Interview
Business Paper One - Complete Grade 9 Notes
Detailed Grade 9 Notes for the entirety of Business Paper One.
[Show more]
Seller
Follow
Content preview
Business Paper TwoUnit 5 - Marketing
Understanding Customer Needs
A business needs to have an effective understanding of the needs and wants of
customers in its target market segment.
Why focus on meeting customer needs?
If you provide a product or service that customers will buy, this will avoid costly
research and development mistakes. This will make you more competitive and
therefore increase sales.
What is segmentation?
Segmentation involves dividing a market into parts that reflects different
customer needs and wants.
Main categories of market segmentation:
Location / demographic
Demographics
Income
Overview of market segments
Demographic – dividing a market into segments based on demographic variables
such as age, gender, religion, nationality, ethnicity etc.
Income – dividing markets into different income segments, often on the basis of
socio-economic grouping.
Location / geographical – Dividing a market into different geographical units,
such as nation, region, cities, neighbourhoods or other territories.
Benefits of effective segmentations:
Better marketing of product to specific customer needs.
Helps with new customer development, focused on needs of customers in
the segment.
Allows a business to grow its shares in a market or to effectively target
fast-growing segments.
Helps make the marketing mix more effective e.g better targeting or
promotion.
What is the purpose of market research?
To gather information that will enable the business to be informed in its decisions
and so reduce the risk of failure.
There are two types of market research:
Primary Research
Data collected first-hand for a specific research purpose
Secondary Research
Data that already exists that has been collected for a different purpose.
Primary Research
Directly focused on research objectives
Kept private – not publicly available
More detailed insight – particularly into customer views
Time-consuming and costly to obtain
Risk of survey bias
, Sampling may not be representative of the whole population
Secondary Research
Often free and easy to obtain
Good sources of market insight
Quick to access and use
Can quickly become out of date
Not tailored for business needs
Specialist reports are often quite expensive.
Market Research
Surveys and Questionnaires:
Can be done through different medias
Relatively cheap and can produce good quality data if the sample size is
large enough
Data collected is usually quantitative and therefore easy to analyse.
Questionnaires have to be well-designed to ensure the information
collected is reliable.
Reply rates are often low, especially for telephone and postal methods.
Can be expensive and time-consuming for a large sample to be obtained
that truly represents the views of the general population.
Focus Groups
Good way of getting detailed information about customer tastes and
preferences
They provide detailed information and opinions e.g quantative information.
Can be costly and time-consuming to conduct and therefore needs to be
carefully managed.
Only a small amount of data is collected which may not reflect the
viewpoints of others fully.
Interviews
Can find out more in depth, qualitative information from respondents.
Follow up questions are possible.
Easy to clarify any misinterpretation of questions.
Expensive and time consuming, which can limit the sample size and
therefore the validity of the data collected
Dependant on the method of interview. It may be difficult to attract
potential respondents to answer questions.
Secondary Research Methods
Competitor website – Valuable information of marketing activities of
competitors including their products and prices.
Newspapers – Financial information is provided on a daily basis.
Market research reports – Paying a research company for a wide variety of
expensive reports that analyse individual markets.
Marketing Mix
, Price
Why is price important?
Pricing decisions directly affect revenue
Must be consistent with other elements of the marketing mix, as it will
directly affect the consumer’s perception of a good or service.
Type of pricing methods
Loss-leader
Cost-plus
Skimming
Penetrative
Competitive
1) Price Skimming – new product
Price skimming involves setting a high price before other rivals come into the
market.
Often used for the launch of a new product which faces little or no competition,
usually due to the product possessing some new, advanced technological
features.
Potential for high profits straight away, which can help pay back its
research and development costs
Product may get a reputation for quality, encouraging brand loyalty.
Additional profits made can be invested in the next new profit.
Price skimming cannot last for long, as competitors soon launch rival
products, which puts pressure on the price.
May slow down the growth of a product because it is expensive and no
more customers can afford or are willing to pay the high price.
2) Price Penetration
The business offers low prices on goods and services at the start. Then the price
increases over time. Often used by new businesses or to support a new product
launch to draw consumers away from the competition.
May result in an initial loss of profits for a business, however, in the long-term,
the exposure gained can help to increase the profits.
Builds customer usage and loyalty
Can help develop long-term reliability of having a higher sales and a
higher market share.
In the short term, it is likely to result in lower profits than would be the
case if prices were set higher.
It may be difficult to raise the selling price in the future.
3) Competitive Pricing
A business will look at the prices charged by rivals. This will give an indication of
what price to charge. Prices are then set based on these prices.
Often used when there is strong competition in a market and customers are
faced with a wide choice of where to buy from.
Selling prices should be in line with rivals, so prices should be competitive
and therefore attract customers.
The business may need other ways to attract customers other than price.
It may have to use non-price methods to compete, for example providing
better quality.
The business will need to research what its competitors are charging,
could increase costs and lower profits.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller rc6. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £3.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67096 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now