1.1 - Meeting Customer Needs

Question 1

Risk

Answer 1

Probability of possible outcomes is known

Risk exists because entrepreneurs commit resources such as money that can be lost. Many businesses fail, and new startups face this risk.

Question 2

Uncertainty

Answer 2

Probability of possible outcome is unknown

Uncertainty exists because businesses operate in an ever-changing environment and are subject to changing external factors such as legal, economic and social factors.

Question 3

Marketing

Answer 3

Marketing involves a range of activities to support the process of communicating with customers with the goal of selling them products that meet their needs. Marketing includes:

• Understanding customer needs
• Understanding the dynamics of the market (Including Competitors)
• Developing successful products
• Promoting the business and its products

Question 4

Mass Market

Answer 4

Market where goods are produced on a large scale.

Question 5

Niche Market

Answer 5

Subset of mass market defined by its own unique needs.

Question 6

Individual Market

Answer 6

Market where products are adapted to meet the needs of individuals.

Question 7

Dynamic market

Answer 7

Market that is constantly changing OR Constant state of flux

Causes:

• Economic Growth
• Demographic Changes
• Changes in legislation
• Social Changes
• Innovation

Question 8

Market Size

Answer 8

(Value) Total consumer spend in a market OR (Volume) Total quantity sold by businesses

Question 9

Primary Market Research

Answer 9

Research carried out first hand by the business

Pros:
- Specific to the needs of the business
- Up to date and reliable

Cons:
- More time consuming and therefore more costly
- Difficult to conduct a large sample size

Question 10

Secondary Market Research

Answer 10

Research conducted by another organisation. It is:

Pros:
- Easy to access and a good starting point
- Fast and less time consuming

Cons:
- Some data can be free but detailed reports can be expensive to access
- Not all data is up to date and might not be relevant to the business

Question 11

Product Orientated

Answer 11

Focused on the production efficiencies and the product itself (product features, profit margins and efficiency).

Question 12

Market Orientated

Answer 12

Focused on consumer needs.

Understanding consumers and developing products that meet their needs (consumer attitudes, characteristics, and how the product is used.

Question 13

Causality

Answer 13

How things influence each other (Cause and Effect)

Question 14

Market Segmentation

Answer 14

Process of dividing the market into subsets of customers who share common characteristics.

Question 15

Limitations of Market Research

Answer 15

• Often biased
• A small sample limits the reliability of the research
• Causality is hard to identify
• Collecting is very time consuming

Question 16

Sampling

Answer 16

Sampling involves selecting a representative group of people from the target population.

• Quicker an easier than trying to collect research from everybody (Often impossible)
• Larger the sample size the more representative the research

Question 17

Correlation

Answer 17

Correlation helps businesses understand the relationship between 2 factors. However, just because there is a strong correlation doesn’t mean that one variable leads to another (Correlation not causation).