Theme 1

• 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


  Desires which are non essential, 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

  
• Customer needs to understand

  • Price
  • Quality
  • Choice
  • Convenience
• Price


  The amount of money a customer is willing to pay for a product/service
• Quality


  The standard of excellence that a customer expects from a product/service
• 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
• Benefits of understanding customers

  • Leads to greater sales
  • Ensures business survival
• Market research


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

  • Reduces risk when launching new products or entering new markets
  • Identifies and understands the future needs and wants of customers
  • Identifies potential gaps (market niche's) in the market which can be exploited to increase the sales volume
  • Identifies competitors and gauges their potential strengths and weaknesses
• Types of market research

  • Primary research
  • Secondary research
• 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
• Primary research methods


  • Surveys
  • Observation
  • Interviews
  • Test marketing
  • Focus groups
• Quantitative data


  Based on numbers and could include financial reports, market data or summaries of data gained from primary research
• Qualitative data


  Gathers descriptions or explanations based on conversations, discussions, impressions, and emotional feelings and is usually gathered through primary research
• Limitations of qualitative data


  • Small and unrepresentative sample size
  • Bias in guiding respondents
  • Influence of others in focus groups
  • Expensive to hire specialist agencies
• Limitations of quantitative data

  • Data may be out-of-date or irrelevant
  • Expensive to purchase market-specific secondary data
  • Incorrect conclusions drawn from data analysis
• Social media for market research

  Provides businesses with incredible market research opportunities - speed, low cost, interactive relationship with customers, customer feedback
• Market segmentation


  The process in which a single market is divided into sub markets or 'segments' where each segment represents a slightly different set of consumer characteristics
• Interactive relationship with customers

  Helps to strengthen brand loyalty
• Customers


  • Able to feedback quickly on products
  • Express innovative ideas about how they want the products to be changed
• Customer feedback


  May help the firm to develop extension strategies in their product life cycle
• Market segmentation


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


  • Represent a slightly different set of consumer characteristics
  • Firms often segment markets according to factors such as geographical location, demographics, behavior and lifestyle, age or gender

  
• Crisp market segments


  • Dinner party snacks (Walkers Sensations, Pringles, Burts)
  • Health conscious crisps (Walkers lite, Walkers baked, Revita lite)
  • Lunch box value snacks (multipacks, hoola hoops etc)
• 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

  
• Market map


  • 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

  
• Saturated market


  No spaces left on the market map, indicating the market is saturated and there are no opportunities to exploit a market niche
• Market niche


  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
• Direct competition


  Businesses are targeting customers with exactly the same product as a competitor
• Indirect competition


  Firms sell different products but compete with each other for the customers disposable income