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Edexcel B A Level Economics > 1.3: Markets, consumers and competition > Flashcards

1.3: Markets, consumers and competition Flashcards

1
Q

What is market research?

A

Any activity that gives a business information about its product or service, its customers, its competitors or the market it operates in.

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2
Q

Why do businesses need market research?

A

To identify whats happening in the market now
To predict what might happen in the market in the future
To explore new possibilities in the market.

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3
Q

What does market research do?

A

Gives information that can be used to make better informed decisions about the business and its future

Allows businesses to understand consumer behaviour + make them more responsive to customer’s needs - leading to market orientation

Helps give a business a competitive advantage - improve products

Reduce risks of start-ups

Helps keep established businesses up with market trends.

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4
Q

What is primary research?

A

Gathering information first hand
Eg: focus groups, questionnaires and direct interviews

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5
Q

What is secondary research?

A

Finding and using information that has been gathered already

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6
Q

What do start-ups use market research for?

A

Small, local market
Gaps in market

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7
Q

What do established businesses use market research for?

A

Researching the market for a new product

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8
Q

Advantages of primary research

A

Can be designed specifically to suit the purpose of the business
Information up to date and directly relevant
Information gathered not available to competitors.

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9
Q

Disadvantages of primary research

A

Can be expensive to collect
Can take a long time
Can give misleading information

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10
Q

Advantages of secondary research

A

Can be doen very quickly
Can be much cheaper than primary research

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11
Q

Disadvantages of secondary research

A

May not be exactly specific to researcher’s needs
Can be dated
May not be accurate

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12
Q

What is quantitative research?

A

Based on numerical data

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13
Q

What is qualitative research?

A

Based on consumer’s attitudes and opinions

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14
Q

What is sampling?

A

Would be practically impossible to interview everybody so a smaller sample of the market is selected to represent it

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15
Q

Describe random sampling

A

A group of people selected so as to be representative of the population as a whole

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16
Q

Describe quota sampling

A

Selecting evenly from particular groups within the population

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17
Q

Describe stratified samples

A

Draw on specific groups that may be identified with particular market segments.

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18
Q

Advantages of random sampling

A

Can be effective and accurate

19
Q

Disadvantages of random sampling

A

Hard to be genuinely random
Needs large sample sizes to be free from bias
Can be expensive

20
Q

Advantages of stratified sampling

A

Targets the market effectively

21
Q

Disadvantages of stratified sampling

A

May be hard to identify appropriate strata
More complex to organise and analyse results

22
Q

Advantages of quota sampling

A

Cheap and effective of sampling

23
Q

Disadvantages of quota sampling

A

Need to be careful in drawing up quotas to avoid bias.

24
Q

What is market segmentation?

A

Dividing the market into groups of consumers with similar characteristics
eNABLES PRODUCTS AND SERVIces to be more effectively produced and targeted for a particular market segment.

25
Q

Advantages of segmentation

A

More precisely a segment can be identified and provided for, more likely it id that a sale will be made
Reduces direct competition
Premium price may be charged if market segments get exactly what they want
Encouraged the development of brand loyalty

26
Q

Disadvantages of segmentation

A

Can be expensive to research and identify different segments
More costly to develop and market different products for different segments rather than just one standardised product
Targeting one particular segment may mean ignoring others
Even if segments are identified, reaching them may be difficult

27
Q

Market positioning

A

Shows how consumers view individual products or brands, in relation to competing producys
May involve variations in price or qualtiy or other aspects of interest to the consumer

28
Q

Market mapping

A

Use of a grid showing two features, such as price and quantity or consumer age.
Helps to position products in relation to each other

29
Q

Advantages of market mapping

A

Enables a business to spot gaps in the market
Can help a business to differentiate its product from the competition.

30
Q

Disadvantages of market mapping

A

Can be hard to categorise some products and services
Identifying a gap does not mean there is a need for a product to fill it

31
Q

What is competitive advantage?

A

Any feature of a business that enables it to compete effectively with rival products

32
Q

Product differentiation

A

May be used to achieve an advantage

33
Q

What does cutting costs allow a business to do?

A

Allow a business to compete on price and still make a profit

34
Q

How can cutting costs be achieved?

A

Improvements in staff training
Improving relationships with suppliers
Striving for greater efficiency in the use of resources

35
Q

How may a business add value to it’s products?

A

Introduce completely new products or re-design existing ones
Target product reliability or customer service with appropriate staff training
Produce a consistently reliable branded product that will sell for more than an anonymous basic one would

36
Q

Product differentiation

A

Occurs when each business creates a distinctive product.
May involve giving it unique features in order to attract customers
May also involve changing perceptions as to the function of the product
Branding important

37
Q

Pricing strategy

A

The way in which a business decides upon the price of its product
Output levels linked to price
High prices=if output is relatively low

38
Q

What do price and output depend on?

A

Competition of business
Competitive advantage product has + product differentiation
Economic growth

39
Q

Dynamic markets

A

Markets that are changing all the time

40
Q

Examples of dynamic markets

A

High tech products

41
Q

Dynamism of market changign

A

Changing demand
Change in fashions leads to rising demand for some products and falling demand for others
Advertising change taste and fashions
Rising incomes increase demand, high end productsS

42
Q

Stable markets

A

One in which the pace of change is slow
Market share and size are fairly constant with little variation in price

43
Q

Market orientation

A

Creating products and services to fits the wants and needs of the customer.
Business adapts its products and innovates in order to compete successfully with rival suppliers

44
Q

How can market orientation improve a firm’s prospects?

A

Market research may provide vital information about a market a business had previously ignored
Business may develop competitive advantage
Brand loyalty=business can charge a higher price for its products and services

Edexcel B A Level Economics (17 decks)

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