1.2

• Market


  Any place where buyers and sellers can meet, e.g. the Amazon website, or a shopping mall
• Needs


  Essential, e.g. shelter or food
• Wants


  Non-essential desires, even if consumers consider them to be essential, e.g. Nike trainers
• Marketing


  The aim is to help identify, anticipate and satisfy consumer needs and wants in a way that makes the business money (profit)
• Market research


  The process of systematically gathering data from consumers which can be used to influence the business decisions
• Understanding Customer Needs


  • Price
  • Quality
  • Choice
  • Convenience
• Price


  The amount of money a customer is willing to pay for a product/service. Customers often have a budget in mind and want to find the best value for their money.
• Quality


  The standard of excellence that a customer expects from a product/service. Customers want products that are reliable, durable, and meet their expectations.
• Choice


  Customers often have a wide range of preferences and want to be able to choose from a variety of products or services.
• Convenience


  Customers value convenience because they want products/services that are easy to access and use. This includes factors such as location, online ordering, and fast delivery.
• Understanding customer needs leads to greater sales and ensures business survival
• Market research


  The objective collection, compilation and analysis of information about a market
• Purpose of market research

  • To reduce risk when launching new products or entering new markets
  • To identify and understand the future needs and wants of customers
  • To identify potential gaps (market niche's) in the market which can be exploited to increase the sales volume
  • To identify competitors and gauge their potential strengths and weaknesses
• Primary research


  The process of gathering information directly from consumers in the target market using field research methods such as surveys, interviews etc
• Secondary research


  The collection, compilation and analysis of data which already exists
• Secondary research methods


  • Using the internet
  • Purchasing market reports from specialist companies
  • Accessing government research
• Quantitative data


  Data based on numbers e.g. financial reports, market data, summaries of primary research
• Qualitative data


  Descriptions or explanations based on conversations, discussions, impressions, and emotional feelings, usually gathered through primary research
• Both quantitative and qualitative data are useful and any data analysis should ideally include a combination of the two
• Limitations of qualitative data

  • The sample size may be too small and unrepresentative
  • Bias may mean researchers can guide respondents
  • Respondents in focus groups may be influenced by others
• Limitations of quantitative data

  • Information may lack relevance or be factually incorrect
  • Can be expensive to purchase market specific secondary data
  • Numerical data may be out-of-date
  • Data analysis and interpretation is a skill
• Using social media for market research

  • Provides businesses with incredible market research opportunities
  • Allows for speed of communication and low cost of gathering information
  • Helps businesses generate interactive relationships with customers and get quick feedback
• When answering questions about market research, focus on weighing up the benefits and drawbacks of methods and justifying which method(s) might be more appropriate in context
• Market segmentation


  The process in which a single market is divided into sub markets or 'segments'
• Market segmentation


  • Each segment represents a slightly different set of consumer characteristics
  • Firms often segment their markets according to factors such as geographical location, demographics, behavior and lifestyle, age or gender
• Market segments for crisps

  • Dinner party snacks (Walkers Sensations, Pringles, Burts) targeted at middle to upper earners/professionals with a premium price
  • Health conscious crisps (Walkers lite, Walkers baked, Revita lite) targeted at the health conscious market
  • Lunch box value snacks (multipacks, hoola hoops etc) targeted at families and the mass market
• Advantages of market segmentation

  • Recognises that consumers are not all identical - consumer groups do not all share the same tastes and preferences
  • Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely
  • Less expensive and wasteful than marketing products at wide market segments
  • May increase loyalty if the consumer feels that their needs are being met which can lead to repeat purchases
• Disadvantages of market segmentation

  • Not everyone within a segment will behave in the same way
  • May be difficult to identify a segment and consumers can belong to multiple segments at the same time
  • Segmentation requires more detailed market research which can prove costly (but beneficial) to the business
  • A segment may be identified but it may be too small and unprofitable to cater for
• Market mapping


  • A tool for identifying the position of a product within a market
  • A market map refers to a two-dimensional diagram that shows the attributes or characteristics of a product in comparison to rivals' products
  • Only two criteria can be chosen e.g. price (high/low) and quality (high/low), age (young/old) and income(high/low) etc
• If there were no spaces left on the market map, it indicates that the market is saturated
• The existence of a space on the market map may indicate the existence of a market niche
• Usefulness of market mapping

  • Market gaps can be identified which may enable a business to come up with ideas for new products
  • Comparisons can be made between a business's products and those of its rivals - where are the business' products positioned about its rivals?
  • Market maps are simple to construct and offer a visual illustration of a products position in the market
• Limitations of market mapping

  • A gap in the market may exist because it is not profitable to fill
  • Mapping a market may require primary research which can be expensive
  • Only two criteria can be chosen which may prove too simplistic
  • Markets are often dynamic and a market map only provides insight at a specific point in time
• Competition


  Occurs when at least two businesses are providing goods/services to the same target market
• The more businesses in the market, the more intense the competition
• Direct competition


  Occurs when the business is targeting customers with exactly the same product as a competitor
• Indirect competition


  Occurs when firms sell different products but compete with each other for the customers' disposable income
• Indirect competition


  • Cinema's and theatre companies
• Benefits of competition for customers

  • Businesses offer lower prices
  • Businesses produce better quality products
  • Businesses provide better customer service
• The absence of competition reduces incentives for businesses to innovate, be efficient or offer consumers lower prices