1.35 Market, consumers and competition Flashcards
Define market research
Any activity that gives a business information about its product, its customers, its competitors or the market
Why do businesses need market research?
Help improve the business and its future
Responsive to customers
Competitive advantage
Crucial to start-ups
What’s the difference between primary and secondary data and the advs/disads of both?
Primary is collected by the people themselves, original. Up-to-date & relevant BUT expensive & time consuming. Examples include: questionnaires, focus groups
Secondary is collected from other sources, unoriginal. Cheap & quick BUT Outdated & irrelevant. Examples include; the internet, books
What’s the difference between quantitative data and qualitative?
Quantitative is numerical and creates stats
Qualitative focusses on consumers’ attitudes and opinions.
How has primary research developed over time?
Due to technology there are less interviews/focus groups. Now primary research focusses on phone calls, emailing and social media.
Why do businesses use new tech methods to collate data?
it is cheaper, more efficient and can target a larger number of people
What is sampling?
A small section of a market is chosen to represent the whole market.
Why is sampling used?
Because it is near impossible to collate the data of every person in a particular market.
What are the 3 types of sampling?
Random - To avoid bias, these people are chosen at random (believe or not).
Quota - Selecting a specific number from a particular group, perhaps by age or gender.
Stratified - The market is divided into groups of similar people and then out of that group chosen randomly.
What is market segmentation?
Dividing the market into groups of people with similar characteristics.
Why does market segmentation occur?
It can help businesses target specific consumers.
E.g. splitting the market into age groups so the business can target the right magazine to them. Teenage girls > heat magazine.
Which sampling method is best for the following situations?
- Inexpensive
- Unbiased
- Accurate
- Quota
- Stratified
- Random
What are the advans and disadvans of market segmentation?
A - Likely to target specific needs, thus generate more sales. Gain a competitive advantage. Higher prices may be charged. Brand loyalty.
D - Expensive. May ignore a large number of consumers by focusing on one.
What is market positioning?
Where the business places their products into relation to competition through the eyes of the consumer. It decides whether or not the product is similar to competition or whether it has found a gap in the market.
What is market mapping?
Using a grid to show 2 features of a market such as quality and price. It helps to spot gaps in the market and position products and businesses against each other.
What are the advans and disadvans of market mapping?
A - Helps businesses spot gaps. See where their competitors are.
D - Can be hard to categorise everything. There may be gaps in the market for a reason.
In what areas may a business have a competitive advantage?
Price, quality, service, reliability, reputation, innovation
What can businesses improve that will decrease costs?
Improve staff training
Improve their relationships with suppliers
Efficient use of resources
How might a business ‘add value’?
Introduce new products/develop current ones
Improve training to give consumers a better experience
Improve the quality
What does a high competitive advantage mean for a business?
Loyalty from consumers
Could increase prices
Improved brand image/recognition
What is product differentiation?
A distinctive product that has unique features or functions to the consumer (USPs).
What are the different pricing strategies? (There’s 7)
Cost-plus: The cost to produce + a profit % added on
Price skimming: High price (quality)
Penetration pricing: Low price (market share)
Premium pricing: Higher than competition (good for established businesses, not new)
Predatory pricing: Below the cost of production to drive out rivals (illegal in the UK)
Competitive pricing: Similar to competition or slightly less
Psychological pricing: Prices rounded slightly down to appear cheaper (0.99p)
What is a dynamic market?
One that changes all the time. Consumer’s preferences alter all the time and so businesses change or create products to suit these needs.
How do dynamisms occur?
Changing demand, fashion, advertising, changes of income (affected by fiscal policies, inflation, unemployment rates) or substitutes appear.
