1.2- Spotting a business opportunity Flashcards
Customer needs:
Price, quality, choice, convenience
3 benefits to understanding customers
Generate sales
Business survival
Overcome competitors
Market research
Techniques used to gather information about its customers, market and competitors
4 Purposes of market research
Identify gaps in the market
Identify & understand customer needs
Reduce risk
Inform business decisions
Primary research
Collection of first hand data that didn’t exist before
Secondary research
Already been undertaken by another organisation
Quantitative
Numerical, easy to analyse and plot a graph
Qualitative
Non numerical, about people’s thoughts and opinions
Primary research
Ads and Dis
Ad-specific to needs, up to date, detailed information
Dis- time consuming, expensive
Secondary research
Ads and Dis
Ad-quick and easy to access, could be compiled by experts
Dis- could be out of date, not specific to you
Types of primary research
Questionaire
Survey
Focus group
Observation
Types of secondary research
Internet
Government reports
Market reports
Qualitative data
Ads and Dis
Ad- highlights issues, essential for new product launches
Dis- biased based on questions, expensive to collect
Quantitative data
Ads and Dis
Ad-easy to analyse, can be compared with other data
Dis- doesn’t explain why, things happen
Reliable market research data leads to:
Less money wasted
Reduces risk
Informed decisions
Unreliable market research data leads to:
Unwise decisions
Business could fail
Could lose money
How can social media help market research
Quick and cheap, can spot latest trends
Market segmentation
Dividing a market into smaller sections of dif customer needs
5 Types of market segments
*Demographic- statistical data of population(age)
*Income- disposable income (luxury/budget)
*Location- products may sell sell in dif areas
*Lifestyle- people’s lives (hobbies)
*Behaviour- purchases at dif times of year (christmas)
Benefits of market segmentation
*Match a product to specific customer needs–>Satisfaction–>Repeat customers
*Build closer customer relationships–>Satisfaction–>Charge higher prices
Market map
Shows the positions a product can take in a market based off two variables
Common features of market maps
Price, quality, level of luxury
Purposes of market mapping
Identify competition
Find gaps in the market
Market mapping
Ads and Dis
Ad- helps spot gaps in the market and competitors
Dis- gap ≠ demand, no guarantee of success
Competitive environment
The dynamic external system in which a business competes
What do businesses compete on?
Price, quality, location, product range, customer service
Competing on Price:
Lower prices=lower profits, would have to lower costs
Starts a price war with competitors
Competing on Quality
High quality is strength
Better quality= higher costs =profits lower
Customers could care more about price
Competing on Location
Convenient location is a strength
Offering free parking
Being out of town can have a larger store
Competing on Product range
Wider range of products targets more customers, attracts customers
Competing on Customer service
Quick service to customers
Being helpful and friendly wins loyalty
Competition can make a business…
Reduce its prices
Reduce its costs
Innovate
Increase product range
Effect of understanding customer needs
Provide what customers want—>Satisfy customers—>Encourage purchases—>Successful business
Effect of identifying gaps in market
USP—>Competitive advantage—>More sales—>Better reputation
Effect of reducing risk
Make changes to product—>More successful launch—>Prevent business failure
Effect of informing business decisions
Checks if an idea is viable—>Prevents wasting resources—>Checks an appropriate price of product
