1.1.1 Meeting Customer Needs

• The market refers to the group of consumers or organizations interested in purchasing a particular product or service
• Understanding the characteristics of the market targeted by a product or service is crucial for business success
• Market size:

  • Refers to the number of potential customers interested in a product or service
  • Important for determining potential sales revenue
  • Not fixed and can change over time
  • Businesses need to monitor the market to adapt strategies to changing customer needs and remain competitive
• Markets can change due to factors like changes in consumer preferences, technological advancements, economic conditions, competition, legal and regulatory changes, demographic changes, and environmental factors
• Market share:

  • Percentage of total sales revenue in a market captured by a specific company or brand
  • Indicates the portion of the market a business controls relative to competitors
  • Important metric for understanding competitive position and making strategic decisions
• Niche market: a smaller segment of a larger market that serves a specific, specialized customer base with unique needs and preferences
• Niche markets cater to specific demographic, psychographic, or geographic groups of customers who share common characteristics or interests
• Niche markets are smaller in terms of the customer base compared to mass markets but can still be profitable and sustainable if the target audience has a genuine need for the specialized offerings
• Niche markets have less competition compared to mass markets, allowing businesses to establish themselves as experts or leaders within that specific niche
• Niche market products or services are often unique or highly specialized, allowing businesses to charge premium prices and maintain customer loyalty
• Marketing in a niche market requires a targeted approach, understanding the niche audience's preferences and behaviours to effectively reach and engage them
• Advantages of operating in a niche market:

  • Targeted Customer Base
  • Reduced Competition
  • Higher Profit Margins
  • Stronger Customer Relationships
  • Lower Marketing Costs
  • Opportunities for Innovation
  • Potential for Expansion
• Disadvantages of operating in a niche market:

  • Limited Customer Base
  • Vulnerability to Market Fluctuations
  • Dependency on Niche Expertise
  • Higher Per-Unit Costs
  • Limited Market Research
  • Competitive Risks
• Mass market: a large, broad segment of the market that encompasses a wide range of customers with diverse needs, preferences, and purchasing power
• Mass markets aim to appeal to a broad and diverse customer base, reaching as many potential customers as possible
• Mass markets have a vast customer base, offering significant revenue potential for businesses, but tend to be highly competitive due to the larger number of businesses targeting them
• Markets aim to appeal to a broad and diverse customer base, including individuals from various demographics, psychographics, and geographic locations
• Mass markets are characterized by their vast customer base, which can include millions or even billions of individuals
• Mass markets tend to be highly competitive due to the larger number of businesses targeting the same customer base
• In mass markets, products or services are often standardized to appeal to a wide range of customers
• Marketing in a mass market typically involves wide-scale advertising and promotional campaigns aimed at reaching the largest possible audience
• Advantages of operating in a mass market:

  • Large Customer Base
  • Growth Potential
  • Economies of Scale
  • Brand Visibility
  • Enhanced Bargaining Power
  • Market Stability
  • Opportunities for Market Segmentation
• Disadvantages of operating in a mass market:

  • Intense Competition
  • Lack of Personalisation
  • Higher Marketing Costs
  • Difficulty in Targeting
  • Limited Flexibility
  • Market Volatility
• Characteristics of dynamic markets:

  • Rapid technological change
  • Shifting consumer behaviour
  • Intense competition
  • High level of uncertainty
• In dynamic markets, businesses need to be proactive, flexible, and able to adapt quickly to changing conditions
• Positive impacts of a dynamic market:

  • Innovation and creativity
  • Increased competition
  • Economic growth
  • Improved efficiency
  • Greater consumer choice
• Negative impacts of a dynamic market:

  • Increased competition and market saturation
  • Market volatility and uncertainty
  • Business failure and job loss
  • Environmental and social impacts
  • Inequality
• clicks

  retailers' goods only available on the internet
• bricks and clicks

  retail stores which then developed websites
• advantages of online retailing - from business's perspective

  • shop is open around the clock - don't miss critical times when customers can shop
  • orders can be taken automatically - reduces need of staff, reduces costs
  • can reach international markets easily
  • stock can be easily withdrawn or updated to keep up with dynamic market changes in tastes
  • easy to set up
  • flexible - owner can be anywhere in the world
  • low overheads - no need for shop premises
  • opportunities for fast growth
• disadvantages of online retailing - from business's perspective:

  • customers may prefer to browse online then purchase from a shop
  • issues with returning goods may put customers off
  • issues with online security puts off older customers not keen to share their bank details
  • very competitive market - hard to drive traffic to sites
  • owners need IT skills
  • competitors can be aware of owners business models, prices, activity
  • problems with fraud/spam/viruses
• why do markets grow?

  • economic growth
  • innovation
  • social changes
  • changes in legislation
  • demographic changes
• what helps businesses adapt to change?

  • flexibility
  • market research
  • investment
  • develop a niche
  • continuous improvement in increasingly competitive market
  • quality - responding to customer needs
  • technology
• competition

  rivalry that exists between businesses in a market
• how competition affects the market - businesses

  • improves quality
  • lowers prices
  • increases choice
  • making products different to rivals - USP
  • using more powerful/attractive advertising
  • offering 'extras' - higher quality customer service
• why have price comparison websites become necessary?

  • saturated markets
  • confused customers
  • customers don't have the time to ring around in order to find the cheapest quota
• how competition affects the markets - consumers

  • more choice
  • better quality products
  • lower prices
• how consumers can be exploited by the by the absence of competition

  • high prices
  • failure of innovation
  • restrict choice
• Business Risk

  Refers to the potential for losses or adverse outcomes that a company may face in its regular operations
• Uncertainty

  Refers to the lack of predictability or knowledge about future events, outcomes, or circumstances