business theme 1: meeting customer needs

what is a mass market?

the largest part of the market that sells a broad range of products that is aimed at the wider audience/general population

what is a niche market?

a subset of the main market that sells specialised products and is aimed at specific customer needs

what does higher profit margins mean?

where a business keeps a greater % of its revenues

what are 3 advantages of a mass market?

1. larger sales potential (large customer base= higher profits)

2. lower unit costs (economies of scale= cheaper production)

3. stronger market position (widespread product availability=dominant market presence)    

what are 3 advantages of a niche market? 

1. customer loyalty (unique needs= loyalty)

2. less competition (specialised products= less competition)

3. higher profit margins (cos of less competition + premium prices)

what are some disadvantages for a mass market?

higher competition

vulnerability to market changes

what are some disadvantages for a niche market?

limited customer base

lack of economies of scale

what is market size?

the total sales of all products in that market

what is market share?

the proportion / % of the market a business has

what is a dynamic market?

a market that is subject to rapid change and influence (trends/competitor rivalry etc

what is business risk?

the possibility that a business will have lower profits than expected or even make a loss

can be predicted/ prepared for

what is business uncertainty?

where uncontrollable factors can lead to unpredictable future outcomes

what is the difference between business risk and uncertainty?

risk is a known outcome that you can calculate but uncertainty is an unknown outcome due to a lack of knowledge 

what is product orientation and when is it appropriate?

=a business focuses only on the product

• little competition in market

• little consumer knowledge

• low disposable consumer income

what is market orientation and what are some benefits?

=business focuses on consumer needs and meeting them

• understand consumer knowledge

• identify potential competitors

• reduces risk

3 benefits a business gains after researching their market?

1. react to / prepare for market changes 

2. develop a marketing plan about market mix 

3. reduces risk of making poor decisions 

what is primary market research and why is it good?

=business conducts research themselves 

• data is specific to business needs

• data benefits business

what is secondary market research and what is it called?

gathering data that already exists

=desk research

limitation of market research?

• human behaviour / bias

• depends on people who take part (have to take time out)

what are market segments and what are some examples?

=a part of a market where customers share one or more need

• location

• age

• gender 

• lifestyle

what is market positioning?

how a company or product is perceived by customers based on different factors

what is market mapping?

where a business creates a visual representation of competitors and their products based on two variables to identify gaps in the market