1.2 Spotting a business opertunity

Question 1

give 6 examples of customer needs

Answer 1

• durability
• choice
• good looking
• quality
• convenience
• price

Question 2

How can a business increase sales?

Answer 2

• lowering the price
• promoting products through advertising
• running a competition/promotional activity
• improve the product

Question 3

why should you use market research?

Answer 3

• to work out customer needs
• to identify gaps in the market
• to reduce risks and make informed business decisions
• identify and understand customers
• understand trends in the market
• understand how a business is doing

Question 4

what is primary research?

Answer 4

information gathered by the researcher and is original data

Question 5

give 4 examples of primary rearch

Answer 5

1) surveys
2) questionnaires
3) focus groups (talking to customers about a proposed product/service)
4) observation(watching what products customers buy in shops)

Question 6

what is secondary research?

Answer 6

When data has already been collected by someone else

Question 7

give three secondary research methods

Answer 7

1) internet
2) market reports
3) government reports

Question 8

what is quantitative data?

Answer 8

data involving numbers

Question 9

what is qualitative data?

Answer 9

information on feelings/thoughts

Question 10

what is a market map?

Answer 10

a grid measuring two features of a product (normally price and quality)

Question 11

what does market mapping allow businesses to do?

Answer 11

• identify a gap in the market

- product differentiation

Question 12

what is a gap in the market?

Answer 12

when no business(es) is currently serving the needs for a particular product/service

Question 13

what is market segmentation?

Answer 13

breaking the market down into sub groups

Question 14

how can you segment a market?

Answer 14

location,demographics,lifestyle,income,social class

Question 15

how is social class divided?

Answer 15

a-upper class
b-middle class
c1-lower middle class
c2-skilled working class
d-working class
e-unemployed

Question 16

what is a competitive market environment?

Answer 16

a dynamic external system in which a business competes and functions

Question 17

how will businesses change in a competitive market?

Answer 17

1) make their brand stand out
2) be customer orientated
3) build customer loyalty
4) differentiate the product/service
5) add value

Question 18

what are the advantages of primary research?

Answer 18

• more accurate
• up to date
• specific to needs
• effective at collecting qualitative data
• direct customer contact

Question 19

what are the disadvantages of secondary research?

Answer 19

-more general

Question 20

what are the advantages of secondary research?

Answer 20

• less time consuming

- effective at collecting qualitative data

Question 21

what does bias mean?

Answer 21

the inclination to agree with a particular idea

Question 22

why would market research be bias?

Answer 22

customers may give answers that the business wants to hear and not their actual opinion

Question 23

what are the advantages of segmentation?

Answer 23

• meet specific customer needs
• differentiate its products
• focus on a specific group of customers
• target its marketing activity
• develop a unique brand image
• build close customer relationship

Question 24

what are the limitations of market segmentation?

Answer 24

• targeting a range of different customers with different products/services can be costly
• focusing on one group of customers can cause businesses to miss opportunity
• some characteristics of customers change over time (lifestyle, income, demographics)

Question 25

what are the benefits of market mapping?

Answer 25

• helps to identify potential gaps in the market
• helps business spot their closest rivals
• supports market segmentation
• helps businesses make decisions about marketing and positioning its brand

Question 26

what are the limitations of market mapping?

Answer 26

• based on opinions and perceptions
• compares businesses only on two variables
• can be difficult to identify the most important variables

Question 27

why should a business sell a particular product or service?

Answer 27

• if there is a gap in the market
• if their is enough demand in the market
• if a business can meet customer needs better than competitors

Question 28

what is product differentiation?

Answer 28

making a product different from others

Question 29

how could you compete with other businesses?

Answer 29

through. ..
- quality
- location
- brand
- price

Question 30

what is a competitive market?

Answer 30

when there is a large number of businesses compared to potential customers

Question 31

how would a competitive market affect business decisions?

Answer 31

may cause businesses to…

• improve efficiency
• find ways to improve competitiveness
• differentiating its products and services
• lowering its prices
• giving customers special offers
• cutting costs

Question 32

what are the drawbacks of a competitive market?

Answer 32

• lower prices in order to compete
• accept lower profit margins
• cut back on expenditure
• be careful about how and when it expands
• monitor its competitors closely

Question 33

why do businesses do market research?

Answer 33

to understand customers, competitors and the market

Question 34

how should a business survive in a competitive market?

Answer 34

• make their brand stand out
• be customer orientated
• build customer loyalty
• differentiate products/services
• add value