3. Evaluating a Business Opportunity

Question 1

why is market research important?

Answer 1

• it reduces the risk involved in launching a new product or starting a business
• it gives the business a better understanding of their competitors products so that they can respond accordingly to be competitive
• it gives them a better understanding of consumer behaviour so they can make decisions to meet their needs and become consumer orientated
• it identifies current trends so businesses can keep up and predict future changes in the market as well as what’s happening now

Question 2

what is a market segment?

Answer 2

a small section or part of a larger market

a segment will contain consumers with similar characteristics or needs–> target market

Question 3

how can markets be segmented?

Answer 3

age, gender, socioeconomic groups based on profession, dietary requirements, ethnicity, region, residential neighbourhood, stages of the family life cycle, and the 4 Cs

the 4 Cs:
cross cultural consumer characteristics…developed by psychologists from Maslow’s hierarchy of needs:

•mainstreamers:

• greatest need is security
• this is the biggest group
• reliable, value for money brands

•aspirers:

• greatest need is status
• want to stand out
• high tech designer products

•succeeders:

• greatest need is control
• don’t need to show off
• upmarket but traditional brands

•reformers:

• greatest need is self fulfilment
• organic…environmentally aware consumers

Question 4

what is undifferentiated marketing?

Answer 4

•also known as mass marketing

• some products are highly standardises so they can be sold in a mass market
• consumers wants and needs are similar and the products don’t need to be differentiated

Question 5

what is multiple segment marketing?

Answer 5

•also known as differentiated marketing

• different needs and wants so the products need to be differentiated
• can be segments so companies produce a range of product variants to meet the requirements of each segment

Question 6

what is single segment marketing?

Answer 6

•also known as concentrated marketing

• smaller companies of highly specialised larger companies try to meet the needs of one small segment–>niche
• concentrate and specialise on a small group of customers
• this has led to micro marketing–>as spending power and expectations rise, people’s nerd and lifestyles are becoming not diverse