1.2 - Spotting a Business Oppurtunity

Question 1

How is quality a customer need?

Answer 1

Offering better quality products may mean that customers are more satisfied. This may mean that the business will be more competitive, even if its products are expensive . In order to convince customers that their products are better than their rivals businesses may decide to spend money on developing high quality products or on promotional material that emphasises quality. However, this will be costly for the firm.

Question 2

What is a market?

Answer 2

• A place where goods are traded between customers and suppliers.
• Trade in a particular type of product, e.g. oil market
• The potential customers for a product, e.g. the age 18-25 market

Question 3

How can a market be segmented?

Answer 3

• Demographics, such as age, income
• Location
• Lifestyle

Question 4

What are the two types of market research?

Answer 4

Primary - (field research) involves gathering new data that has not been collected before.
Secondary - (desk research) involves gathering existing data that has already been produced.

Question 5

What does market mapping help with?

Answer 5

Helps a business understand its location within the market and the markets key features. They can find out:

• competitors selling similar products and how customers perceive them
• gaps in the market

Market maps show two variable such as price against quality

Question 6

What is quantitative data?

Answer 6

Factual information is called quantitative data.

Question 7

What is the purpose of market research?

Answer 7

• identify and understand customer needs
• identify gaps in the market
• reduce risk
• inform business decisions

Question 8

How is price a customer need?

Answer 8

Customers will often want to pay less a given product. If all the products in the market are the same, then price becomes one of the most important factors affecting which one customers buy. Therefore firms charge lower prices than they would like to attract customers. However, this means that the profit per product is lower.

Question 9

What are examples of primary market research?

Answer 9

• Questionnaires and surveys
• Observations
• Consumer trials
• Hall tests
• Focus group

Question 10

What does demographic mean?

Answer 10

Identifiable characteristics that people within one population might have such as age or income.

Question 11

What are customer needs?

Answer 11

What customer want or need in a a product or service

Question 12

What is the market share?

Answer 12

The proportion of total sales within the market that is controlled by a business.

Question 13

Why is important to meet customer needs?

Answer 13

So that customers are happy and are likely to buy the product. This will generate sales and ensure that the business will survive.

Question 14

What are the four main factors of customer needs?

Answer 14

• Price
• Quality
• Choice
• Quality

Question 15

What are examples of secondary market research?

Answer 15

• Articles
• Books
• Newspapers
• Internet
• CD/DVD

Question 16

What do businesses do when a gap in the market is spotted?

Answer 16

The business will use market research to confirm if there is a demand for this idea. If there is a demand the business can focus on creating products to fill the gap. This will help the business to be different from their competition and so increase sales.

Question 17

What is qualitative data?

Answer 17

Information collected about opinions and views is called qualitative data.

Question 18

How is competition good in the market place?

Answer 18

• Price: If there are several retailers, each retailer will lower the price in an attempt to win customers. It is illegal for retailers to agree between themselves to fix a price. They must compete for business.
• Product range: In order to attract and satisfy customers, companies need to produce products that are superior to their competitors.
• Customer service: Retailers that provide customers with a helpful and friendly service will win their loyalty.

Competition makes business think carefully on making the best product to gain the most sales in a market

Question 19

What is market segmentation?

Answer 19

When people within a market are divided into different groups. This can allow them to identify their target market. They can then create a marketing strategy to make sure that their marketing is as effective as possible.

Question 20

When is there a monopoly and a competitive market?

Answer 20

A competitive market has many businesses trying to win the same customers. A monopoly exists when one firm has 25% or more of the market, so reducing the competition.

Question 21

How is choice a customer need?

Answer 21

Having a large range of products may make a business seem more attractive as they will have a better selection in one place.

Question 22

How is location a customer need?

Answer 22

Customers may be more likely to buy from a business if it sells products in a convenient place as they won’t have the inconvenience of travelling or waiting for the product. Therefore businesses may decide to open stores in particular locations or to sell items online in order to offer the greatest convenience to oustomers as possible.