business p2

what is segmentation?`

the process of dividing a market into groups based on different characteristsics.

what are the ways of segmentation

age

gender

location

income

what is the aim of market research

to gather info about customer needs. It should be a ongoing process to inform business eciosion making. This ensures that decisioin are based on data rather than gut feeling.

reasons for conducting market research

to find out about demand in a particular market

To identify a speciific target market

to identify the number of competitiors which operate within a area

what is primary research

Obtaining data first hand to meet the specific needs of the business

ADV of primary research

up to date

matches the needs ot the business dirictly

DISADV of primary research

expensive

time consuming

what are methods of primary research

survey

postal questionaire

face to face questionaire

telephone questionaire

interview

focus group

observation

ADV of survey

large amounts of data can be collected easily

online surveys are easy to conduct on a regular basis

DISADV OF SURVEYS

The sample must reflect the profile of the target market for the results to be valid

how do you calculate market share

sales of product / total sales in market x 100

what is the marketing mix

product place promotion and price. All of these are combined to encourage customers to buy products from them

what is price

how much a customer will pay to buy a product

price skimming

involves setting a high price because there will be a high demand fo rit when it first enters the market. These are often bought by customers who want the best product on the market. Over time the price can be reduced because competitros enter the market with similar version of the product that are cheaper.

why is price skimming a important pricing method?

it helps businesses generate large amounts of revenue which help cover the research and development costs of the new product. They also gain a good reputation for generating innovative products

what is price penetration

Setting a low price for a new product to attract customers and generate sales quickly. Once customers have tried the prodct they may become loyal to it and then the price can be gradually increased.

What is loss leader ?

A product that is priced below its cost price. This results in a loss being made on each product sold. Its hoped that low prices will attract customers who may then be tempted to buy more products while in store which are profitable. Howveer if customers choose to just buy the loss leader then the business will not make profit

what are benefits of new product development ?

Increase in reputation for developing a new product

increase in sales for the launch of a new product

DISADV OF DEVELOPING A NEW PRODUCT

Its a lengthy process

reputation can be affected if the product isnt as good as expected

What is the product life cycle

The stages a product goes through from when its first being developed to when it gets released on the market

what is promotion?

The way in which a business communicates its product through advertisingn

what are two reasons for promotion ?

to inform potential customers about a product which can increase brand awareness

To increase sales

Benefits of newspapers through promotion

can be useful when reaching a nationwide audience

people can refer to it more than once as its printed

disadvantages of newspapers through promotion

once its read it may not be referred to again

Its quality may be poor unless colour is used