1.2 - Spotting A Business Opportunity

Question 1

What influences customer needs are?

Answer 1

-price
-quality
-choice
-convenience

Question 2

What is the importance of understanding customers?

Answer 2

-generating sales
-business sales

Question 3

What is the purpose of market research?

Answer 3

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

Question 4

What are the methods of market research?

Answer 4

-primary research: survey, questionnaire, focus group, observation
-secondary research: internet, market reports, government reports

Question 5

what are the benefits of primary market research?

Answer 5

-the information collected will be up to date
-the questions asked can be tailored to ask specific questions relevant to the business
-it allows the business to have direct contact with existing and potential customers

Question 6

What are the drawbacks of primary market research?

Answer 6

-it can be time consuming to collect
-the research is open to potential bias, depending on the sample used
-often more expensive

Question 7

What are the benefits of secondary market research?

Answer 7

-it is usually cheaper than primary research.
-it can be less time consuming because information is more easily found.

Question 8

What are the drawbacks of secondary market research?

Answer 8

-the information gathered may not be specific or relevant to the business.
-the information may be out of date

Question 9

What is qualitative and quantitative data?

Answer 9

• qualitative data is based on people’s feelings, judgements, opinions.
  -quantitative data is numerical.

Question 10

What is the impact of using social media as market research?

Answer 10

• positive impact when conducting research
  -able to collect first-hand information more quickly (more cheaply)

Question 11

What is the importance of the reliability of your market research?

Answer 11

• market research is not effective if the data is unreliable

Question 12

How do businesses use market segmentation to target customers?

Answer 12

-location
-Income
-lifestyle
-demographics
-age

Question 13

What are the disadvantages of segmenting the market?

Answer 13

-narrowing the market= by focusing on one market segment, a business will be restricting the overall number of customers that may be attracted to the business.
-cost= adapting promotions for each segment will be expensive as each campaign has to be slightly different to meet exact needs of that segment.
-need to re-evaluate= Customers’ characteristics and desires will change over time. So a business must continually review its activities in order to ensure that it is still attractive to all the different segments it is targeting.

Question 14

What is the benefit of market mapping?

Answer 14

-businesses able to see if part of the market has no products.
-this may mean there is a gap in the market where customer needs are not being met.
-market mapping also helps a business to find out who their closest rivals/how they are perceived.

Question 15

What is the drawbacks of market mapping?

Answer 15

-products are plotted on diagram based on opinions & perceptions of the person creating it.
-may not reflect reality and businesses make poor decisions as a result.
- business that spots gap in the market must be cautious.
-may be gap because there is no demand for the type of product that they have identified.

Question 16

How does price impact a competitive environment?

Answer 16

-charging lower prices relies on being able to produce the product cheaply so enough profit is made on each sale.
- also means that a business must sell a larger quantity to make a large overall profit.

Question 17

How does quality impact a competitive environment?

Answer 17

-business may choose to differentiate itself by producing a better quality.
-customers will be more attracted because they may seek out a product that is superior in terms of function and durability.

Question 18

How does location impact a competitive environment?

Answer 18

-customer may choose a business because it is more easily accessible than others in the market.
-this can include being located online.

Question 19

How does product range impact a competitive environment?

Answer 19

-having a wide product portfolio will give customers more choice.
-this makes them more likley to purchase from that business than one that has a narrower product range.

Question 20

What is the impact of competition on business decision making?

Answer 20

-the business will need to
differentiate their product from their competitors