a while. They could also use the internet to increase sales (if not already done).
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Extension Strategies-Promotion
Companies could re-launch the product/brand to a different market segment in order to attract new consumers. They could also increase advertising/sales promotion or alter/re-brand the packaging.
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Marketing Constraints-Laws
Prevents businesses from false advertising e.g. nutrition, ingredients weight.
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Marketing Constraints-Consumers
They may not like the marketing campaign of the business, may refuse to purchase the product, negative reviews/feedback/word of mouth, complain to the business/ASA.
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Marketing Constraints-Code of Practice
Rules which businesses voluntarily agree to keep but have no legal status (not by law).
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Regulatory Organisations-ASA
The Advertising Standards Authority monitor and control advertising as well as judging what can be broadcast, printed or displayed. They also respond to complaints by consumers.
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Regulatory Organisations-Trading Standards
They are operated by local councils, aim is to protect consumers and to encourage honest practices. Interested in marketing activities adhering to legislation such as the Trade Descriptions act.
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Regulatory Organisations-Consumer Legislation
Laws that protect consumers from being sold products that are: poor quality, wrongly described, incorrect weight, advertising misleading, sold on misleading credit terms (on the terms it has identified).
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When should companies react to Pressure Groups?
Strength of pressure group, If it will have a negative impact on the business (i.e. reputation), the impact on other stakeholder, the cost of doing what the pressure group wants.
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What can companies do when reacting to pressure groups?
React and make the changes as the pressure group demand, make alterations-compromise with the group and use it to their advantage, do nothing and ignore the group, fight back and make public statements.
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Card 2

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Advantages of Primary Research

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Because the company itself is gathering the data, it is only beneficial to that business. It can adapt to that particular business depending on what the data says.

Card 3

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Disadvantages of Primary Research

Back

Preview of the front of card 3

Card 4

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Secondary Research

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Preview of the front of card 4

Card 5

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Advantages of Secondary Research

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