Topic 1.2 - Spotting a Business Opportunity Flashcards
1.2.1
What are the 4 customer needs?
- price
- quality
- choice
- convenience
1.2.1
what is the importance of identifying and understanding customers?
- generating sales -> business survival
1.2.2
What is the purpose of market research? (4)
● to identify and understand customer needs
● to identify gaps in the market
● to reduce risk
● to inform business decisions.
- to identify competitors and figure out their strengths and weaknesses
1.2.2
What are the 2 methods of marketing research?
- Primary Research
- Secondary Research
1.2.2
What is primary research? + examples
Primary research is any data that you collect yourself (I kinda waffled the definition tbh)
examples:
survey, questionnaire, focus group, observation
1.2.3
What is secondary research? + examples
Secondary research is when you compile data that already exists, rather than data you collected yourself
examples:
internet, market reports, government reports
1.2.2
What are the 2 types of data from market research?
qualitative data (non-numerical)
quantitative data (numerical)
pros of social media in market research (expand each point)
- cheap (lower tc blah blah blah)
- fast (can make business decisions quicker -> more efficient)
- interactive relationship w/ customers (improves loyalty)
1.2.2
What is the importance of the reliability of market research data?
The advantages of having reliable market research data include:
the business can make properly informed decisions
reduces risk
means less money is wasted
gives a higher chance of business success
The consequences of relying on unreliable market research data include:
the business making unwise decisions
it could ultimately cost the business money
the business could bring out products that don’t sell
the business could fail
1.2.3
Name 5 different market segments
location, lifestyle, income, age, gender
1.2.3
How does market mapping help a business (3)
- market mapping helps spot a gap in the market (1)
- which leads to the production of a new product to fill the gap (1)
- (which leads to sales and eventually) profit (1)
Collusion
Secret or illegal cooperation or conspiracy in order to deceive others
Monopoly
A company having a complete market share
Free market
A system of buying and selling goods and services with little or no government control
Price-fixing
When multiple rival companies agree to keep the price of a certain product above a certain value
what is market research?
the process of systematically gathering data from consumers which can be used to influence the business decisions
what goes into a customer’s mind (in terms of price) when buying a product? (2)
how does understanding this help businesses?
- see if the product is good value (price is fair for quality)
- if the price of the product is within their budget
- Understanding this helps the business price its products competitively and offer promotions that appeal to their target market (e,g: buy one get one free)
what are the benefits of a product being high quality?
- customer satisfaction, leads to
- positive word-of-mouth (good PR), leads to
- more customers, leads to
- more sales, and in turn profit
what do customers want in terms of choice of product?
- would like to be able to choose from a variety of products or services (since diff customers have wide range of preferences)
- these products meet their ‘specific needs’
How to make buying a product more convenient? (4)
- online shopping
- fast home delivery
- good customer service
- easy to find the product you are looking for
which leads to…
- positive customer experience
cons of qualitative data? (4)
people may not go in depth, or maybe too in depth, so might not be that useful
Respondents in focus groups may be influenced by the responses of others, or not provide accurate information
not quantifiable so it will be difficult to compare
subjective, so not easy to compare
cons of quantitative data (3/4)
Information may have been collected for other purposes and so may lack relevance or may not be factually correct - iffy
Numerical data may be out-of-date, especially in dynamic markets
Data analysis and interpretation is a skill and individuals within the business may draw incorrect conclusions which are then used to guide business strategy
Looking at a small amount of data and then extrapolating the results can provide wrong assumptions from which strategic decisions are made
Numerical data may provide insights, but does not provide the reasons for the insights e.g. data may reveal sales volumes are falling, but not the reason for the decline
advantages of market segmentation (3)
Recognises that consumers are not all identical - consumer groups do not all share the same tastes and preferences - iffy
Products and marketing activities can be altered to meet different needs of different groups of consumers and targeted more precisely
Less expensive and wasteful than marketing products at wide market segments
May increase loyalty if the consumer feels that their needs are being met which can lead to repeat purchases
cons of market segmentation (4)
Not everyone within a segment will behave in the same way
May be difficult to identify a segment and consumers can belong to multiple segments at the same time
Segmentation requires more detailed market research which can prove costly (but beneficial) to the business
A segment may be identified but it may be too small and unprofitable to cater for
