GCSE Enterprise and Marketing OCR

This subject is broken down into 28 topics in 6 modules:

  1. How to Target a Market 7 topics
  2. What Makes a Product or Service Financially Viable 4 topics
  3. Product Development 4 topics
  4. How to Attract and Retain Customers 5 topics
  5. Factors for Consideration when Starting up a Business 3 topics
  6. Different Functional Activities Needed to Support a Business Startup 5 topics
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  • 6
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  • 28
    topics
  • 10,226
    words of revision content
  • 1+
    hours of audio lessons

This page was last modified on 28 September 2024.

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Enterprise and Marketing

How to Target a Market

The Need for Customer Segmentation

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The Need for Customer Segmentation

Understanding Customer Segmentation

  • Customer segmentation is the practice of dividing a company's customers into groups that reflect similar characteristics such as age, gender, interests, spending habits, etc.
  • It is a crucial step in strategic marketing since it allows businesses to target specific groups of customers effectively.
  • Market segmentation is the first step in target marketing and it aims to identify and define potential customers or users.

The Need for Customer Segmentation

  • Breaking down a market into segments helps businesses to focus their resources. Instead of trying to appeal to everyone, businesses can concentrate on reaching the most profitable customers in a specific segment.
  • Customising marketing messages and products for specific segments enables businesses to better satisfy customers' needs and wants, fostering customer loyalty and retention.
  • Customer segmentation aids in better product development. By understanding the needs and wants of different segments, companies can design and market products or services that better cater to those needs.
  • Segmentation helps in pricing decisions. If businesses know which customers are willing to pay more for certain features, they can adjust their pricing strategies accordingly.

Types of Customer Segmentation

  • Demographic segmentation involves dividing the market based on variables such as age, gender, income, ethnic background, and family life cycle.
  • Psychographic segmentation is based on social class, lifestyle, or personality characteristics.
  • Behavioural segmentation is based on consumers' knowledge, attitudes, uses, or responses concerning a product.
  • Geographic segmentation divides customers based on their geographical location.

Implementing Customer Segmentation

  • The process of customer segmentation should be data-driven based on detailed market research. Surveys, focus groups, customer databases, and sales data are common sources of information.
  • The success of segmentation relies on the targetability of the segment. Businesses must be able to reach the segment through effective communication mediums.
  • It's also important that the segmented markets are measurable. Businesses must be able to estimate the potential profitability of a segment.
  • Segmentation is not a one-time process. The segmentation strategy should be periodically reviewed and updated based on changes in market conditions and consumer behaviours.

By understanding the importance of customer segmentation, you can appreciate its role in enhancing business performance and achieving market success. It offers a pathway for businesses to improve their offerings, develop loyal customers, and ultimately, increase profitability.

Course material for Enterprise and Marketing, module How to Target a Market, topic The Need for Customer Segmentation

Enterprise and Marketing

Product Development

The Impact of External Factors on Product Development

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The Impact of External Factors on Product Development

Understanding the Impact of External Factors on Product Development

  • External factors in product development are variables outside the control of a company that can influence product design, production, and marketing.
  • Knowledge of external factors and their potential impact helps businesses anticipate challenges and mitigate risks.

Major External Factors

  • Economic conditions: The economic climate can influence both customer demand and production costs. For instance, during a recession, consumers might look for cheaper alternatives and the company may need to adjust its product range accordingly.
  • Socio-cultural changes: These include changes in tastes, lifestyle trends or consumer behaviour. Companies need to closely observe these changes to ensure their products continue to meet customer needs.
  • Technological advancements: Technology often drives innovation, offering opportunities for companies to incorporate new features into their products or to improve manufacturing processes.
  • Environmental and sustainability issues: There is growing pressure for businesses to be more environmentally responsible. This can affect everything from product design (e.g. using eco-friendly materials) to packaging and distribution.
  • Legal regulations: Companies must comply with all relevant laws and regulations. These could range from safety standards for products, to data protection laws for customer information.

How External Factors Impact Product Development

  • External factors can dictate the features and specifications of a product. For example, if sustainability becomes a key focus for consumers, a company may switch to eco-friendly materials or production processes.
  • Changes in the external environment can also impact product pricing. Economic fluctuations or changes in raw material costs can affect how much it costs to create a product, and this may be passed on to consumers.
  • External factors, such as technological innovations, can also drive the development of new products. Companies that stay on top of new technologies are often able to create innovative product offerings that keep them competitive.
  • Legal regulations ensure products meet certain standards for safety, quality, or other criteria. Breaches could result in penalties or damage to the company's reputation.
  • By monitoring and responding to external factors, businesses can not only maintain their competitiveness but also seize new opportunities. However, they must also be aware of any potential risks these changes could bring.

Strategies for Dealing with External Factors

  • Businesses must be proactive in their approach, through regular market research and environmental scanning, to stay abreast of changes in the market and wider business environment.
  • Companies need to be flexible and ** adaptable**, ready to revise their product development strategies in response to changes in external factors.
  • Companies can act on opportunities created by external factors, such as developing new products in response to technological advancements, or finding ways of reducing production costs in line with economic conditions.
  • It is crucial to ensure that all aspects of the product - from design to production, to marketing - are aligned with the regulatory environment to avoid legal issues.

Real-life Example

  • A real-world example of adjusting to environmental factors is the shift from plastic to paper straws in the food and drink industry. As environmental concerns grew, companies developed alternative, more sustainable products to meet customer expectations.

Course material for Enterprise and Marketing, module Product Development, topic The Impact of External Factors on Product Development

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