1.1 MEETING CUSTOMER NEEDS Flashcards
(16 cards)
what is a market
a market is any place that buyers and sellers will come together to exchange goods or services.
niche market
A smaller part of a large market, with products tailored to specific customer needs.
mass market
A large market of customers which is undifferentiated and that sells products and services to suit a large number of consumers
features of a mass market
- large number of potential customers to attract
- most likely to have lots of competition
- Customers needs and wants are general and don’t need to be specific
- Makes products in large numbers
- Success usually associated with low-cost (highly efficient) operation or market leading brands.
- Products appeal to a wide range of customers
- Products are widely available through a range of markets
advantages of mass market
- Able to purchase goods and materials in bulk (economies of scale)
- Dealing with higher volumes of sales which make it easier to afford larger advertising and marketing campaigns
- lower production of costs due to economies of scale
- greater brand awareness
disadvantages of mass market
- Competition is likely to be fierce as businesses are attracted to potentially high sales levels
- Without a USP, it can be difficult to survive - hard to differentiate
- hard to keep up to date with consumer trends and changes in taste
features of a niche market
- Less competition in a specific marker = Higher survival rates
- Able to set own prices due to no competition over price = more profit
- If specific to customers needs and wants, there will be more people willing to pay more money for it.
- Promotional activities will be targeted at just a small subsection of the whole market
- Can often charge premium prices
advantages of niche market
- Less competition
- Can charge at higher price
- Customers tend to be more loyal
- Product’s can be tailored to meet customer needs
disadvantages of niche market
- Fewer customers as it is a smaller part of the larger market
- Hard to persuade retailers to stock the products
- Vulnerable to market changes - all “eggs in one basket”
what could happen for a company that is going from a niche market to a mass market
1.Forced to lower prices as some stores feel their customers would not pay the expensive prices when there may be close competition offering a similar product for much less.
2. More promotion will be needed so it does not get lost in the sea of other promotional products, meaning more money spent on promotion.
3. Increasing capital, labour, land so that there is a larger volume of the product to sell, but a newly mass market product may not have the means to do this.
4. Competition. Other brands are going to start to re-create the product if it is doing well and sell it for a cheaper price to drive you out of the mass market.
dynamic market
Markets which are constantly changing. The environment is dynamic, for example buyers may choose to buy less of one product and more of another. It can grow, change and decline very quickly
Reasons for dynamic markets constantly changing
- Social trends
- Changes in technology
- Competitiveness
- Trends
- Consumer tastes
- Fashion
- Rising/Falling incomes
- Arrival of a superior product offered by competition
- External shocks
how can businesses stay competitive even during dynamic markets?
- New businesses emerge when new technoloiges or design techniques make it possible to invent new products or cheaper substitutes
- Sellers respond to buyer’s changing needs by improving existing products and services or introducing new ones. For example, demographic factors can cause needs to change.
- Sellers also respond to other sellers’ changes in order to stay competitive
- Some businesses expand by diversifying their product ranges to meet needs in new or different markets.
competition
is where rival businesses in the same market try to win customers from each other.
price
The value at which a product or service is offered to customers
