1.2 Spotting a business opportunity

Question 1

what are the three slightly different things that the word market means?

Answer 1

1) A place
2) Product
3) A group of people

Question 2

what are competitors?

Answer 2

Competitors are the different businesses that sell the same products in the same market, but they compete with each other over sales to customers.

Question 3

when making decisions the businesses might look at the strengths and weaknesses of its competitors in the following areas but what are these areas?

Answer 3

Price, customer service, quality, product range, Location.

Question 4

How will price affect competitors in a business?

Answer 4

customers will often want to pay less, so if the firms charge lower prices, then they would like to stop customers from buying elsewhere. However, this will mean that a firm may not make much profit per product sold.

Question 5

How will customer service affect competitors in a business?

Answer 5

offering customer service can attract customers and may mean that customers are willing to pay more money for a product and having a reputation for bad customer service might put customers off.

Question 6

How will the quality of products affect a business?

Answer 6

Offering better quality products may mean that customers are more satisfied. This may mean that business will be more competitive even if its products are more expensive.

Question 7

What will a business do to stand out from the competition?

Answer 7

To stand out from the competition a business might decide to train its staff in good customer service or provide extra services such as user training when the customer buys a product.

Question 8

How can a business convince that their products are better than their rivals?

Answer 8

In order to convince customers that their products are better than their rivals businesses may decide to spend money on developing high-quality products or on promotional materials that emphasises the quality. However, this will be costly for the firm.

Question 9

How will product range affect a business?

Answer 9

Having a large range of products may make the business more attractive to customers. A business may also try to fill any gap in the market such as supplying a previously unmet consumer need by developing new products.

Question 10

How will location affect a business?

Answer 10

Customers may be more likely to buy from a business if it sells products in a convenient place as they won’t have the inconvenience of travelling or waiting for the product.

Therefore businesses may decide to open stores in particular locations or to sell items online in order to offer the greatest convenience to customers as possible.

Question 11

why might a business carry out market research?

Answer 11

Businesses sometimes carry out market research in order to find out about the market and how they are performing in it.

Question 12

What else is market research used for?

Answer 12

To understand customer needs for example: what their needs are and how to satisfy them.

Question 13

What things may be included in customer needs?

Answer 13

The type of product, the quality of products, the price, the convenience of where it is sold and how much choice they have of a range of products e.g. different colours and sizes.

Question 14

what is the advantage of understanding the customer needs?

Answer 14

By understanding the customer needs businesses will be better able to make products that the meet these needs. This will increase their sales and help to ensure the business’s survival.

Question 15

How does market research help to improve businesses?

Answer 15

Make informed decisions, spot a gap in the market and reduce risks.

Question 16

what are the two types of market research?

Answer 16

Primary and secondary research.

Question 17

what does primary research involve?

Answer 17

Primary research involves getting information from customers or potential customers about their opinions.

Question 18

what are the different forms of primary research?

Answer 18

Questionnaires, surveys and focus groups.

Question 19

what are the advantages of primary research?

Answer 19

Observations are really cheap and give accurate information, questionnaires are cheap and can be used to sample a large geographic area, phone surveys have a much higher rate of response and focus groups are faster than surveying several people individually.

Question 20

what are the disadvantages of using primary research?

Answer 20

1) Observations don’t allow customers to give opinions so the business will know what customers are doing but not necessarily why.
2)With questionnaires it’s likely that most people won’t respond.
3) Phone surveys are more expensive.
4) In focus groups quieter individuals might not get their opinions heard.

Question 21

what is secondary research?

Answer 21

It is looking at other people’s work

Question 22

what does secondary research allow?

Answer 22

Secondary research allows access to a wide range of data not just the views of their sample groups. It’s useful for looking at the whole market and analysing past trends to predict the future.

Question 23

what secondary research involve?

Answer 23

It involves looking at the things like market research reports, government reports, articles in newspapers, magazines and on the Internet.

Question 24

what is an advantage of using secondary research?

Answer 24

Its often used by small businesses as its cheaper than primary research and the data is easily found and instantly available.

Question 25

what are the disadvantages of using secondary research?

Answer 25

Disadvantages of using secondary research are that its not always relevant to your needs, its not specifically about your products and its often out of date.

Question 26

what do the sites on social media allow people to do?

Answer 26

It allows them to create profiles of themselves on the internet. That includes putting the things that they enjoy.

Question 27

How do businesses benefit from social media ?

Answer 27

They can sometimes collect information about people from their profiles and use it for their market research. For example, they can see what sorts of things are popular or are increasing in popularity.