Identifying and understanding customer needs

• Why is it important for a new business to identify its customers?

  To understand what they want
• What are the two key outcomes of identifying and understanding customer requirements for a new business?

  Generate sales and increase survival likelihood
• How does understanding customer requirements help in generating sales?

  It enables the business to provide products or services that meet customer needs
• What might happen if a business does not understand the requirements of its customers?


  It may fail to generate sales
• What is an example of a target audience for a business focused on non-meat diets?

  Customers who are vegan or vegetarian
• Why would a business that sells vegan products likely generate more sales?

  Because it understands and meets the requirements of its target customers
• What would be an ineffective strategy for a business targeting non-meat eaters?

  Selling items derived from animals, like leather jackets or ham sandwiches
• What is one of the main aims of a new, small business?

  Survival
• How long does a new business typically aim to survive?

  At least 12 months
• How does generating sales relate to the survival of a new business?

  Generating sales increases the chances of survival
• What is key to business survival in relation to customer requirements?

  Keeping up with changing requirements of customers
• How should businesses adapt to changing customer requirements?

  By modifying their products and services accordingly
• What is key for an entrepreneur or business to be successful?

  Identifying and fulfilling customers' needs
• Where do most business ideas come from?

  From an entrepreneur spotting a need for a product or service
• What are the four main customer needs that an entrepreneur or small business must consider?

  • Price
  • Quality
  • Choice
  • Convenience
• What does price refer to in a business context?

  How much a business charges for its product or service
• What do customers want when purchasing a product or service?

  A fair price
• What is the relationship between price and value for money?

  Customers ultimately want value for money, even if they are drawn in by low prices
• Why is it important for a price to match the quality of a product or service?

  Because customers have expectations based on the price they pay
• What might customers expect if a jewellery shop sells rare diamonds at a low price?

  Customers may be put off by the low price
• How do customers perceive quality in relation to price?

  Generally, those paying a low price expect lower quality and those paying a higher price expect higher quality
• If a person buys a handbag for £15, what might they expect regarding its durability?


  They may expect it to last for six months
• What expectation might a customer have for a handbag that costs £500?


  They may expect it to last for five years or longer
• How does price affect the level of service offered by businesses?

  Low prices often mean a lower-quality service, while higher prices often mean a higher-quality level of service
• Why is choice important for businesses?

  Because customers have different needs and desires when buying items
• What might customers want in terms of choice when shopping?

  Different styles, sizes, or completely different products
• How might a clothing shop cater to customer choice?

  By stocking a range of styles and sizes for each item of clothing
• How would a sandwich shop need to cater to different customers?


  By offering a range of sandwiches to cater to various dietary preferences
• What advantage do businesses that operate through e-commerce have regarding choice?


  They can offer a wider choice as they are not restricted by physical display areas
• What do customers want in terms of convenience?

  They want something that is easier, quicker, or generally less hassle
• How are customers willing to pay for convenience?

  Customers are often willing to pay more for convenience
• What is an example of convenience in shopping?


  Buying clothes or food online instead of traveling to a shop
• How might a ticket-selling business enhance convenience for customers?


  By allowing customers to display tickets via an app on a smartphone