LO1 - Understand how to target a market

Question 1

Why is market research used?

Answer 1

• To reduce risks of not knowing your customers - To understand the market which you’re operating in - To promote the organisation - To aid decision making - To gain customers’ views and understand their needs - To inform product development

Question 2

What are the two types of market research?

Answer 2

Primary and Secondary research

Question 3

What form of market research is the most reliable?

Answer 3

Primary / Field research

Question 4

Which form of market research is the least reliable?

Answer 4

Secondary / desk research

Question 5

Name some methods of primary / field research

Answer 5

Observations, questionnaires, surveys, focus groups, consumer trials, interview

Question 6

Name some methods of secondary / desk research

Answer 6

Internal data, books, newspaper, magazines, competitor data, government publications, statistics, purchased research material, internet browsing or social media browsing

Question 7

What are the benefits of primary / field research?

Answer 7

• The gathering of data which does not exist therefore the data is new and first hand - You know where the data has come from - Greater control - Reliable as you haven’t relied on old data

Question 8

What are the benefits of secondary / desk research?

Answer 8

• Quicker to gather than primary research as already been gathered - Cheaper than primary research - Can easily gathered on a large scale

Question 9

What are the drawbacks of secondary / desk research?

Answer 9

• Information gathered may be outdated - Data gathered may be bias - Data gathered may be inaccurate - Not always relevant data compared to what is intended

Question 10

What are the drawbacks of primary / field research?

Answer 10

• Can be expensive to gather - Can be time consuming to gather

Question 11

Age, gender, income, lifestyle and occupation are examples of what?

Answer 11

Market segmentation

Question 12

Why is market segmentation used? Remember market and customer segmentation are slightly different.

Answer 12

• To ensure customers needs are met - Potential to increase profits - Increase customer retention - Allows target Marketing- Potential for increase in market share

Question 13

What are the reasons why businesses use customer segmentation?

Answer 13

• Understanding what benefits they require- Understand how much money they are able/willing to pay- Quantity of goods required- Quality of goods required- Time and location they wish to purchase the goods

Question 14

What are the consequences of not listening to customers?

Answer 14

• Not able to identify trends and changes within consumer wants - Customers may not feel valued - Issues which may be brought to the businesses attention may not be resolved - Loss in customer loyalty (retention)

Question 15

For a start up business, which method of feedback is suitable?

Answer 15

• Customer comment cards
• Comments made to staff members

The reason behind this is due to these methods costing little to no money to conduct. A start up business needs to be aware of its fixed and variable costs. Otherwise, their outflows will be gerater than their inflows (pay more than they could receive).