1.1-Meeting customer needs

What is a local market?

A market where customers are short distance from suppliers

What is a national market?

The same product or service is offered to customers who are spread around the country

What is a physical market?

Brings buyers and sellers together in the same location

What is an electronic market?

Transactions are completely electronically with a delivery method depending on the nature of the product sold

What is mass marketing?

A firm will try to accommodate as much of the market as possible

What is mass marketing characterised by?

• Low prices

• Wide range of sales outlets and widely available

• Extensive promotion

• High turnover

What are the benefits of mass marketing?

• Greater number of customers in the market

• Businesses can produce large quantities at a lower unit cost by exploiting economies of scale

• Greater brand awareness

What are the drawbacks of mass marketing?

• Firms face tough competition

• Large capital investment needed. Products are often standardised, which makes it difficult to tailor products to cater for all needs

What is economies of scale?

The reductions in average unit costs enjoyed by a business as output increases

What is niche marketing?

Where firms concentrate on selling to a small segment of the market

What are the benefits to niche marketing?

• It is easier to focus on the needs of the consumer in this market

• Small firms can often survive by supplying niche markets

• May avoid competition

• If there is less competition, firms can charge higher prices

What are the drawbacks to a niche market?

• Little or no benefits for economies of scale

• Limited potential for sales growth and large orofits

• If a niche business is successful it may face competition from bigger firms

What is a brand

A feature of a business or product that is recognised by customers and distinguishes it from competitors

What are the 6 forms of brand?

• Images

• Colour

• Logo

• Shape

• Symbols

• Celebrity endorsement

What are the benefits to a business of building a brand?

• Adds value to the business

• Greater customer awareness

• Helps achieve greater market share

• Justifies increase in price

What is a dynamic market?

A market that is buject to rapid and fundamental change over a short period of time

What is a stable market?

A market which the pace is slow, market size and share is fairly consistent with little variation

What see the positive impacts of operating in a dynamic market?

• New product development

• Innovation

• Quick to react - > first mover advantage and competitive advantage

• Improved customer service

What are the negative impacts of operating in a dynamic market?

• Rapid change increases uncertainty and forecasting is difficult

• Constant pressure to innovate

• Products can become obsolete very quickly

• Increased competition

What are the different strategies that a firm can use to adapt to change?

• Flexibility

• Increased advertisement

• Continuous improvement of all aspects of the firm

• Investment

• Develop a niche within the market

• Conduct market research

What are the advantages to online retailing?

What are the disadvantages of online retailing?

• High set up costs

• Increased competition

• Concerns about privacy and security

• Inconvenience of returning unwanted items

• Technical issues

What ways can competition affect the market?

• Changes in prices

• Barriers to entry

• Drives forward innovation

• Increased choice, quality and convinience

What factors affect the car market?

• Demographics

• Economy

• Social

• Ethucs

• Environment

• Competition

• Technology

What is market size?

Measured by the number of units sold in a market ( sales volume)

OR

Measured by the value of all sales in the market (sales value)

How do you calculate market growth?

Percentage change = (change ÷ original) x 100

What is market share?

(sales of firm÷ sales of market) x 100

What is product orientation?

Instead of focusing on what the customers want, a firm will focus on what they do well - business puts most of their efforts into developing and making products which it believes consumers want and which will sell

What are advantages of product orientation?

• Businesses gain a first mover advantage in the industry if they produce products or features that are new to a market

• The business focuses their resources on internal research and innovation

• Less time and money is spent on market research

What are the disadvantages of product orientation?

• Products become quickly obsolete

• Disconnect from customer needs and wants

• Missed opportunities

• High research and development costs

• High risk of a short life cycle

What is market orientation?

An outward looking approach to new product development where the key focus is on the market

What ar the advantages of market orientation?

• Higher chance that customers will accept and be satisfied with your products

• Customer loyalty

• Help businesses to improve existing products

What ar the disadvantages of market orientation?

• High costs

• Short term focus

• Overdependence on customer feedback

• Risk of imitation

• Market changes - quickly outdated

• Limited innovation

What is market research?

The collection, analysis and collation of data which enables businesses to identify what customers want and need in order to inform their marketing strategy

Why is market research important for businesses?

• To adapt the product to the market

• To find gaps in the market

• Increased brand awareness

• Helps to retain a loyal customer base

• Financial stability

What is primary research?

Collecting data first hand - information that didn’t exist before the research began

What are methods of primary research?

• Interviews

• Observation

• Focus group

• Test marketing

What are the advantages and disadvantages of primary market research?

What is secondary research?

The use of information that has been collected already for a different purpose

What are methods of secondary research?

• Annual reports

• Internal data

• Government sources

• News

• Trade journals

What are the advantages and disadvantages of secondary market research

What is quantitative research?

Research based larger sames, which is more statistically valid. Often in numerical form

What is qualitative research?

Based on opinions, attitudes, beliefs and intentions

What is a sample?

A small group of people who must represent a proportion of a total market when carrying out market research

The correlation between sample size and reliability is….

Positive

What will the usefulness of sampling depend upon?

• Sample size

• Quality of data

What does the sample size depend on?

• Time constraints

• Mass or niche market

• Budget

• Staff available

Limitations of market research :

• Time constraints

• Cost

• Bias

• Dynamic markets

• Human error

How can ict be used to collate market research?

• Company websites ( cookie trackers / databases)

• Social networking ( feedback, comments,purchases, trends)

• Databases( store and organise the data)

What are the advantages and disadvantages of ict to support market research?

What is market segmentation?

Diving markets into consumers that have similar needs/wants

What ar the 3 types of segmentation?

• Demographic - age / gender / income / education

• Geographic - location

• Income group

What are the benefits and drawbacks of market segmentation?

What is market mapping?

A grid showing different features that matter to customers, such as price, quality etc

What does a market map look like?

What are the benefits and drawbacks of market positioning?

What is competitive advantage?

A feature of a product / brand that allows it to compete more successfully than it’s competitors operating in the same market

What is product differentiation?

Having unique features that make a product stand out

What are the different examples between actual product differentiation and perceived product differentiation

What is the value and the limitations of product differentiation?

What is adding value?

When a business increases the worth customers place on a product by improving it

How do you calculate adding value?

Sales price - direct costs

Benefits of adding value :

• Charge higher price

• Differentiation from competitors

• Low prices can retain customer base

• Can focus on market targets

Drawbacks of adding value :

• Increases costs

• Increased time to market

• Will need to regularly update to remain competitive and respond to changes in the market