1.2 Spotting a business opportunity

Question 1

Give four customer needs

Answer 1

1. Price, quality, choice, convenience

Question 2

2. What are the advantages of meeting customer needs?

Answer 2

2. Higher satisfaction, more customer loyalty, More repeat purchase, positive reputation.

Question 3

3. What are the disadvantages of not meeting customer needs

Answer 3

3. Lower satisfaction, less customer loyalty, less repeat purchase, poor reputation

Question 4

4. What is meant by price?

Answer 4

4. The amount charged to customers for a good or service

Question 5

5. What is meant by convenience?

Answer 5

5. How easy to access a good or service is.

Question 6

6. What is meant by choice?

Answer 6

6. The variety a business offers in terms of its products or services.

Question 7

7. What is meant by quality?

Answer 7

7. How fit for purpose a product or service is; how well a product or service meets a customer’s needs.

Question 8

8. Why might a business conduct market research?

Answer 8

8. To identify and understand customer needs, to identify gaps in the market, to reduce risk, to inform business decisions.

Question 9

9. Give two types of market research

Answer 9

9. Primary and secondary

Question 10

10. Give two types of data that can be collected from conducting market research.

Answer 10

10. Quantitative and qualitative

Question 11

11. What is meant by primary market research?

Answer 11

11. Research that is collected first hand, it is research that does not already exist.

Question 12

12. Give four examples of primary market research.

Answer 12

12. Survey, questionnaire, focus group, observation

Question 13

13. Give two benefits of conducting primary research.

Answer 13

13. Up to date, specific to the business needs

Question 14

14. What is meant by a survey?

Answer 14

14. investigate the opinions or experience of (a group of people) by asking them questions

Question 15

15. What is meant by a interview?

Answer 15

15. An interview is a structured conversation where one participant asks questions, and the other provides answers.

Question 16

16. What is meant by a focus group?

Answer 16

16. A group of people assembled to participate in a discussion about a product before it is launched, or to provide feedback

Question 17

17. What is meant by an observation?

Answer 17

17. When customers are watched by the business to see their behaviours.

Question 18

18. What is meant by secondary market research?

Answer 18

18. Research that already exists, it is second hand information.

Question 19

19. Give three examples of secondary market research

Answer 19

19. Market reports, government reports, internet

Question 20

20. Give two benefits of conducting secondary market research

Answer 20

20. Its quick to gather, its cheap

Question 21

21. Give two limitations of conducting secondary market

Answer 21

21. May be out of date, not specific to the business

Question 22

22. What is meant by a market report?

Answer 22

22. A report written by a market specialist, detailing the key trends within a market e.g. Mintel.

Question 23

23. What is meant by a government report?

Answer 23

23. A report written by the government on a particular issue or piece of research e.g. government report on the gender pay gap.

Question 24

24. What is meant by the internet?

Answer 24

24. A global computer network providing a variety of information and communication facilities, consisting of interconnected networks using standardised communication protocols.

Question 25

25. What is meant by qualitative data?

Answer 25

25. Data that includes judgements and opinions.

Question 26

26. Give an example of how a business would gather qualitative data

Answer 26

26. Asking open ended questions; conducting a focus group

Question 27

27. Give a benefit of gathering qualitative data

Answer 27

27. It is more detailed so offers more insight into the reasoning behind a decision.

Question 28

28. Give a disadvantage of gathering qualitative data

Answer 28

28. It can be time consuming to analyse.

Question 29

29. What is meant by quantitative data?

Answer 29

29. Data that includes numbers and statistics.

Question 30

30. Give an example of how a business would gather quantitative data

Answer 30

30. Asking closed questions; conducting a poll on social media.

Question 31

31. Give a benefit of gathering quantitative data

Answer 31

31. Its quick and easy to analyse

Question 32

32. Give a disadvantage of gathering quantitative data

Answer 32

32. It doesn’t provide reasoning behind the choices made.

Question 33

33. How can social media be used to gather market research?

Answer 33

33. Through reviews, a poll, checking number likes, follows.

Question 34

34. What is the benefit of using social media to gather market research?

Answer 34

34. Wide audience, quick and easy to use.

Question 35

35. What is meant by reliability?

Answer 35

35. The quality of being trustworthy or of performing consistently well

Question 36

36. Why is reliability important when gathering market research?

Answer 36

36. If the data is reliable the business will make better quality decisions- meaning higher chance of business success.

Question 37

37. What is meant by market segmentation?

Answer 37

37. When the market is split into groups of customers who have similar characteristics.

Question 38

38. Give four ways a business could segment the market

Answer 38

38. Age, gender, income, lifestyle

Question 39

39. What is the benefit to a business of segmenting the market?

Answer 39

39. Able to adapt products to more closely meet the customer needs, can target advertising more appropriately, can sell more effectively in suitable locations.

Question 40

40. What is the disadvantage to a business of segmenting the market?

Answer 40

40. Not all customers may fit into the category, may increase costs trying to meet the needs of different groups.

Question 41

41. What is a market map?

Answer 41

41. A diagram which uses two axes (usually price and quality) to allow products or businesses to positioned based on how they meet the different criteria.

Question 42

42. What is the benefit to a business of producing a market map?

Answer 42

42. Helps identify a gap in the market, can see how saturated a market is (how many competitors are positioned in a certain area)

Question 43

43. What is meant by direct competition?

Answer 43

43. When two businesses sell the same/similar products to the same groups of customers. E.g. Coca Cola & Pepsi

Question 44

44. What is meant by indirect competition?

Answer 44

44. When two businesses selling different product compete for the same consumer income. E.g. Vue Cinema and Hollywood Bowl.

Question 45

45. How can businesses compete with each other? (Five main ways)

Answer 45

45. Price, quality, location, customer service, product range

Question 46

46. What impact does lots of competition have on a business?

Answer 46

46. May encourage innovation, may encourage wider product portfolio, may cause the business to advertise more, the business may lower their prices.

Question 47

47. If a business is in a market where they don’t have lots of competition, why might this be a disadvantage to customers?

Answer 47

47. The business may innovate less- leading to lower quality products, firm may charge the customers higher prices.