Evaluating A Business Oppertunity Flashcards
Secondary research
Ads & Disads
Finding out information that already exists
Ads- often free, easy access, lots of info available
Disads- often out of date, competitors have access, can be unreliable, commercial data can be expensive
Primary research
Ads & Disads
Any research that is undertaken for the first time
Ads- up to date, tailors to companies requirements, not available to competitors
Disads- expensive, time consuming, risk of poor results if not planned well
Random sampling
People selected at random
Wide range of people
Quota sampling
Certain amount of a type of person
E.g 50 men, 50 women
Stratified sampling
Population split into different groups
People from one group are selected
Problems with sampling
Can be bias, leading questions
Inaccuracy with small size
Inaccuracy by selecting convenient people
Market size
Measured by total sales volumes
Or
Value of all sales
How valuable a market is at one time, how much revenue is already being generated
Market segment analysis
Process of dividing a market into segments of customers with similar needs or characteristics
E.g geographical, Age, gender
Behavioural and psychological segments
B- spending and loyalty patterns
P- lifestyle and personality
Qualities of a niche market
Usually higher prices
As customers are more willing to for the n
Unique product
Market share
Percentage of the market a business owns
Sales of business / total sales in market
X 100
How to position a business idea
Exploit weaknesses of competitors Differentiate yourself, - branding, advertising -range if products - customer service
Market mapping
Shows a range of positions that. Product can take in a given market
Adding value
Difference between value of the input costs and final selling price
Selling price- total costs
Product trial
When a company tests out its new products on a small segment of the markets
Usually a geographical segment
Upsides of product trials
Tests market to asses likely demand levels
If successful the company is more likely to calucute accurate estimated sales for launch
Allows them to change their marketing mix accordingly to feedback
Downsides of product trial
Gives competitors awareness of upcoming launches, allow them to develop or push forward a product they have already been developing
Main advantages of product trialling
- risks are reduced
- allows change to marketing mix before official launch
Main disadvantages of product trialling
- can be expensive
- takes a long time- trends could pass
- competitors could copy
- invalid feedback could be given
Opportunity cost
The cost of the next best alternative that must be forgone in order to Persue a certain action
He to turn product trial into repeat purchase
- offer products people like
- excellent customer sevice
- advertising (reminding of the product)
- loyalty schemes
- sales promotions
