1.2 spotting a business opportunity Flashcards
why might a business make products to meet customer needs
encourage repeat purchase (build a loyal customer clientele) and attract new customers
how may a business identify their customers
online registration
how might a business understand their customers
qualitative market research
when may meeting customer needs be the most important
for fashion-focused industries
ethical issues about targeting customer needs
some products may be ‘wants’ rather than needs to companies manipulate their advertisements to make their customers believe they need the product rather than just want it
what are 4 customer wants
price
choice
quality
convenience
why might a business expand its product range
give customers more choice
more choice means that it is more likely that they will find a product that matches their needs
resulting in an increase in sales
what is the role of market research
to help a business understand the nature of its customers, competitors and the market in which it operates in order to make informed decisions about its products and/or services
purposes of market research (6)
identify gaps in the market
indentify customer wants and needs
understand how well the business is doing, such as customers’ opinions
make informed business decisions
understand trends in the market
identify and understand competitors
what are the types of market research
primary and secondary market research
what is primary research
collecting information that did not exist before (first hand).
benefits of primary research
more accurate
up to date
specific to needs of the business
effective at collecting qualitative data
direct customer contact
what is secondary research
gathering information that already exists
advantages and disadvantages of secondary data
more general
less time-consuming
effective at collecting qualitative data
examples of primary data (6)
surveys
focus groups
observations
experiments
questionnaires
social media
examples of secondary data (6)
internet sites
local newspapers
government reports
market reports
telephone directories
sales data
why can market research be risky
they cost a lot of money and time
when making decisions in the conclusions what is good to include
market research
how can you make market data more reliable
increasing the sample size of customers questioned
how may a larger business get market research
by paying a market research company to carry out extensive primary research
what research is most effective for small businesses?
secondary research as most of it is free
what else must a business look out for when analysing data
bias from customers who may just agree and give the answers that they think the business may want or by not surveying a representative sample
what is a market segment
a group of buyers with similar characteristics and buying habits
what are the six ways a market can be segmented?
age
gender
lifestyle
income
demographics
location
pros of market segmentation
meet specific customer needs
differentiate its products
focus on a specific group of customers
target its marketing activity
develop a brand image
build close customer relationships
limitations of segmentation
target a range of different customers with different products can be costly
focusing on one group of customers can cause businesses to lose another opportunity
customer characteristics can change over time which can be expensive
how do market maps work
help businesses to position their products by identifying gaps in the market
what are gaps in the market
opportunities where customer needs are not being met
benefits of market mapping (3)
helps to identify potential gaps in the market
helps to identify closest rivals
helps to make informed decisions about their business
limitations of market maps (3)
based on opinions and perceptions rather than accurate data
compares businesses based on only two aspects/variables which is too simplistic
cab be difficult to identify the two most appropriate variables
ways to make the business more competitive (7)
wider product range
better customer service
stronger brand image
convenient location
higher quality
better design
lower price
what is product differentiation
making a product different from others in some way
