1.1-Meeting customer needs

• Mass markets are large markets with a large number of customers.

  The benefits of selling your product in this market are:

  • Low prices
  • Wide availability
  • Economies of scale
  • Higher turnover sales volume
  • Extensive promotion

  The drawbacks of selling your product in this market are:

  • Lots of competition
  • High volume product not flexible to demand changes
• Niche markets are small subset of the mass market that address a specific need or want

  The benefits of operating in this type of market are:

  • Charge premium prices
  • Easier to target customers
  • Small scale production can be flexible and follow trends
  • Less competition

  The drawbacks of operating in this type of market are:

  • Very risky as demand may not be constant
  • Higher unit costs as few economies of scale
• A brand is a name, term, design, logo, packaging or other features that distinguish one product or service from another.

  The benefits of building a brand are:

  • Brand loyalty
  • Brand extensions
  • Brand value
  • Brand personality
  • Lower PED

  Generic branding is branding that is so strong that our use of language is changed. For example, “google it”
• What are the formulas used to calculate market growth and market share?

  Market growth: (Current market size - Previous market size) / Previous market size Market share: (Company's sales / Total market sales) * 100
• A dynamic market is a market that is constantly changing and evolving.

  This happens due to:

  • changes in consumer preferences
  • Innovation
  • Competition
  • Changes in legislation
• Online retailing is considered a dynamic market.

  The advantages of online retailing are:

  • Shop is open 24/7
  • Orders can be taken automatically
  • Shop can reach international markets
  • No need for brick and mortar store so low fixed costs
  • Easy to set up
  • Flexible

  The disadvantages of online retailing are:

  • Most people still prefer to look, touch, try a product before buying
  • Very competitive
  • Owner needs IT skills
  • Problems with fraud/spam/viruses/hackers
  • Competitors are aware of prices and activity
• Drawbacks of innovation

  • Heavy time and resource commitment with no guarantee of success
  • Potential loss of focus on core function of business
  • Competitors will react
  • Company image and reputation will be damaged if new product fails
• Process innovation


  • Making the operations of the business more efficient
• Innovation


  Introduction of new ideas, products, or processes into a market
• Benefits of innovation

  • Development of USP leading to a competitive advantage
  • Ability to charge a premium price
  • Reputation as being innovative in an industry
• Product innovation


  • Developing new products or improving old products
• What are the two types of competition?

  Direct competition- when 2 or more businesses sell similar products that appeal to the same group of customers

  Indirect competition- when 2 or more businesses sell different products but are competing for the same customers
• How does competition affect the market?

  • The price a business can charge
  • The buying power of the customer
  • The selling power of the supplier
  • Availability of substitutes
  • Willingness and ability of new firms to enter the market
• What can firms do to become more competitive?

  • Focus on quality
  • Build a brand
  • Promotions and advertising
  • Create a USP
  • Competitive pricing
  • Make the buying experience more convenient
• Market orientation is when the business focuses on the needs of the customer and the marketplace.

  The advantages of market orientation are:

  • Easy to adapt to dynamic markets
  • Meet customer expectations so higher prices can be charged
  • Low risk strategy as based on customer feedback

  The main disadvantage of market orientation is that the cost of regular market research to keep up with what customers want is very high
• Product orientation is the focus on the product itself and its features and benefits rather than what customers want

  The benefits to product orientation are:

  • Produce innovative products
  • Customers are likely to buy if business has a strong brand

  The main disadvantage is that they may have to spend a lot on marketing to convince customers to buy
• Market research is the process of gathering primary and secondary data on buying habits, lifestyle, usage and attitudes of customers

  The business uses the information gathered to:

  • Help achieve the marketing objectives
  • Identify trends in the market
  • Compare performance to competitors
  • Explain cause and effect of market behaviour
  • Predict future sales and performance potential
  • To explore whether there is an opportunity or threat
• Primary research is where a business gathers new data first hand.

  The benefits of primary research are:

  • Specific to research objectives
  • Findings kept private
  • More detailed information

  The drawbacks of primary research are:

  • Time consuming
  • Costly to obtain
  • Risk of survey bias
  • Sampling may not be representative of the whole population
• Secondary research is where a business uses data that is already available

  The benefits of secondary research are:

  • Often free and easy to obtain
  • Good source of market insights
  • Quick to access and use

  The drawbacks of secondary research are:

  • Can quickly become out of date
  • Not tailored to the business’ needs
  • Specialist reports are expensive
• Quantitative data involves gathering data that can be turned into statistics.

  The benefits of collecting this type of data are:

  • Data easy to analyse
  • Numerical data provides insights into relevant trends
  • Can be compared with other data

  The drawbacks of collecting this type of data are:

  • Doesn’t explain the reasons behind numerical trends
  • May lack reliability if method is not valid
• Qualitative data seeks to gather and explore feeling and thoughts about a product from customer.

  The benefits of collecting this type of data are:

  • Can highlight issues that need addressing
  • Very useful insights
  • Essential for new product development and launches

  The drawbacks of collecting this type of data are:

  • Expensive
  • Based around opinions
• Market segmentation is the process of dividing a market into smaller groups of customers with similar needs and characteristics.

  Doing this makes it easier for businesses to develop products aimed at certain people and to help them target their marketing

  The different ways businesses can segment the market are:

  • Age
  • Gender
  • Income
  • Race/religion
  • Geographic location
  • Social class
• What are the benefits and drawbacks of market segmentation?

  Benefits:

  • Focus resources on parts of a market where the business can succeed
  • Allows a business to grow share in fast-growing segments
  • Helps with new product development
  • Helps make the marketing mix more effective

  Drawbacks:

  • Data not always available, up to date or reliable
  • Just because you can identify a segment doesn’t mean you can reach the customers in it
  • Markets are increasingly dynamic
• Market positioning is how consumers perceive a brand or product in relation to its competitors.
• Market mapping compares two features of products or brands that are important to customers. This is set out as a matrix.

  The advantages of this are:

  • Helps to find a gap in the market
  • Useful process for comparing similarities and differences between businesses
  • Helps to gain a better understanding of its competition
  • Useful as a market research tool to gain an understanding of customer perceptions

  The disadvantages of this are:

  • Just because there is a gap doesn‘t mean there’s demand
  • Can oversimplify issues
  • The position of brands and products on a map are a matter of opinion and may be biased
• Adding value is the process of adding value to a product or service to make it more attractive to customers. final price - cost of production.

  The three main ways to do this are:

  • Production- USP, better design
  • Distribution- Convenient location, brand everywhere
  • Marketing- Creating a brand, use of social media, sponsorship

  The impacts of adding value are:

  • Goods/services stand out from rivals
  • Charge higher prices
  • Larger profit per unit
  • Increase market share Added value= selling price - cost of input
• Competitive advantage is a way that allows firms to generate more sales or be more profitable than its rivals.

  The ways of gaining a competitive advantage are:

  • USP
  • Branding
  • More shops
  • Innovate product
  • Lower costs of production
  • Advertising and marketing
  • Celebrity endorsements
  • Reliability and quality
  • Good customer service
  • Convenience
• Risk: All business activity comes with risk-there is always a chance that something could go wrong, a business is aware of and accepts these risks

  Uncertainty: These are unexpected external events that are hard to predict