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1.1 Meeting customer needs - Coggle Diagram
1.1 Meeting customer needs
1.1.1 The market
Mass markets
Aim their products to a wide range of customers, with different backgrounds rather than one specific type of customer. For example, bread
Benefits the business as they can gain economies of scale by buying goods in bulk. Easier to afford advertising campaigns
Lots of rivals in a mass market, making it very competitive due to a lack of differentiation between firms, a USP is very helpful
Niche markets
A smaller section of the market which businesses focus on. These are carefully tailored products made with quality and great care. For example, this could be a brioche bun, rather than your everyday bread
Less competition in niche market, allows businesses to charge higher prices and products can be tailored to the customers desires
Disadvantages are that being in a smaller segment of the market, fewer customers are in demand for it. May be difficult for retailers to stock the product
Dynamic markets
A market which is constantly changing and developing, it can grow or decline very quickly
Risk and uncertainty
Risk - Factors within a business that are not expected but can be planned ahead for to mitigate the risk of a potential disaster
Uncertainty - Being unsure on the factors influencing sales and therefore cannot be planned ahead for which may impact profit and growth
Competition
When rival firms in the same market try to win customers from each other, this could be achieved through USPs or pricing techniques
1.1.2 Market Research
Market research
Business try to use market research to find out more information about their target audience, judging by factors on behaviour, attitudes towards products and trends in sales
Product/Market orientation
Product orientation - When the business focuses on the products they're producing to the best quality possible, ignoring the consumers priorities
Market orientation - When the business prioritises it's customers over it's products. Businesses must be critical at market research to ensure that the products are to the customers needs and desires
Primary market research
Examples of primary market research
Observations of customers
Online forms and surveys
Interviews
Focus groups
Involves using data that the business creates first-hand and used for that specific business
Advantages of primary market research
Gathers up-to-date customer views about the product
Questions can be tailored to meet the individual needs of the business
disadvantages of primary market research
Time-consuming process to collect the data
Expensive to carry out
Results could be inaccurate
Questions may have a slight bias to them
Secondary market research
Examples of secondary market research
Government statistics
Mintel reports
The businesses own data
Competitor's data
Advantages of secondary market research
Time and cost effective as data has already been collected
Data is freely available to collect
Disadvantages of secondary market research
Dependant on another businesses efforts to create the data, could be unreliable
High chance of bias data
Data could be old or out-of-date
Market segmentation
Involves dividing a market into smaller sections of customers with similar needs or interests. E.G a bank may segment it's customers on an age basis to treat them differently
1.1.3 Market positioning
Market mapping
Creating a diagram that identifies all the products using two key features. For example, price and quality
It can help spot gaps in the market that may lead to exciting product innovation, and allows businesses to see where competitors are placing their products in a market
Gaps in the market are often present due to a lack of demand, leading to business decisions made on insufficient evidence
Competitive advantage
Competitive advantage is a sustainable way to keep ahead of your competitors in the long-term
Different ways to gain a competitive advantage for example, could be to be the lowest cost producer, or to differentiate your product from others
Product differentiation
This is a method businesses use to persuade people to buy your products rather than others by the use of distinct features. This could be branding, packaging or special product features
It focuses on telling customers what is different and better about the product, leading to more people being likely to buy it and adding value
It could add to higher designing and production costs, which could result in a price too high for customers to want to pay for
