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Component 1 Business Opportunities > Market research, location and supply and demand. > Flashcards

Market research, location and supply and demand. Flashcards

1
Q

What is market research?

A

the action or activity of gathering information about consumers’ needs and preferences.

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2
Q

What is the value of market research?

A

-Better communication.
-Identify opportunities.
-Minimises risk.
-Helps to create benchmarks to measure progress.
-Assess the effectiveness of previous campaigns.
-Establishes where product is in the life cycle.

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3
Q

What does a business consider when conducting market research?

A

costs, accuracy, the objective of the research, level of expertise, time.

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4
Q

What is primary research?

A

First hand data collected by the business or a business employed by the business.

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5
Q

What is an observation?

A

Watching the activity without taking any direct action. Qualitative, time consuming. It reveals the customers’ opinions of the products.

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6
Q

What are online surveys?

A

Questions asked through the website/social media. Can see lots of views and automatically goes to a database. Quantitative but a low response leads to unrepresentative.

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7
Q

What are face-to-face surveys?

A

Useful for emotional-style questions because qualitative. Costly and time consuming.

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8
Q

What are focus groups?

A

A group of potential customers discuss their opinions on the product. Gets detailed qualitative opinions but can be more expensive.

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9
Q

Advantages of primary research?

A
  1. Specific to the immediate data needs and topic at hand
  2. Offers behavioural insights generally not available from secondary research.
  3. Up to date.
  4. Detailed.
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10
Q

Disadvantages of primary research?

A
  1. costly
  2. time consuming
  3. requires more sophisticated training and experience to design study and collect data
  4. may provide biased data if sample size isn’t big enough.
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11
Q

What is secondary research?

A

using existing information

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12
Q

What are government studies?

A

Demographic trends, census data. Quantitative and usually free to obtain. Can be out of date and all business get access it.

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13
Q

What are commercial resources?

A

Market research reports (quant and qual). Specific of market but not the business. Can be expensive, and basic.

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14
Q

What is internal data?

A

Quantitative data of past sales. Cheap and confidential but may be out of date and may not answer the questions being asked.

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15
Q

What is competitors’ data?

A

Quantitative and in the same market. Cheap but all businesses can access.

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16
Q

What is newspaper and magazine data?

A

Shows current trends and is cheap.

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17
Q

Advantages of secondary research?

A

Saves time and money if on target
Aids in determining direction for primary data collection
Pinpoints the kinds of people to approach
Serves as a basis of comparison for other data

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18
Q

Disadvantages of secondary research?

A

May not give adequate detailed information
May not be on target with the research problem
Quality and accuracy of data may pose a problem

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19
Q

Benefits of conducting market research?

A

-Can engage with potential customers. They feel like they are being listened to.
-Accurate and reliable data makes decisions less risky.
-Can gain a competitive advantage.

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20
Q

Drawbacks of conducting market research?

A

-Can be expensive.
-May lack the expertise to collect the data.
-Difficult balance between quick and detailed.
-Legal and ethical issues (data protection).

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21
Q

What is qualitative data?

A

descriptive data
-Subjective.

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22
Q

Advantages of qualitative data?

A

-Tells you exactly what to keep/change.

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23
Q

Disadvantages of qualitative data?

A

-Difficult to analyse.
-May not be able to get representative sample.Wh

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24
Q

What is quantitative data?

A

numerical data.

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25
Q

Advantages of quantitative data?

A

-Can get a large sample.
-Objective.

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26
Q

Disadvantages of quantitative data?

A
  • Context of research is ignored
  • A large sample must be studied
  • Not valid
  • Can have a false impression and can be biased
  • Not subjective
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27
Q

What is sampling?

A

A process of selecting subjects who are representative of the population being studied. This process may be random or non-random.

28
Q

What is quota sampling?

A

-Aims to get a representative sample.
-Needs to be in the same proportions as the population.
-Isn’t random so can be biased.

29
Q

What is random sampling?

A

-Each person in the population has an equal chance of being selected.
-Easy to design but needs an accurate list.
-Not representative.A

30
Q

Advantages of sampling?

A

-time saving
-money saving
-quality assurance of data
-greater response rate

31
Q

Disadvantages of sampling?

A

-Could be bias.
-Difficult to be fully representative.
-Needs specific subject knowledge.
-Over simplifies humans.

32
Q

Why do we need to avoid bias?

A

Leads to an unrepresentative sample.
-More risky to base decisions of of this.

33
Q

What is demand?

A

the amount of a good or service that consumers are willing and able to buy at a certain price.

34
Q

What is the demand curve?

A

a graph of the relationship between the price of a good and the quantity demanded

35
Q

what causes a movement along the demand curve?

A

change in price

36
Q

How do other factors do to the curve?

A

Shift it left or right.

37
Q

What factors affect demand?

A

-Income and wealth (savings) of consumers.
-Advertising.
-Demographic changes.
-Price of substitute goods.
-Price of complimentary goods.
-Trends/fashion.

38
Q

What is supply?

A

The amount of goods/services that companies can supply at a given price.

39
Q

What is a supply curve?

A

a graph of the relationship between the price of a good and the quantity supplied

40
Q

How do you explain a supply curve?

A

As the price goes up, more companies can supply the product as it is easier to make a profit. Few companies can supply efficiently at a low price.

41
Q

What factors affect supply?

A

-Cost of production.
-Introduction of new technology (can make more for less).
-Taxes, subsidies and regulation (makes it more or less easy).
-Weather changes affecting a harvest.

42
Q

What is market equilibrium?

A

a situation in which quantity demanded equals quantity supplied.

43
Q

What is price elasticity of demand?

A

The responsiveness of demand to a change in price

44
Q

What is an elastic product?

A

A small change in price causes a large change in quantity demanded. Usually luxuries or goods with lots of substitutes. More sensitive.

45
Q

What is an inelastic product?

A

-The price can change a large amount but it only cause a small change in demand. Necessities.

46
Q

What do businesses used price elasticity?

A

Predict the effect of changes in price, or a indirect tax.
To see if they can go into a price war.

47
Q

How can a business make products more inelastic?

A

-Reducing competition.
-Increasing customer loyalty.
-Increasing brand value and desire.

48
Q

What is income elasticity of demand?

A

The responsiveness of demand to a change in income

49
Q

Positive and elastic demand?

A

-A change in income causes a more than proportional change in demand.
-Positive means the direction is the same for both (rises and rises or falls and falls).

50
Q

Positive and inelastic demand?

A

A less than proportional change.

51
Q

What is negative demand?

A

When a rise in income causes a fall in demand (Aldi and Lidl, inferior goods).

52
Q

What can a business use income elasticity for?

A

-Plan workforce, production capacity and stock levels.
-Sales forecasting.

53
Q

What are normal goods?

A

goods for which demand increases as income increases. Everyday products.

54
Q

What are luxury goods?

A

luxury goods are goods were an increase in income will cause an even bigger increase in the demand for the good. More sensitive than normal goods.

55
Q

What are inferior goods?

A

Goods for which a consumer will buy less of when income rises, cheap substitutes that people switch to when income is reduced. Negative elasticity.

56
Q

How does cost affect location?

A

-Sole traders have limited capital.
-Needs to be low enough to pay off and eventually make profit.
-A town centre will be more expensive than an industrial estate.

57
Q

How does proximity affect location?

A

-Important for face-to-face selling.
-A balance between footfall and cost.
-May be further from suppliers (can’t respond to changes).
-Can easily attract customers.

58
Q

How does proximity to competition affect location?

A

Some choose to locate far way from petrol stations, where there is a lack of services. Some locate near eachother so customers know they are there.

59
Q

How does labour affect location?

A

-Certain businesses need specific skills.
-May locate where there is a lack of jobs.
-May locate internationally to reduce labour costs.

60
Q

How does infrastructure affect location?

A

Roads, ports, airports, communication systems, internet.
-Saves time and money.

61
Q

how to grants affect location?

A

-Gives money to locate in a particular area.
-Have strict rules usually.

62
Q

What other factors affect location?

A

Space to grow, business rates, population density, image, accessibility.

63
Q

What do businesses consider when choosing a location?

A

type of product/service, costs, how close they need to be to suppliers.

64
Q

What is a supply factor?

A

cost of land, labour and energy.

65
Q

What is a demand factor?

A

customers, convenience, image.

Component 1 Business Opportunities (5 decks)

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