Business Paper 1 1.1 Meeting customer needs

What is market research?

Market research is gathering data from customers in order to influence business decisions

What is a mass market?

A market where the products are aimed at a broad audience. Production usually happens on a larger scale and products are available for most of the market.

What is a Market segment?

A group of consumers who share similar characteristics and a small part of a large market

What is a niche market?

Products aimed at a smaller section of a larger market and has a small target audience

What are the advantages of a mass market?

-low cost of sales because of economies of scale

-Larger profits

-Larger revenue

-Wider target audience

What are the disadvantages of a mass market?

-Lower profit margins

-Lower selling price

-Products are less unique

-less customisation

What are the advantages of a Niche market?

-Products are more specialised so you can charge a higher selling price

-Increased profit margin

-Increased customer service

What are the disadvantages of a niche market?

-High cost of sales because of low use of economies of scale

-Lower sales volume

-small target market

What is market share?

The proportion of total sales of a product or service compared to the whole market

What is a brand?

A name, image or logo which helps one product or service stand out from competitors

Advantages of a strong brand image

• can change a higher selling price

• Perceived quality is higher than one of a weaker brand

• Can add value to the products

What is a dynamic market?

A market that is always changing and moving

What is online retailing?

Online retailing involves selling products via the internet

What are the advantages of online retailing?

• Provides access to a wider range of consumers

• Enables 24/7 sales

• Lower fixed costs and variable costs

• Can track consumer data

What are the disadvantages of online retailing?

• Costs for website development and maintenance

• High levels of competition

• Low levels of customer service

• Higher levels of returns

What is market growth?

The measurement for change in the entire market

What is direct competition?

A business targets customers with the same product as a competitor

What is indirect competition?

When a business sells different products but compete for the same customers

What is risk?

The potential threat to a business but it can be measured using risk management

What is uncertainty?

Outcomes are difficult to predict

What is product orientation?

Focuses on the product development and the characteristics of the product

What is market orientation?

Focuses on meeting the needs of the customer and using the information to design a product

What is primary market research?

Research done by yourself and taken directly from consumers and this could be interviews or surveys

What are the advantages of primary market research?

• Focused on the needs of the business

• More up to date

• Specific questions can be asked

• More in depth information

What are the disadvantages of primary market research?

• Sample size may be too small

• Participants can answer biased

• More expensive

• Time consuming

What is secondary market research?

Collecting and analysing data that already exists this can be done through purchasing market reports or accessing data online

Advantages of secondary market research

• A lot quicker

• Information is free or less expensive

• suitable for small businesses

Disadvantages of secondary market research

• Information may lack relevance for the purpose

• Could be out of date

Advantages of market segmentation

• Products are altered to meet customer needs

• less expensive

• less wasted products

• Increased loyalty

Disadvantages of market segmentation

• Could be difficult to enter a segment

• increased market research

• may be unprofitable in some segments

What is market mapping?

Where a product is position in the market based on level of quality and price and other factors

What is adding value?

increasing the value of a product by introducing a unique selling point to gain a competitive advantage

Methods of adding value

• Marketing and branding

• features of products

• customer service

• packaging