Planning for success Flashcards
Key considerations involved when planning and organising a small business
MR LDCT
- Opportunities to run a small business:
- Market research
- Location
- Demographics
- Competition
- Target markets
Why should you Market research?
There will always be a risk involved in starting up a new business. Will the proposed new product or
service attract customers? Will it appeal to enough customers and generate sufficient sales to cover costs
and make a profit? Anyone thinking about commencing a business should first gather some ‘facts and
figures’, especially to determine whether the level of demand for the new or improved product is sufficient
to generate a profit.
How can you market research effectively?
The process of information gathering is known as market research. Market research involves collecting
and analysing information about customers and the business opportunities available. Market research
helps the entrepreneur to make better decisions by understanding consumer behaviour. By collecting and
assessing information about the needs and wants of consumers, a more accurate and responsive marketing
plan can be designed and, therefore, the risk of failure can be reduced.
What are the three steps of the market research process
Step 1: Determining information needs
Step 2: Collecting data from primary and secondary sources
Step 3: Analysing and interpreting data
What is Determining information needs?
The problem is clearly and accurately stated to determine what needs to be measured and the issues involved. This is a crucial step.
Why do entrepreneurs follow the three steps of market research approach?
To obtain accurate information
Why Location is a huge factor:
A good location can make the difference
between success and failure. This is
particularly true for retail ‘bricks and mortar’
businesses, which generally need a constant
flow of people walking past the store.
A suitable location might be a shopping centre,
mall or main street, or the business owner may
choose an online presence or prefer a home-
based business. This will depend on the nature
of the business.
What is one of the benefits of having a good location?
- It boosts sales.
- Where to locate a business is a crucial
A good location will lead to more sales.
decision because this will have an impact on
profits. The location chosen can affect many
aspects of how a business operates, such as
total sales and how expensive it is to run. Most businesses will seek locations that maximise their revenue and minimises their costs.
Why is Demographics important to entrepreneurs?
It is important for an entrepreneur to understand the changes that are taking place in the make-up of the
population. Demographic factors are population characteristics that affect customer spending and include age, ethnicity, gender, marital status, family size and income.
An examination of a region’s demographic pattern will provide a clearer picture of a business’s possible
customers.
Why is Competition so important to entrepreneurs?
Competition refers to rivalry among
businesses that try to supply the needs
and wants of a market. Competitors,
therefore, are other businesses that
offer rival products or services.
Businesses need to be mindful of the
actions and strategies implemented
by their competitors as this can affect
their sales. Not only do they need to be
aware of existing competitors, but they
also have to monitor the environment
for potential newcomers. Managers
need to ensure that they respond to
any changes in the actions of their
competitors.
What should businesses aim for to achieve a sustainable competitive advantage over their competitors?
Business owners should aim to achieve a sustainable competitive advantage over their competitors so
they can capture a larger share of the
market. A sustainable competitive
advantage refers to the ability of a
business to develop strategies that
will ensure it has an ‘edge’ over its
competitors for a long period of time.
Why are Target markets so important for entrepreneurs?
Many entrepreneurs are so enthusiastic about starting, they often overlook one crucial question: ‘Who
will buy my good or service?’ Sales are the lifeblood of the business, so it is necessary to have a good
understanding of one’s target market.
What does target market refer to?
Target market refers to the group of customers to whom the business intends to sell its products. Once
the target market has been identified, the business concentrates its marketing activities on that group. For
example, a sophisticated men’s suit business in central Sydney might typically aim its marketing activities
at a customer who is male, aged 30 to 50, city-based and earning an above-average income.
