A Level Business - 1.1 Meeting Customer Needs

Mass market

Market aimed at the general population. Marketed to all consumers. Products sold on a global scale.

Mass Market Pros & Cons

Pros: High sales and revenue potential, Brand recognition and customer loyalty, Economies of scale.

Cons: High competition, Difficult to meet all customer needs, High marketing and production needs.

Niche market

Subset of main market that addresses specialist needs. Caters to specific segment of market not met by other providers.

Niche Market Pros & Cons

Pros: Less competition, Clear focus on customer needs, Strong brand loyalty.

Cons: Small market size, Vulnerable to market changes, Higher unit costs.

Market Size

Total sales made by all producers in the market. Measured by either vol. of sales, or total amount spent by customers.

Market Share

Proportion of a market taken by a business. Calculated by Sales of X / Total sales in market * 100

Dynamic Markets

Market that is subject to rapid and continuous change, e.g. clothing market.

Online Retailing

The retailing of goods online, where transactions are conducted via websites or apps rather than in physical outlets.

Online Retailing Pros & Cons 

Pros: Wider market reach, Lower fixed costs, Convenience for customers, Easier to gather customer data.

Cons: High competition, Delivery and logistics costs, Security issues, Customers can’t try products, leading to lower satisfaction.

Risk

Possibility that a business will have lower than anticipated profits or experience a loss rather than a profit, which is influenced by material costs and competition.

Uncertainty

When businesses are unable to predict external shocks or future events.

Product Orientation

Business that only looks at product or production processes when deciding what to make next

Market Orientation

Identifying customer needs and wants, and meeting them.

Primary Market Research

Original data gathered first-hand by a business to understand customers, competitors and the market. Tailored to the business’s exact needs

Types of Primary Market Research

Surveys, Interviews, Observation, Focus Groups, Consumer Panels, Test Marketing

Surveys

Structured sets of questions to gather data from customers.

Interviews

One-to-one conversations to collect data

Observations

Watching how consumers behave in real situations

Focus Groups

Small groups of consumers who discuss a product, guided by a moderator

Consumer Panels

Group of consumers who give regular feedback over a period of time

Test Marketing

Launching product in small area to test customer response.

Secondary Market Research

Data gathered from sources that already exist

Types of Secondary Market Research

Annual Reports, Internal Data, Government Sources, News, Trade Journals, Specialist Organizations’ Publications, EU and International Sources.

Annual Reports

Financial performance of competitors, sales trends, market position and growth figures.

Internal Data

Sales records, customer databases, previous research, website analytics.

Govt Sources

Industry statistics, legislation and regulatory information

News

Updates on industry trends, competitor announcements, market and economic conditions

Trade Journals

Analysis and forecasts, info on new products

Specialist Organizations’ Publications

Research reports from groups, consumer behavior reports

EU and International Sources

Eurostat stats, international market trends.

Quantitative Data

Gathers numerical data

Qualitative Data

Gathers feelings and thoughts about a product from consumers.

Market Segmentation

Process of splitting a market into groups of consumers who have similar needs, characteristics, or behaviors.

Different Characteristics of Market Segmentation

Demographic Segmentation, Geographic Segmentation, Psychographic Segmentation, Behavioral Segmentation.

Demographic Segmentation

Based on population characteristics e.g. age, gender, income

Geographic Segmentation

Based on location

Psychographic Segmentation

Based on lifestyle, personality, and social class.

Behavioral Segmentation

Based on how consumers behave.

Market Mapping

Finding variables which differentiate brands in a market and then plotting them on a map to identify a gap in the market