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Customer Needs 1.1
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| Question | Answer |
|---|---|
| Define Market Positioning | Where a product is placed in the market relative to its competitors |
| State two things that Influence Market Positioning | Internal constraints e.g. budgets Internal strengths e.g. creativity and innovation Market conditions e.g. degree of competition External environment e.g. state of the economy |
| Explain what is meant by a Market Map | A market map is a diagrammatic technique that enables businesses to display the perceptions of customers. It compares different variables regarding products and consumers. It can be used to identify what segment of the market is underprovided for. |
| What are Factor inputs? | 4 factors of production: Land; Labour, Capital and Enterprise. |
| Define Added Value | This is achieved when a business increases the worth of its factor inputs by creating new output. Its the value of the finished good or service over and above the cost of achieving it |
| Define Unique Selling Point and provide an example | Must differentiate one product from another. The feature of a product that can be focused on in order to differentiate it from all competition. A USP could be a lower price, a smaller version of the product or offering extra functions |
| Explain what is meant by a Competitive advantage | A feature of a business that allows it to perform more successfully than others in the market e.g. Same quality of product at a lower price |
| What is Michael Porter’s generic strategy? | States that a firm can enjoy a competitive advantage if it is either: Lowest cost or Highest differentiated. Porter’s premise is to be one thing or the other and not stuck in the middle. |
| Describe Michael Porter’s generic strategy - Low Cost | Porter states that a strategy of low cost can be successful in either a mass or niche market. He refers to this as cost leadership, Cost leadership means being able to offer your product or service at the lowest cost possible |
| Describe Michael Porter’s generic strategy - Differentiation | Porter states that a strategy of differentiation can be successful in either a mass or niche market He refers to this as differentiation, in the mass market, and focussed differentiation, in a niche market |
| Define Product differentiation | A unique feature that makes a product stand out from other products in the marketplace. Firms try to make their product different to the competition by adapting the actual product in some way. |
| Define Market | Any place that buyers and sellers will come together to exchange goods or services. There will normally be an exchange of money at a set price. Today, markets take numerous forms e.g. local, national, physical or electronic. |
| Explain what is meant by Mass Markets | A product is targeted at a wide range of people The market is not segmented i.e. the characteristics of types of customers are not an important factor Products appeal to a wide range of customers Products are widely available through a range of markets |
| Describe Niche Markets | Identifying small, currently unsatisfied, gaps in the market The target market is well defined with distinct characteristics Promotional activities will be targeted at just a small subsection of the whole market Can often charge higher prices |
| Define Market size | This is the total value or volume of sales in the market. |
| What is the Market Size Formula? | Number of units sold x price |
| Define Market share | The proportion of total market sales that a firm has |
| What is the Market Share Formula? | Sales of one firm/Total market sales x 100 |
| Define Brand | A product produced by one business using a specific name |
| Explain Branding | Branding involves the creation of an identity for the business that distinguishes that firm and its products from other firms. Branding can add value to a product allowing firms to charge higher prices also leads to brand loyalty |
| Describe what is meant by a Brand extension | Adding new product ranges to a recognised brand name. Consumers familiar/loyal to the brand are more likely to be willing to try new products e.g. customers happy with the service provided by Virgin Media might be more willing to join Virgin Active |
| Describe two benefits of building a brand | Help build loyalty and repeat business as well as adding value allowing businesses to charge higher prices. Other benefits include brand extension. |
| Define a Dynamic Market | One that is subject to rapid or continuous changes e.g. shoes. Online retailing is a dynamic market it is consistently changing, expanding and developing. |
| What is meant by Online Retailing? | The process of buying and selling goods and services over the internet |
| What is the Market Growth formula? | Change in size of market / original size x 100 |
| Define Risk | The outcome of an action taken or not taken, in a situation which may result in loss or gain. Risk can be measured and quantified. It is the possibility that a business will have a lower than expected profit or a loss. |
| Define Uncertainty | The absence of certainty or something which is not known. When a business is unable to predict external shocks. Uncertainty cannot be measured in quantitative terms through past models. |
| Describe Innovation | When a new idea or invention is launched onto the market normally with a view to financial gains |
| Explain how a business can protect itself from uncertainty | If a business is worried about fluctuating interest rates then they could switch their loan to a FIXED rate so loan repayments stay the same. A DJ could take out insurance in case their equipment catches fire. |
| State two benefits of online retailing | 1. Offers greater convenience to the consumer 2. Can shop 24/7 3. Breaks down geographical barriers 4. Lower overhead costs 5. Access to a wider market |
| Define Market segmentation | Involves the division of larger markets into small clearly identifiable sections. Segmentation happens in most markets e.g. in the toothpaste market there are toothpastes for smokers, small children and people with sensitive teeth. |
| Define Market segment | Identifiable group with similar needs and wants. |
| Explain Demographic segmentation | Identifies subgroups of the population based on their demographic profile or characteristics e.g. age, gender and ethnicity. |
| Describe Geographic segmentation | Defines market categories based on where people live e.g. regions, cities or neighbourhoods. |
| Explain Income segmentation | Identifies subgroups of the market based on their levels of income and profession. Newspapers segment in terms of socioeconomic groups. |
| Describe behavioural segmentation | Characterises subgroups based on the behavioural patterns of the consumer rather than their characteristics. For example' frequency of purchase e.g. heavy user or light user |
| Define Random Sampling | Each member of the population has an equal chance of being included. Its appropriate when researching a large market and bias cannot be introduced |
| Explain Stratified Random Sampling | Separates the population into segments e.g. income groups.A sample is then taken from that segment |
| Explain Quota Sampling | Occurs when the interviewers select people within the population who meet set criteria e.g. 300 males aged between 24 –26. The interviewers can choose whoever they want provided they meet the criteria set |
| Define Market research | The systematic and objective collection, analysis and evaluation of information relating to markets and marketing |
| Explain and give two examples of Primary research | Involves gathering information for the first time. Examples include; Surveys and questionnaires e.g. Postal, Telephone, Face to face and On-line. In depth interviews and Focus groups |
| Define Secondary research | Research that has already been undertaken by another organisation and therefore already exists. Examples include; national and Local Government e.g. Office for National Statistics,Academic organisations e.g. universities and Newspapers |
| Describe Quantitative research | The gathering of statistical data to inform the company about people’s behaviour but does not identify the reasons |
| What is Qualitative research? | The gathering of non-statistical information that gives a company in depth insight into the reasons for human behaviour |
| State three problems of Market Research | 1.Past data and trends may not be a fair indication of the future 2.Accuracy of research findings 3.Financial costs 4. Questionnaire bias and Respondent bias e.g. exaggerating or not telling truth |
| Define Product orientation | inward-looking approach to new product development where the focus is on what products can be made and the production process. This means the business focuses on the production process and the product itself hopes it will fit with what the customer wants |
| Define Market orientation | Outward looking approach to new product development were the key focus is on what products the consumer wants. Apple is market orientated and sees its customer to be king and develops all its phones based on customers' specification. |
| Explain the benefits of Websites (Market Research) | 1.Invite feedback through blogs 2. Can be used to monitor the number, frequency and timings of visitors 3. Online polls and surveys 4. Cookies |
| What is Social Networking (Market Research)? | 1.Reviews 2.Blogs 3. Likes/dislikes 4. Viral marketing 5. Customer feedback |
| State one advantage of Quota Sampling | Quick and easy way of obtaining a sample |
| State two disadvantages of Quota Sampling | Not random, so some risk of bias/Need to understand the population to be able to identify the basis of stratification |
| State two benefits of Stratified sampling | It is random thus it reduces bias/It is not as expensive as a full random sample |
| State two advantages of Market Orientation | Close fit with customer expectations/Greater responsiveness to changes in customer needs |
| Give two disadvantages of Market Orientation | Regular changes in the appearance or function of a product may leave customers confused about what the brand really stands for/With customers who care mostly about cutting edge products, a marketing orientation may not work as well as product orientation |
| State one advantage of Product Orientation | Allows the business to focus on product quality and innovation and spend most of its efforts and money on doing this. |
| Give one advantage of Random sampling | It is not biased because everyone has an equal chance of being chosen |
| Give one disadvantage of Random Sampling | It assumes all consumers equally important so it is less useful if the product is targeted at a specific segment of the market |
Created by:
durquhart1
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