theme 1 Flashcards
what is market research?
the process of gathering information about the market and customers’ needs and wants.
what is primary research?
New research that is carried out to answer specific issues and questions
what is a focus group?
a group of people who discuss their views on on a product, service, advertisement or idea. can be face-to-face or online
define questionnaires
a set of questions with a choice of answers
define interviews
can be carried out online, on the phone or face-to-face and allow detailed open questions to be asked.
define observations
means watching how customers behave naturally, when they dont know theyre being watched.
explain one benefit of using primary market research.
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.
explain one disadvantage of primary market research
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.
discuss the impact of undertaking primary research
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.
1.1.1 The dynamic nature of
business
Why new business ideas come about:
● changes in technology
● changes in what consumers want
● products and services becoming obsolete.
1.1.1 The dynamic nature of
business
How new business ideas come about:
● original ideas
● adapting existing products/services/ideas.
1.1.2 Risk and reward
The impact of risk and reward on business activity:
● risk: business failure, financial loss, lack of security
● reward: business success, profit, independence.
1.1.3 The role of business
enterprise
The role of business enterprise and the purpose of business activity:
● to produce goods or services
● to meet customer needs
● to add value: convenience, branding, quality, design,
unique selling points.
1.1.3 The role of business
enterprise
The role of entrepreneurship:
an entrepreneur: organises resources, makes business
decisions, takes risks.
1.2.1 Customer needs
Identifying and understanding customer needs:
● what customer needs are: price, quality, choice,
convenience
● the importance of identifying and understanding
customers: generating sales, business survival.
1.2.2 Market research
The purpose of market research:
● to identify and understand customer needs
● to identify gaps in the market
● to reduce risk
● to inform business decisions.
1.2.2 Market research
Methods of market research:
● primary research: survey, questionnaire, focus group,
observation
● secondary research: internet, market reports, government
reports.
1.2.2 Market research
The use of data in market research:
● qualitative and quantitative data
● the role of social media in collecting market
research data
● the importance of the reliability of market research data.
1.2.3 Market segmentation
How businesses use market segmentation to target
customers:
● identifying market segments: location, demographics,
lifestyle, income, age
● market mapping to identify a gap in the market and the
competition.
1.2.4 The competitive
environment
Understanding the competitive environment:
strengths and weaknesses of competitors based on: price,
quality, location, product range and
customer service
● the impact of competition on business decision making.
1.3.1 Business aims and
objectives
Business aims and objectives when starting up:
● financial aims and objectives: survival, profit, sales,
market share, financial security
● non-financial aims and objectives: social objectives,
personal satisfaction, challenge, independence
and control.
1.3.1 Business aims and
objectives
Why aims and objectives differ between businesses.
Aims set out what you hope to achieve at the end of the project. Objectives should be specific statements that define measurable outcomes.
1.3.2 Business revenues, costs
and profits
The concept and calculation of:
● revenue
● fixed and variable costs
● total costs
● profit and loss
● interest
● break even level of output
● margin of safety.
1.3.2 Business revenues, costs
and profits
Interpretation of break even diagrams:
● the impact of changes in revenue and costs
● break even level of output
● margin of safety
● profit and loss.
1.3.3 Cash and cash-flow
The importance of cash to a business:
● to pay suppliers, overheads and employees
● to prevent business failure (insolvency)
● the difference between cash and profit.
1.3.3 Cash and cash-flow
Calculation and interpretation of cash-flow forecasts:
1.3.3 Cash and cash-flow
Calculation and interpretation of cash-flow forecasts:
● cash inflows
● cash outflows
● net cash flow
● opening and closing balances.
1.3.4 Sources of business finance
Sources of finance for a start-up or
established small
business:
● short-term sources: overdraft and trade credit
● long-term sources: personal savings, venture capital,
share capital, loans, retained profit and crowd funding.
1.4.1 The options for start-up and
small businesses
The concept of limited liability:
● limited and unlimited liability
● the implications for the business owner(s) of limited and
unlimited liability.
1.4.1 The options for start-up and
small businesses
The types of business ownership for start-ups:
● sole trader, partnership, private limited company
● the advantages and disadvantages of each type of
business ownership.
1.4.1 The options for start-up and
small businesses
The option of starting up and running a franchise operation:
● the advantages and disadvantages of franchising
1.4.2 Business location
Factors influencing business location:
● 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.
1.4.3 The marketing mix
What the marketing mix is and the importance of each
element:
price, product, promotion, place.
1.4.3 The marketing mix
How the elements of the marketing mix work together:
● 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.
1.4.4 Business plans
The role and importance of a business plan:
● 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.
1.4.4 Business plans
The purpose of planning business activity:
● the role and importance of a business plan in minimising
risk and obtaining finance.
