1.2 Spotting A Business Opportunity Flashcards
What is marketing?
Marketing helps a business identify the needs and wants of its customers
Why is satisfying customer needs beneficial?
-businesses can compete more effectively that competitors (more likely for profit
-customer loyalty and positive advertising
-businesses can keep up to sate with changing preferences , avoids becoming obsolete
-can avoid costly mistakes
-can increase sales
What are the four customer needs na d wants?
Price: the amount of money customers are willing to pay (unique or luxury too?)
Quality: the standard / durability of a product or service (meet customers expectations)
Choice:giving customers a variety to choose from , can adapt to their preferences
Convenience: saving customer time and effort ( fast delivery, online shopping)
Target market definition
The group of customers that a business expects to buy their product or service
Market research definition
The process of gaining information about customers , competitors and market trends from primary and secondary sources
Market segmentation definition
Dividing customers within a market onto smaller groups with the same characteristics and common needs or wants
How do you segment a market?
-gender
-age:can help pricing (elderly homes can be more expensive, gen x clothing)
-location : region, urban or rural , also the weather in different countries
-income : luxury, essentials etc.
-lifestyle
-race/religion
Advantages of market segmentation (4)
1: recognises that not all consumers are the same and can vary in preferences
2: can be used to target and advertise more precisely to get more sales
3: less expensive and wasteful
4: could increase customer loyalty if consumers feel the company suits to their needs (repeat purchases)
Disadvantages of market segmentation (4)
1: not everyone within a segment will have the same preferences
2: may be difficult to identify a segment
4: requires more detailed market research, if not could lead to failure
4:a segment may be too small and unprofitable to cater for
What is the purpose of market research?(4)
-IDENTIFIES CUSTOMER NEEDS AND WANTS, allowing a first mover advantage from competitors and to avoid becoming obsolete as preferences change
-RECOGNISES GAPS IN THE MARKET
- REDUCES LAUNCHING RISK limits marketing mistakes and improves budget decisions when starting a business
-INVESTIGATES THE POTENTIAL STRENGTH AND WEAKNESSES OF COMPETITORS can help your businesses product stand out
What is Quantitive data ?
Based on numbers and could include financial reports ( sales, costs)
What is qualitative data?
Gathers descriptions, emotions, impressions and opinions
Limitations of quantitative data?
-Numerical data may be out of date
-numerical data does not provide reasons for an increase or decline in something
Limitations of qualitative data.
-bias may be present
- in focus groups, people may be influenced by other opinions
- difficult to present in a graph/chart
-harder and longer to collect
What is primary market research?
The process of gathering information directly from consumers (field research like interviews)
Methods of primary research
- SURVEYS : a questionnaire, can be face to face or online, the most widely used
-OBSERVATION: to study consumer behaviour in an appropriate location
-INTERVIEWS: an interviewer asks questions (may take longer)
-FOCUS GROUPS: free range discussion in a group
Advantages of primary research.
-focuses on the needs of the business and will not be available to competitors
- allows in depth info to be gathered from respondents
-up to date and is relevant to the business
Disadvantages of primary research
-sample size may be too small and unreliable
- researchers may have bias
-respondents may be influenced by others’ answers
-may need to hire a specialist (exonsive)
-time consuming
What is secondary market research.
The collection, compilation and analysis of data that already exists
Sources of secondary research
-government publications
-financial reports
-online databases
-media sources
Advantages of secondary research
- information is already available so is quicker
-info is often free (lower costs)
-suitable for small businesses that lack budget or expertise
Disadvantages of secondary research
-May lack relevance to the business and difficult to analyse
-May not be factually accurate
-could be expensive?
-May be out of date
Gap in the market definition
Occurs when no business is currently serving the needs of customers for a particular product
Market mapping definition
collecting information about competitors, such as revenue, growth rate and industry sectors, and then using that information to plot those companies on a graph or plot