1.1 Meeting Customer Needs

Question 1

What is a market?

Answer 1

Place where buyers/sellers connect to exchange goods/services for money.

Question 2

Define mass market.

Answer 2

Aimed at general public.

Question 3

What are economies of scale?

Answer 3

Average cost per unit of output decreases as production of output increases.

Question 4

What characterizes a dynamic market?

Answer 4

Markets constantly changing.

Question 5

List reasons for market changes.

Answer 5

• Consumer preferences change
• Trends
• Economies of scale
• Competitiveness

Question 6

What are the pros of online retailing?

Answer 6

• Large sale volume - higher revenue
• Everyone equally targeted
• Large scale production - economies of scale + lower unit cost

Question 7

What are the cons of online retailing?

Answer 7

• Lots of direct competition
• Similar products need to differentiate by marketing - expensive
• Less flexible to demand changes

Question 8

Define niche market.

Answer 8

Subsets of main market addressing a specialist need.

Question 9

What are the pros of a niche market?

Answer 9

• Premium price for exact product
• Easier to target customers
• Small scale production - flexible to adapt to new trends
• Less direct competition

Question 10

What are the cons of a niche market?

Answer 10

• Demand not always constant
• Small product range
• Higher unit cost - no economies of scale

Question 11

How is market size measured?

Answer 11

• Volume of sales
• Value of sales

Question 12

What is the formula for market share?

Answer 12

Market share = (Sales of product x / Total sales in whole market) x 100

Question 13

List positive changes in online retailing.

Answer 13

• Open 24/7
• Access to global market
• Convenient for customers
• Target broader market segment

Question 14

What are some negative changes in online retailing?

Answer 14

• Technical faults
• Security issues
• Can’t try on product
• Hard to build customer loyalty

Question 15

Define direct competition.

Answer 15

Two or more businesses selling similar products.

Question 16

Define indirect competition.

Answer 16

Businesses selling different products to same type of customers.

Question 17

How does competition affect the market?

Answer 17

• Priced competitively
• Better products
• Increase convenience (near customers, online)
• Promotion - deals, ads, celebrity endorsements

Question 18

What is market orientation?

Answer 18

Business places customer needs at centre of decision making process.

Question 19

What is quantitative data?

Answer 19

Numerical data.

Question 20

What is qualitative data?

Answer 20

Consumers’ feelings/thoughts of a product.

Question 21

List limitations of market research.

Answer 21

• Validity
• Reliability
• Cost/budget
• Time

Question 22

How does ICT impact market research?

Answer 22

• Internet (cost effective) - surveys can reach all customers using website
• No staff required
• Data more likely reliable - not rushed

Question 23

Define market segmentation.

Answer 23

Dividing a market into identifiable groups of individuals (i.e. market segments).

Question 24

List types of market segmentation.

Answer 24

• Demographic: gender, age, race, economic characteristics
• Geographic: Location
• Behavioural: Customer loyalty, usage/purchase behaviour
• Psychographic: Personality, lifestyle, values, interests

Question 25

What are the pros of market segmentation?

Answer 25

* Understand customer needs * Customer loyalty * Quick response to changing demand patterns * New products have greater chance of success

Question 26

What are the cons of market segmentation?

Answer 26

* High cost of market research * Lose focus of products purpose (e.g., adding too much features)

Question 27

Define product orientation.

Answer 27

Business priorities product quality rather than customer needs.

Question 28

What are the pros of product orientation?

Answer 28

* Product quality * Technological investment * Economies of scale more easily occurs - lower unit cost

Question 29

What are the cons of product orientation?

Answer 29

* Outsourcing of production * Fashion/tastes not accounted for * Neglects market change

Question 30

What is primary market research?

Answer 30

Research conducted by yourself.

Question 31

What is secondary market research?

Answer 31

Collecting data which already exists.

Question 32

Define market positioning.

Answer 32

Influence customer perceptions of a brand/product relative to competitors.

Question 33

What is market mapping?

Answer 33

Segmentation leads to more targeted marketing.

Question 34

What is the purpose of product differentiation?

Answer 34

Consumers must acknowledge difference to be willing to pay a premium price.

Question 35

List methods of product differentiation.

Answer 35

* Reputation (restaurant) * Customer service/after sale service (M&S) * Value for money (Lidl) * Product features (cars)

Question 36

What is a unique selling point (USP)?

Answer 36

A feature that makes a product stand out from competitors.

Question 37

List ways to add value to products/services.

Answer 37

* Design (differentiation advantage) * Production Quality (differentiation advantage) + efficiency (cost advantage) * Marketing (brand differentiation advantage)

Question 38

What are the benefits of adding value?

Answer 38

* Increase profit margins by higher costs * Protection against competitors offering lower prices * Customer loyalty

Question 39

What are the components of the marketing mix?

Answer 39

* Segmentation * Targeting * Positioning * Product * Price * Place * Promotion

Question 40

List competitive advantages of a product/service.

Answer 40

* Lower costs * Cost Advantage * Unique/superior product * Differentiation advantage

Question 41

Define competitive advantage.

Answer 41

How a business makes itself stand out by offering lower price / superior quality.

Question 42

What is cost advantage?

Answer 42

Skilled work/efficient operations to provide low cost value to customers (e.g., Aldi, Ryanair).

Question 43

What is differentiation advantage?

Answer 43

Resources focused on creating a superior value for customers (e.g., BMW, Waitrose).