1.1.1: marketing consumer needs

what is a market?

• any place where buyers and sellers can meet and exchange goods and services e.g. amazon or a shopping centre

what is marketing?

• a range of activities which help a business sell its products

what does marketing involve? (4)

• identifying the needs and wants of consumers

• designing products that meet customer needs

• charging the right price

• persuading customers to buy the products

what is a mass market 

• a large market of customers which is undifferentiated and sells products and services to suit a large number of customers 

what is a niche market?

• a smaller part of a large market with products tailored to specific customer needs

what are the characteristics of a mass market?

•  products are less unique as they are aimed at broad market segments

• low average costs due to large scale production 

• lower sales means lower profit margins and greater affordability 

• mass media is used to advertise the product 

• products are widely available 

what are the characteristics of a niche market?

• less competition in a specific market so higher survival 

• able to set own prices due to no competition over price so more product 

• products are often specialised and specific to customers needs and wants 

• can often charge higher prices 

• high costs due to small scale productions

what are the advantages of operating in a mass market?

• able to purchase goods in bulk so cheaper to produce per item

• can use mass media to produce products

• large number of customers

what are the disadvantages of operating in a mass market

• lots of competition

• standard product so does not suit everyone

• has no USP so may be difficult to survive

• high cost of factories and advertising

what are the advantages of operating in a niche market

• less competition 

• can charge a higher price 

• can focus on customer needs 

• small scale production 

what are the disadvantages of operating in a niche market?

• smaller number of customers

• high profits may attract competitors

• change in taste or fashion can have a big impact

• production cost can be high

what are the two ways market size can be measured by?

• the value which is the total amount spent by customers buying products

• volume which is the physical quantity of products that are made and sold

what is a dynamic market?

• a market which were constantly changing for example buyers may choose to buy more of one product and less of another

what are 5 reasons why markets are changing?

• social trends/ fashions

• changes in technology

• arrival of superior products offered by competition

• external shocks

• rising/falling incomes

what would happen to a business that does not respond to market change?

• they may loose competitiveness and will have to exit the market

is it easy for a business to forecast sales in a dynamic market?

• no it is difficult to forecast sales due to rapid change and growth so demand is unpredictable as consumers wants and needs evolve quickly 

what is market share?

• the proportion of particular market held by a business

• usually shown by a percentage

how is market share calculated?

why is market share important?

• it can highlight a businesses position in the market

• can influence the strategy and objectives of a business

How can businesses increase market share?

• Lower prices, promotion, innovation, product improvements.

Why might increasing market share improve profits?

• Greater sales may create economies of scale.

Define a brand.

• A name, symbol or identity distinguishing a product from competitors.

What is branding?

• Creating a unique identity for products.

Why are brands important?

• Create recognition and customer loyalty

What is brand loyalty?

• Customers repeatedly buying the same brand.

Advantages of strong brands?

• Loyalty,

• premium pricing,

• competitive advantage,

• easier promotion.

Disadvantages of branding?

• Expensive to build

• reputation damage can reduce sales.

Define online retailing.

• Selling goods and services over the internet.

Advantages of online retailing for businesses?

• Lower costs

• wider market reach

• 24-hour trading

• faster communication.

Advantages of online retailing for customers?

• Convenience

• greater choice

• easier price comparison

• home delivery.

Disadvantages of online retailing for businesses?

• Increased competition

• delivery costs

• cybersecurity risks.

Disadvantages of online retailing for customers?

• Cannot inspect products physically

• delivery delays

• security concerns.

Define innovation.

Development of new products, processes or ideas.

Benefits of innovation?

• Competitive advantage

• increased sales, market growth

• differentiation.

Risks of innovation?

• Costly

• uncertain success

• possible product failure.

Define competition.

Rivalry between businesses for customers.

Effects of increased competition?

• Lower prices

• more innovation

• better quality

• increased promotion.

Why does competition benefit customers?

More choice and better value.

Why can competition be difficult for businesses?

Lower profit margins.

Define risk.

Outcomes are unknown but probabilities can be estimated.

Define uncertainty.

Outcomes and probabilities are unknown.

Difference between risk and uncertainty?

• Risk = probabilities known

• uncertainty = probabilities unknown so outcomes cannot be predicted accurately .