1.2 - Spotting a business opportunity Flashcards
What can the word market mean?
The place where a good is being sold. Trade in a particular type of product. Or the potential customers for a product.
What are competitors?
The different businesses that sell the same products in the same market.
Why is it useful for businesses to understand the markets?
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.
What is market size?
The number of individuals (including companies) within the market which are potential buyers or sellers of products.
What is market share?
Is the proportion of total sales within the market that is controlled by the business.
How might a business go about learning about the market?
By carrying out market research.
What might businesses compete over?
Price
Customer service
Quality
Product range
Location
What are the two reasons for carrying out market research?
To learn about the market.
And to learn about the customers.
What are the customers needs?
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.
Why would a business do market research on their customers?
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.
What three ways does doing market research help a business?
- Make informed decisions
- Spot a gap in the market
- Reduce risks
What decisions might market research influence?
- What products to sell
- Where to sell them and how to promote them
- What price to sell them for
What is primary research?
Getting information from customers or potential customers.
What are some examples of primary research?
- Questionnaires
- Surveys
- Focus groups
- Observation
What are the advantages of primary research?
Up-to-date, relevant and specific to the business.
What are the disadvantages of primary research?
Expensive and can be time-consuming.
What is secondary research?
Looking at other people’s work. E.g. market research reports, government reports, articles in newspapers and magazines and on the internet.
What are the three advantages of secondary research?
- cheaper
- easy obtain
- instantly available
What are the disadvantages of secondary research?
- not always relevant to your needs
- not specific about your product
- often out of date
What is quantitative data?
Information that you can measure or reduce to a number.
What is qualitative data?
Information about people’s feelings and opinions.
Advantage of qualitative data?
Gives a greater depth of information.
Disadvantage of qualitative data?
Tricky to analyse because it’s hard to compare two people’s opinions.
What does reliable research mean?
It’s results can be repeated by another researcher. It is accurate and more useful for the business.
What is market segmentation?
When people within a market are divided into different groups.
How does market segmentation help a business?
It allows them to identify their target market.
What is a target market?
The specific group of people that a product is aimed at.
What are the different groups that a market can be segmented into?
Age
Income
Location
Lifestyle
What does a market map help the business understand?
Helps a business understand its location within the market, and the market’s key features.
What can a business use a market map to find out?
- It’s competitors selling similar products
- Any gaps in the market
