1.2 - Spotting a Business Opportunity Flashcards
1.2.1 - Customer needs 1.2.2 - Market research 1.2.3 - Market segments 1.2.4 - The competitive environment
What are the four main customer needs?
- Choice: When buying products, customers like to have a choice because different customers have different tastes and needs.
- Quality: Customers assess quality as a product’s suitability and their opinion will depend on expectations.
- Price: Customers will be influenced by price, especially by low prices.
- Convenience: Convenience refers to how easy it is for customers to purchase desired products.
Why is it crucial for businesses to meet customer needs?
- Generate sales: Customers will continue to buy products. Repeat custom ensures that the business generates cash flow.
- Business survival: As the reputation of the business grows, more and more consumers are likely to buy its products. This should lead to increased profits provided costs don’t rise, making it likely that the business will continue to operate.
What are the advantages of a business conducting market research?
- To identify and understand customer needs
- To identify gaps in the market
- To reduce risk
- To inform business decisions.
Define primary research and identify 5 methods of conducting primary research.
Market research involves obtaining information about customers, potential customers or competitors which is carried out for the first time. Methods include:
- Survey
- Questionnaire
- Observation
- Interviews
- Focus Groups (small group of people discussing a product)
What are the benefits and drawbacks for a small business of conducting primary research?
+ Primary rseaerch is more specific to the business as it is conducting research that is applicable to its prouct or service and market. This means it is likely to help make a more informed business decsion.
- Prinary research does not exist already, therefore someone has to conduct the research, which means you have to pay someone in terms of time for planning, carrying out the research and the analysis. This can be expensive if you are just starting.
What are the benefits and drawbacks of conducting secondary research?
+ As secondary research already exists it is therefore cheaper, as no time is spent planning and conducting the research, so is a low cost alternative to primary fresearch which will help a small business keep start up costs low.
- The downside is that as it already exists it may not be as specific to your business so it may contribute to a poor decsion which isn;t approriate for your particular target market.
Define secondary research and identify 5 methods of conducting secondary research.
Secondary research involves obtaining information about market trends, compeitors and markets that already exists. methods include:
- Internet
- Government Statistics and reports
- Company Reports
- Newspapers/magazines/books
- Market reports
- What is the difference between quantitative and qualitative data?
- How are each collected?
QuaLitavtive - Data is expressed in the form of opinions and judgements and is collected via open ended questions.
QuaNtitavtive - Data is isexpressed as numbers, percentages and statistics and is collected via closed questions.
Idenitfy 4 ways social media can be used to conduct market research? (make sure your answer is specific to social media!)
- Posting a link to a survey
- Conducting a poll on Instagram or Twitter
- Idenitfying trends and opinions via hastags, retweets, shares and likes.
- Posting an open ended question on a social media site such as facebook for qualitative responses or likes
What are the advantages of using social media to conduct market research?
Social media is a relatively cheap way of understanding customers, compared with traditional methods such as TV, flyers.
It allows a business to deepen their understanding of the market which helps them to identify popular trends and develop or improve their products
It’s more efficient, up to date information can be obtained quickly and in real time, which means the business can be more responsive to changes in the market place.
How can a business ensure its data collected in market research is valid, reliable and accurate?
- The most appropriate research methods must be used in order to obtain the type of data required
- The sample size must be appropriate in terms of size and its representation of the market
- Sufficient data should be obtained to allow for anomalies
- Analysis of data must be thorough and accurate
Why is it important that market research data is valid, accurate and reliable?
- If your research is not reliable the business decisions that it informs could lead to disastrous, harmful and expensive mistakes that will limit their chance of profit and growth.
- Failing to align product/service with the needs of the customer which will impact negatively upon sales
- Missing gaps and opportunities in the market
What is a market segment?
A part of a market that groups buyers with similar buying habits or characteristics.
How can a business segment the market? (7)
- Location/area
- Demographic
- Age
- Income, socio-eceonomic categories
- Lifestyle, choices, interests
- Ethnicity
- Religion
What is a market map and why is it useful?
A market map is a diagram based on two features of a product or service (e.g. high/low price and high/low quality) which compares different businesses.
A market map will allow a business to identify a gap in the market. This means they may be able to devlop a new original idea to fill that gap where there will be no competitors, or adapt an existing product that could also fill the gap.
