1.2: Spotting a business opportunity Flashcards
What will a business encourage if it meets customer needs?
repeat purchase
attract new customers
What are the 4 customer needs?
price
choice
quality
convenience
What are the 4 personal circumstances that affect customer needs?
family needs
personal tastes and preferences
financial needs
emotional needs
What is the purpose of market research?
help a business understand it’s customers, competitors and the market that it operates in to make informed decisions about its products and services
Name some purposes of market research
identify gaps or overcrowded areas in the market
identify and understand competitors
understand trends in the market
reduce the risk of business decisions
identify and understand customer needs
What are the types of market research?
primary and secondary
What is primary research?
collecting information that did not exist before
What are some methods of primary research?
surveys
focus groups
observations
questionnaires
experiments
social media
What are the benefits of primary research?
more accurate
up to date
specific to needs
effective at collecting qualitative data
direct customer contact
competitors don’t have the same info
What is secondary research?
collecting information that already exists
What are some methods of secondary research?
internet sites
local newspapers
market reports
government reports
sales data
What are the benefits of secondary research?
more general
less time consuming
cheaper
effective at collecting quantitative data
What is qualitative data?
information about people’s opinions, judgements and attitudes
What is quantitative data?
data that can be expressed as numbers and statistically analysed
Why can small businesses only do a little bit of market research?
it can be expensive
What is a market segment?
a group of buyers with similar characteristics and buying habits
Why do businesses segment the market?
allows the business to understand its customer needs and better target its customers
What are the ways in which a market can be segmented?
gender
age
demographics
lifestyle
location
income
What are the benefits of market segmentation to a business?
meet specific customer needs
differentiate its products
focus if a specific group of customers
target it’s marketing activity
develop a unique brand image
build close customer relationships
What are the limitations of market segmentation?
can be expensive
focusing on one group can cause a business to miss another opportunity
customer characteristics change over time
How does market mapping help a business?
identifies gaps and overcrowded areas in the market
What are the benefits of market mapping?
helps identify gaps in the market
helps identify competitors
supports market segmentation
helps make business decisions
What are the limitations of market mapping?
based on opinions rather than data
compares based on only two variables
can be difficult to identify the most appropriate variables
Ways to compete?
lower prices
improve design
wider product range
better customer service
stronger brand image
convenient location
higher quality
How does product differentiation help businesses?
position their products and target different market segments
gain a competitive advantage
What is a competitive market?
when there are a large number of businesses relative to the number of potential customers
when businesses sell very similar products and services that are difficult to differentiate
What are some decisions that a business might make in a highly competitive market?
improving efficiency
improving competitiveness
differentiating its products and services
lowering prices
special offers
cutting costs
What are some drawbacks of a highly competitive market?
business might have to:
lower prices to compete
accept lower profit margins
cut back on spending
be careful about expansion
monitor its competitors closely
