1.2 - Spotting a business opportunity

Question 1

What can the word market mean?

Answer 1

The place where a good is being sold. Trade in a particular type of product. Or the potential customers for a product.

Question 2

What are competitors?

Answer 2

The different businesses that sell the same products in the same market.

Question 3

Why is it useful for businesses to understand the markets?

Answer 3

Businesses want to know about the market that they are competing in and how well they are performing in it.
They are interested in the market size and their market share.
And their competition.

Question 4

What is market size?

Answer 4

The number of individuals (including companies) within the market which are potential buyers or sellers of products.

Question 5

What is market share?

Answer 5

Is the proportion of total sales within the market that is controlled by the business.

Question 6

How might a business go about learning about the market?

Answer 6

By carrying out market research.

Question 7

What might businesses compete over?

Answer 7

Price
Customer service
Quality
Product range
Location

Question 8

What are the two reasons for carrying out market research?

Answer 8

To learn about the market.
And to learn about the customers.

Question 9

What are the customers needs?

Answer 9

The type of product.
The quality of the product.
The price.
The convenience of where it is sold.
How much choice they have of a range of products.

Question 10

Why would a business do market research on their customers?

Answer 10

To better understand their customers’ needs so they will be better able to make products that meet these needs. This will increase their sales and help to ensure the business’ survival.

Question 11

What three ways does doing market research help a business?

Answer 11

1. Make informed decisions
2. Spot a gap in the market
3. Reduce risks

Question 12

What decisions might market research influence?

Answer 12

• What products to sell
• Where to sell them and how to promote them
• What price to sell them for

Question 13

What is primary research?

Answer 13

Getting information from customers or potential customers.

Question 14

What are some examples of primary research?

Answer 14

• Questionnaires
• Surveys
• Focus groups
• Observation

Question 15

What are the advantages of primary research?

Answer 15

Up-to-date, relevant and specific to the business.

Question 16

What are the disadvantages of primary research?

Answer 16

Expensive and can be time-consuming.

Question 17

What is secondary research?

Answer 17

Looking at other people’s work. E.g. market research reports, government reports, articles in newspapers and magazines and on the internet.

Question 18

What are the three advantages of secondary research?

Answer 18

• cheaper
• easy obtain
• instantly available

Question 19

What are the disadvantages of secondary research?

Answer 19

• not always relevant to your needs
• not specific about your product
• often out of date

Question 20

What is quantitative data?

Answer 20

Information that you can measure or reduce to a number.

Question 21

What is qualitative data?

Answer 21

Information about people’s feelings and opinions.

Question 22

Advantage of qualitative data?

Answer 22

Gives a greater depth of information.

Question 23

Disadvantage of qualitative data?

Answer 23

Tricky to analyse because it’s hard to compare two people’s opinions.

Question 24

What does reliable research mean?

Answer 24

It’s results can be repeated by another researcher. It is accurate and more useful for the business.

Question 25

What is market segmentation?

Answer 25

When people within a market are divided into different groups.

Question 26

How does market segmentation help a business?

Answer 26

It allows them to identify their target market.

Question 27

What is a target market?

Answer 27

The specific group of people that a product is aimed at.

Question 28

What are the different groups that a market can be segmented into?

Answer 28

Age
Income
Location
Lifestyle

Question 29

What does a market map help the business understand?

Answer 29

Helps a business understand its location within the market, and the market’s key features.

Question 30

What can a business use a market map to find out?

Answer 30

• It’s competitors selling similar products
• Any gaps in the market