Identifying and understanding customers

Question 1

Why do business exist?

Answer 1

Businesses exist to provide goods and service to meet our wants and needs.

Question 2

All businesses are involved in an exchange process, what does this mean?

Answer 2

A business provides a good service in exchange for something in return i.e. money.
For this to be successful the exchange must benefit both sides.
Those investing in, running and managing the business must feel that the rewards generated by the exchange process are worthwhile and better than rewards that could be gained elsewhere (opportunity cost). The customer must feel the benefits justify the price paid.

Question 3

Is there a difference between a customer and a consumer?

Answer 3

A customer buys a product from a business whereas a consumer is someone who uses the good and service produced by businesses.

Question 4

How can a business increase its sales?

Answer 4

By providing more benefits and doing something better than competitors.

Question 5

What does the marketing mix mean to you?

Answer 5

It’s a combination of factors that influence a customer’s decision to purchase a product.

Question 6

When considering to buy a new product, what to you consider?

Answer 6

If it is:

• Affordable
• Stylish
• Reliable
• Environmentally friendly etc

Question 7

What would the consequences be if a business didn’t understand its customers?

Answer 7

• Withdraw the product because sales are too low
• To amend the product in some way, which has a cost
• To lower the price, which may reduce profits - how could this possibly increase profits?
• Damage the brand name which may affect the company’s future success.