1.2

• what are the 4 customer needs

  price, quality, choice, convenience
• customer needs change over time
• successful businesses anticipate their customers needs in advance to stay ahead of competition
• why do businesses need to adapt to customers needs

  • can traget lots of different customers
  • the same product can satisy different customer needs
  • business doesn't lose customers to competitors
  • business can stay current and on trend
• how are price and quality linked


  the quality of the product should reflect the price
• why is meeting customer needs important


  • business survival
  • have enough customers to cover costs and make profit
  • satisfied customers lead to an increase in sales and revenue
  • businesses may have repeat purchases and loyal customers
• what is market research 


  the process of collecting information on what consumers want, market trends and competition
• what is market research used for

  • to identify a gap in the market
  • inform business decisions
  • reduce the risk of starting a business
• what is primary research 


  the first hand collection of new data
• what are examples of primary research

  • surveys
  • focus groups
  • questionnaires
  • observation
• what are the positives of primary research


  • can ask questions they need answers to
  • information is current
  • information won't have been seen by competitors
• what are negatives of primary research


  • can be expensive
  • can be time consuming
  • results may be innacurate
• what is secondary research

  the collection of data that already exists
• what are examples of secondary research

  government reports, market reports, internet
• what are the positives of secondary research

  • data is easy to find
  • cheap or free to obtain
  • can give a good overview of the market
• what are the negatives of secondary research


  • may be collected fir a different purpose so could be inaccurate
  • can be out of date
  • may not be specific to the business needs
• why is market research useful

  • reduces risks of starting a business
  • identifies gaps in the market
  • inform business decisions
• what is qualitative data

  opinions, judgements and feelings of a person that can't be put on a graph and is often obtained by open ended questions
• what is quantative data

  numerical data that can be put onto a graph and is often obtained by closed questions
• you should always consider how reliable information is before you use it
• what is market segmentation


  the breaking down of the market into smaller groups that shares characteristics
• how are markets segmented


  location, demographics, lifestyle, income, age
• what is lifestyle


  how someone lives their life and what choices they make
• why may companies segment by lifestyle


  healthy living businesses may segment the market like this to target their market
• what is location


  grouping customers based on where they live
• what businesses may segment based on location

  a sole trader e.g a gardener or a cafe focussed on attracting customers from the local area
• what companies may segment on age

  a yout club owner will target the teenage population
• what are demographics

  data relating to population e.g gender, race, sexuality
• why may a business segment by demographics

  to target families or couples
• what is market mapping

  a diagram a business uses to cmpare brands
• why is a market map used

  can see who and where their competitors are and to spot a gap in the market
• what things may be compared on a market map

  price and quality
• when does competition occur

  when separate businesses provide goods and services to the same group of customers
• what is the competitive environment

  a market where there are many businesses selling similar goods and services
• what is differentiation

  a business making their product stand out from a competitive market
• what are the five ways a business can compete

  price, quality, location, product range and customer service
• how does a business compete using quality

  higher quality products can attract customers however it may be more expensive to produce
• how do businesses compete using price

  a business may offer lower prices to their competitors to attract customers

  price lowering could result in more sales but also increases costs
• how do businesses compete using location

  a business may have a superior location to competitors- it could be more convenient or easier to access
• how do businesses compete with product range

  having a large product range gives customers more choice and they can cater to more customer needs