1.1 and 1.2

• Price


  Customers want value for money. A price that reflects the satisfaction that a customer will receive from a product. Customers will be prepared to pay a higher price for a product that will give them greater satisfaction.
• Quality


  Customers getting what they want or better than expected. The level of quality a customer expects does depend upon the price they have paid. Customers are more accepting of a low quality product if they paid a low price for it.
• Choice


  Customers have options. It increases the chance that the product will be perfect for one type of customer. Choice means that there is lots of competition. This results in low prices and better quality products and service as businesses compete for sales.
• Convenience


  Making life easier for customers. Convenience includes the process of buying a product and getting it delivered. The more convenient a product is, the higher the price customers are usually willing to pay.
• Efficiency & reliability


  Customers want their needs met consistently.
• Design


  Many customers value style and design above price. They will therefore pay a higher price for a product that looks good and is stylish.
• Some businesses believe that the appearance of the products and the way they work give them a USP over their competitors
• Why meeting customer needs is important

  Businesses need customers to survive. Must have enough customers willing to pay enough to cover costs and make profits. Satisfied customers leads to more sales due to repeat purchases and recommendations.
• Market research


  The process of finding out about customers and potential customers in a market for a product to help a business to satisfy customer needs more effectively.
• Purpose of market research

  • To identify and understand customer needs
  • To identify gaps in the market
  • To reduce risk
  • To inform business decisions
• Primary research methods


  • Focus groups
  • Surveys
  • Observations
  • Experiments
  • Questionnaires
  • Social Media
• Primary research benefits


  More accurate, up to date, specific to business needs, effective at collecting qualitative data, direct customer contact
• Primary research drawbacks


  Expensive, interviewer bias, time-consuming, inaccurate if the sample size is too small, inaccurate if the wrong questions asked
• Secondary research sources


  • Internet sites
  • Local newspapers
  • Government reports
  • Market reports
  • Telephone directories
  • Sales data
• Secondary research benefits


  Cheaper than primary, quicker to carry out, lots of information freely available
• Secondary research drawbacks


  Not specific to the needs of the business, not suitable for new products not tested before, not suitable for open-ended qualitative questions, out of date, not reliable depending on who has done the research
• Social media research


  Can be used to collect feedback from comments, reviews, surveys or online focus groups. Current trends can be tracked using hashtags. This can be quick and cheap, it is in real time, businesses can respond immediately.
• Qualitative data


  In-depth research into the opinions and views of a small number of potential or actual customers; it can explain why consumers buy what they buy
• Quantitative data


  Factual research on a large enough sample of people to provide statistically reliable results
• Size and scale


  The greater the sample size (proportion of the population), the more accurate the research will be
• Bias


  Bias is the inclination to agree with an idea. Market research can be biased if customers give the answers that they think the business wants them to give.
• Reliability


  The questions should enable people to give accurate and relevant answers.
• Market segmentation


  The division of a market into customer groups, each of which has distinct preferences.
• Ways to segment a market

  • Location
  • Income
  • Lifestyle
  • Age
  • Other demographic factors
• Benefits of segmentation


  Meet specific customer needs, differentiate its products, focus on a specific group of customers, target its marketing activity, develop a unique brand image, build close customer relationships
• Limitations of segmentation


  Targeting a range of different customers with different products can be costly, customer characteristics change over time, focusing on one group of customers can cause a business to miss another opportunities
• Market mapping


  Evaluating business ideas, goods and/or services by setting out the features of the market, product or service on a diagram. The map comprises two axes with each representing two features.
• Examples of features used in market mapping

  • Price (high/low)
  • Quality (high/low)
  • Everyday use/special occasion
  • Range of products (small/extensive)
  • Number of outlets (one/numerous)
  • Modern/traditional
  • For young people/older people
• Benefits of market mapping

  Helps to identify potential gaps in a market, helps businesses to identify their closest rivals, supports market segmentation, helps businesses to make decisions about marketing and positioning its brand
• Limitations of market mapping

  Based on opinions and perceptions, compares business based on only two variables, can be difficult to identify the most appropriate variables
• Competition


  Encourages businesses to make decisions about how they operate so that they can succeed against other businesses in their market
• Ways to compete


  • Better customer service
  • Stronger brand image
  • More convenient location
  • Higher quality
  • Better design
  • Lower prices
  • Wider product range
• Competitive market


  When there are a large number of businesses relative the the number of potential customers, a market is competitive
• Decisions a business may make in a competitive market

  • Improving efficiency
  • Finding ways to improve competitiveness
  • Differentiating its products and services
  • Lowering its prices
  • Giving customers special offers
  • Cutting costs
• Challenges in a highly competitive market

  Lower prices in order to compete, accept lower profit margins, cut back on expenditure, be careful about how and when it expands, monitor its competitors carefully
• Competition and how it affects business decisions

  Competition leads to businesses needing to make decisions that will persuade cus to buy from then rather than competitors. The business might look at the strengths and weaknesses of the competitors in the following areas : price, customer service, quality. Product range and location.
• Impact of social media on market research :

  Reliable results

  Real time feedback

  Helps businesses know what customers want
• Dynamic nature of business

  Why new business ideas come about and how new business ideas come about
• Reasons new ideas come about

  • Changes in technology
  • Changes in consumer wants
  • Products becoming obsolete
• Invention


  Creating a new idea