1.2

• Customer needs


  • Price
  • Convenience
  • Choice
  • Quality
• Customer needs


  • They are subjective and depend on what the customer requires
• The importance of understanding customer needs is to identify who the customers might be, attract new customers, and retain repeat customers
• Primary research


  Firsthand research done by the business, such as surveys, focus groups, and observation
• Secondary research


  Secondhand research already done by others, such as online information, market reports, and government data
• Primary vs Secondary research


  • Primary is more specific to the business but secondary is quicker and cheaper, though may lack relevance or be out of date
• Qualitative data


  Words and thoughts, such as opinions from focus groups
• Quantitative data


  Numeric and statistical data, such as survey results
• Considerations when doing market research

  • Sample size, research bias (who you ask)
• Market segmentation


  Splitting the population into smaller groups or 'segments' to identify target audiences
• Niche market


  Targeting a smaller, more specific section of the market
• Mass market


  Targeting the larger, majority section of the market
• Market segment


  A smaller section of the population
• Niche market


  Targeting a smaller section of the market
• Mass market


  Targeting the bigger segment, the vast majority of people
• Criteria for identifying market segments


  • Location
  • Demographics (age, ethnicity, religion)
  • Lifestyle (tastes and trends)
  • Income
• When analysing markets, a market map can be used to identify gaps in the market
• Market map


  • Shows high price vs low price, and high quality vs low quality
  • Allows identification of gaps in the market that could be opportunities
• Not all gaps in the market are good business opportunities
• SWOT analysis


  Looks at strengths, weaknesses, opportunities and threats
• Areas to consider in a SWOT analysis


  • Price
  • Location
  • Product range
  • Customer service
• Competition impacts decision-making


  Businesses often base decisions on what competitors are doing (e.g. pricing, innovations)
• Competition drives innovation as businesses need to stay ahead of each other
• Businesses may decide to leave a market or enter a new market due to competition
• BENEFITS OF SEGMENTATION

  • MEET SPECIFIC CUTOMER NEEDS
  • DIFFERENTIATE ITS PRODUCTS
  • FOCUS ON SPECIFIC GROUP
  • DEVELOP UNIQUE BRAND IMAGE
• LIMITATIONS OF SEGMENTATION

  • TARGETING A RANGE OF DIFFERENT CUSTOMERS WITH DIFFERENT PRODUCTS AND SERVICES CAN BE COSTLY
  • FOCUSING ON ONE GROUP CAN CAUSE A BUSINESS TO MISS ANOTHER OPPORTUNITY
  • CUSTOMER CHARACTERISTICS CHANGE OVER TIME
• LIMITATIONS OF MARKET MAPS

  • BASED ON OPINIONS
  • BASED ON 2 VARIABLES-SIMPLISTIC