theme 1

Question 1

what is market research?

Answer 1

the process of gathering information about the market and customers’ needs and wants.

Question 2

what is primary research?

Answer 2

New research that is carried out to answer specific issues and questions

Question 3

what is a focus group?

Answer 3

a group of people who discuss their views on on a product, service, advertisement or idea. can be face-to-face or online

Question 4

define questionnaires

Answer 4

a set of questions with a choice of answers

Question 5

define interviews

Answer 5

can be carried out online, on the phone or face-to-face and allow detailed open questions to be asked.

Question 6

define observations

Answer 6

means watching how customers behave naturally, when they dont know theyre being watched.

Question 7

explain one benefit of using primary market research.

Answer 7

Primary research guarantees that the information collected is up-to-date and relevant, enabling accurate trends to be revealed. Primary research also allows the person or organisation to control ownership of the data.

Question 8

explain one disadvantage of primary market research

Answer 8

it requires a large sample size to be reliable. leading to it being very costly. therefore, most firms use a small sample which might be less accurate.

Question 9

discuss the impact of undertaking primary research

Answer 9

this can improve understanding of customer needs. this is because you can specify particular questions you need answers to. this leads to the business being able to adjust to their marketing mix. therefore, customer satisfaction should improve. moreover, customers will become more loyal. consequently, sales will increase.

Question 10

1.1.1 The dynamic nature of
business

Why new business ideas come about:

Answer 10

● changes in technology
● changes in what consumers want
● products and services becoming obsolete.

Question 11

1.1.1 The dynamic nature of
business

How new business ideas come about:

Answer 11

● original ideas
● adapting existing products/services/ideas.

Question 12

1.1.2 Risk and reward

The impact of risk and reward on business activity:

Answer 12

● risk: business failure, financial loss, lack of security
● reward: business success, profit, independence.

Question 13

1.1.3 The role of business
enterprise

The role of business enterprise and the purpose of business activity:

Answer 13

● to produce goods or services
● to meet customer needs
● to add value: convenience, branding, quality, design,
unique selling points.

Question 14

1.1.3 The role of business
enterprise

The role of entrepreneurship:

Answer 14

an entrepreneur: organises resources, makes business
decisions, takes risks.

Question 15

1.2.1 Customer needs

Identifying and understanding customer needs:

Answer 15

● what customer needs are: price, quality, choice,
convenience
● the importance of identifying and understanding
customers: generating sales, business survival.

Question 16

1.2.2 Market research

The purpose of market research:

Answer 16

● to identify and understand customer needs
● to identify gaps in the market
● to reduce risk
● to inform business decisions.

Question 17

1.2.2 Market research

Methods of market research:

Answer 17

● primary research: survey, questionnaire, focus group,
observation
● secondary research: internet, market reports, government
reports.

Question 18

1.2.2 Market research

The use of data in market research:

Answer 18

● qualitative and quantitative data
● the role of social media in collecting market
research data
● the importance of the reliability of market research data.

Question 19

1.2.3 Market segmentation

How businesses use market segmentation to target
customers:

Answer 19

● identifying market segments: location, demographics,
lifestyle, income, age
● market mapping to identify a gap in the market and the
competition.

Question 20

1.2.4 The competitive
environment

Understanding the competitive environment:

Answer 20

strengths and weaknesses of competitors based on: price,
quality, location, product range and
customer service
● the impact of competition on business decision making.

Question 21

1.3.1 Business aims and
objectives

Business aims and objectives when starting up:

Answer 21

● financial aims and objectives: survival, profit, sales,
market share, financial security
● non-financial aims and objectives: social objectives,
personal satisfaction, challenge, independence
and control.

Question 22

1.3.1 Business aims and
objectives

Why aims and objectives differ between businesses.

Answer 22

Aims set out what you hope to achieve at the end of the project. Objectives should be specific statements that define measurable outcomes.

Question 23

1.3.2 Business revenues, costs
and profits

The concept and calculation of:

Answer 23

● revenue
● fixed and variable costs
● total costs
● profit and loss
● interest
● break even level of output
● margin of safety.

Question 24

1.3.2 Business revenues, costs
and profits

Interpretation of break even diagrams:

Answer 24

● the impact of changes in revenue and costs
● break even level of output
● margin of safety
● profit and loss.

Question 25

1.3.3 Cash and cash-flow

The importance of cash to a business:

Answer 25

● to pay suppliers, overheads and employees
● to prevent business failure (insolvency)
● the difference between cash and profit.

Question 26

1.3.3 Cash and cash-flow

Calculation and interpretation of cash-flow forecasts:

Question 26

1.3.3 Cash and cash-flow

Calculation and interpretation of cash-flow forecasts:

Answer 26

● cash inflows
● cash outflows
● net cash flow
● opening and closing balances.

Question 27

1.3.4 Sources of business finance

Sources of finance for a start-up or
established small
business:

Answer 27

● short-term sources: overdraft and trade credit
● long-term sources: personal savings, venture capital,
share capital, loans, retained profit and crowd funding.

Question 28

1.4.1 The options for start-up and
small businesses

The concept of limited liability:

Answer 28

● limited and unlimited liability
● the implications for the business owner(s) of limited and
unlimited liability.

Question 29

1.4.1 The options for start-up and
small businesses

The types of business ownership for start-ups:

Answer 29

● sole trader, partnership, private limited company
● the advantages and disadvantages of each type of
business ownership.

Question 30

1.4.1 The options for start-up and
small businesses

The option of starting up and running a franchise operation:

Answer 30

● the advantages and disadvantages of franchising

Question 31

1.4.2 Business location

Factors influencing business location:

Answer 31

● proximity to: market, labour, materials and competitors
● nature of the business activity
● the impact of the internet on location decisions:
e-commerce and/or fixed premises.

Question 32

1.4.3 The marketing mix

What the marketing mix is and the importance of each
element:

Answer 32

price, product, promotion, place.

Question 33

1.4.3 The marketing mix

How the elements of the marketing mix work together:

Answer 33

● balancing the marketing mix based on the competitive
environment
● the impact of changing consumer needs on the marketing
mix
● the impact of technology on the marketing mix:
e-commerce, digital communication.

Question 34

1.4.4 Business plans

The role and importance of a business plan:

Answer 34

● to identify: the business idea; business aims and
objectives; target market (market research); forecast
revenue, cost and profit; cash-flow forecast; sources of
finance; location; marketing mix.

Question 35

1.4.4 Business plans

The purpose of planning business activity:

Answer 35

● the role and importance of a business plan in minimising
risk and obtaining finance.