5.1 - Identifying and understanding customers

5.1 - Identifying and understanding customers

1. Keywords

   • Exchange - when someone gives up something in return for something else e.g. products for money
   • need - something that needs to be fulfilled for us to survive
   • Want - what we would like to satisfy our needs
   • customer - someone who buys a product from a business
   • consumer - someone who uses good and services produced by business

2. An exchange process

   • businesses must ensure that the investment of time, money and labour is exchanged for a sufficient amount to make a profit
   • customers need to believe the amount they pay for a product is value for money

3. identifying a business opportunity

   • businesses must offer products that customers want to buy, so they have to identify peoples needs and wants

4. difference between customer and consumer

   • a customer is someone who buys a product, a consumer is someone who uses good or services but may not necessarily buy them e.g. buying your friend some food and they eat it.
     • they are normally the same person however, businesses have to identify needs and wants of both e.g. you may want the latest, most expensive phone (consumer) but your parents may just want a cheap phone to contact you in emergencies

5. increasing sales

   • the key to a business increasing sales is to provide a better or unique product/service than competitors
     • e.g. Dyson's new hairdryer looks unique but claims to dry hair more effectively without damage
   • different features may increase sales even if the product is more expensive
     • a product or service can cost a similar price to others but add features e.g. uber is a taxi service but can be done from an app and gives a price before booking, dramatically increasing sales

6. selecting the correct marketing mix

   • • the marketing mix is a combination of factors that influence a customers decision to purchase something

7. Avoiding costly mistakes

   • understanding customer is the key to sales and avoiding expensive mistakes
   • if a business gets a product/service wrong it may have to withdraw it as sales are low
   • it may have to amend it which costs money
   • or may have to lower the price which can reduce profits and future reputation and success
   • E.g. the wii u only sold 13mil compared to the wii's 100mil so is regarded as a failure

8. Being competitive

   • the competitiveness of a business means its ability to offer better value for money than competitors
   • understanding customers wants means the business can satisfy these wants
   • the better you understand customers the better you can provide what they want
   • Competitive
     • Right product, right price, right promotion, right location = HIGH SALES

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