1.1 - Meeting Customer Needs

Flashcards covering market types, research, competition, and strategies for meeting customer needs based on Edexcel A Level Business notes.

What is the definition of a market

A market is any place where buyers and sellers can meet, such as $amazon.co.uk$ or a shopping mall.

What is the primary difference between a need and a want?

Needs are considered essential things like shelter or food, while wants are non-essential desires, such as $Nike$ trainers.

What characterizes products in a mass market?

Products are less unique as they are aimed at broad market segments.

How is a niche market defined?

A niche market is a subset of a larger market where products are more specialised and unique, aimed at narrow market segments.

What are the common pricing and profit characteristics of mass markets?

Mass markets typically have low prices leading to greater affordability and high sales volumes, but resulting in lower profit margins.

Why do niche markets often have high average costs?

Niche markets suffer from high average costs due to small-scale production and a lack of economies of scale.

What is the difference between sales volume and sales revenue?

Sales volume is the physical number of units sold, while sales revenue is the financial value of those units, calculated as $\text{price} \times \text{quantity sold}$.

What is the formula for calculating market share?

$$\frac{\text{Sales of a business}}{\text{Total sales in the market}} \times 100$$

Using the 2022 Starbucks Coffee example, how is its market share calculated?

$$\frac{£328m}{£4.6bn} \times 100 = 7.13\%$$

What is a brand and what is its primary role in the market?

A brand is a name, image, or logo that helps a product stand out from competitors and is a key way to achieve product differentiation.

What is the definition of a dynamic market?

A dynamic market is a market that is subject to rapid or continuous changes.

Which example is given for a dynamic market versus a stable market?

The mobile phone market is identified as dynamic, while the market for eggs and milk is described as relatively stable.

How can online retailing benefit primary market research for a business?

Businesses can collect data by tracking consumer behaviour and searches on their websites.

What are the four key areas to consider when examining dynamic markets?

$1.$ Online retailing, $2.$ How markets change, $3.$ Innovation and market growth, and $4.$ Adapting to change.

What is the difference between product innovation and process innovation?

Product innovation involves adapting or improving existing products, while process innovation involves adapting or improving existing processes, such as just-in-time stock control.

In the worked example for electric vehicles, what was the total sales count for 2021?

$$190,859\, \text{electric vehicles}$$

How does the transcript distinguish between direct and indirect competition?

Direct competition involves businesses targeting customers with the same product, while indirect competition involves firms selling different products but competing for the same disposable income.

What are three benefits for customers resulting from intense competition?

Businesses offering lower prices, producing better quality products, and providing better customer service.

What is the fundamental difference between risk and uncertainty?

Risk is a potential threat that can be measured and prepared for, whereas uncertainty occurs when outcomes are difficult to predict.

How does product orientation differ from market orientation?

Product orientation focuses on the characteristics of the product first, while market orientation focuses on consumer needs to design products.

What is primary research?

The process of gathering new information directly from consumers in the target market using field research methods like surveys or interviews.

What are two disadvantages of secondary research?

The information may lack relevance because it was collected for other purposes, and it may be out of date, especially in dynamic markets.

What is the role of focus groups in market research?

They involve free-range discussions led by a specialist to collect detailed feedback from a small group of $12\text{--}15$ people in the target market.

How can social networking be used to support market research?

It can be used to gather information via online social channels, run quick polls, or track opinions about brands.

What are the three main types of market segmentation mentioned?

Geographic, Behavioural, and Demographic segmentation.

What are demographic factors used in market segmentation?

Factors such as age, gender, and family circumstances.

What is behavioural segmentation based on?

Customer lifestyle, health/dietary choices, frequency of purchase, and brand loyalty.

What does a 'saturated' market indicate on a market map?

It indicates that there are no spaces left on the map, meaning there are high levels of competition and no opportunities to exploit a market niche.

What are the limitations of market mapping?

A gap may exist because it is not profitable, research can be expensive, only two criteria can be chosen, and markets are dynamic.

What does it mean for a competitive advantage to be 'distinctive' and 'defensible'?

'Distinctive' means the product is different from competitors, and 'defensible' means the business can prevent competitors from copying it.

Name four sources of competitive advantage mentioned in the notes.

Quality, delivery times, low price, and reliability.

How did Hyundai in Singapore achieve product differentiation in 2014?

By introducing a $3\text{-year}$ warranty on new cars when the industry standard was $1\, \text{year}$.

What is the definition of 'adding value'?

The difference between the price charged to the customer and the cost of inputs required to create the product or service.

What are five methods of adding value to a product or service?

Marketing and branding, adding unique functions and features, providing excellent customer service, customisation, and superior packaging.

Why is adding value considered beneficial even if it raises costs?

It is worth it if the increase in the selling price outweighs the costs associated with the method, thereby improving profitability.