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business > Topic 1.2 - Spotting a Business Opportunity > Flashcards

Topic 1.2 - Spotting a Business Opportunity Flashcards

1
Q

1.2.1
What are the 4 customer needs?

A
  • price
  • quality
  • choice
  • convenience
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2
Q

1.2.1
what is the importance of identifying and understanding customers?

A
  • generating sales -> business survival
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3
Q

1.2.2
What is the purpose of market research? (4)

A

● 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

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4
Q

1.2.2
What are the 2 methods of marketing research?

A
  • Primary Research
  • Secondary Research
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5
Q

1.2.2
What is primary research? + examples

A

Primary research is any data that you collect yourself (I kinda waffled the definition tbh)

examples:
survey, questionnaire, focus group, observation

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6
Q

1.2.3
What is secondary research? + examples

A

Secondary research is when you compile data that already exists, rather than data you collected yourself

examples:
internet, market reports, government reports

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7
Q

1.2.2
What are the 2 types of data from market research?

A

qualitative data (non-numerical)
quantitative data (numerical)

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8
Q

pros of social media in market research (expand each point)

A
  • cheap (lower tc blah blah blah)
  • fast (can make business decisions quicker -> more efficient)
  • interactive relationship w/ customers (improves loyalty)
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9
Q

1.2.2
What is the importance of the reliability of market research data?

A

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

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10
Q

1.2.3
Name 5 different market segments

A

location, lifestyle, income, age, gender

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11
Q

1.2.3
How does market mapping help a business (3)

A
  • 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)
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12
Q

Collusion

A

Secret or illegal cooperation or conspiracy in order to deceive others

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13
Q

Monopoly

A

A company having a complete market share

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14
Q

Free market

A

A system of buying and selling goods and services with little or no government control

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15
Q

Price-fixing

A

When multiple rival companies agree to keep the price of a certain product above a certain value

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16
Q

what is market research?

A

the process of systematically gathering data from consumers which can be used to influence the business decisions

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17
Q

what goes into a customer’s mind (in terms of price) when buying a product? (2)

how does understanding this help businesses?

A
  • 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)
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18
Q

what are the benefits of a product being high quality?

A
  • customer satisfaction, leads to
  • positive word-of-mouth (good PR), leads to
  • more customers, leads to
  • more sales, and in turn profit
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19
Q

what do customers want in terms of choice of product?

A
  • 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’
20
Q

How to make buying a product more convenient? (4)

A
  • online shopping
  • fast home delivery
  • good customer service
  • easy to find the product you are looking for

which leads to…
- positive customer experience

21
Q

cons of qualitative data? (4)

A

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

22
Q

cons of quantitative data (3/4)

A

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

23
Q

advantages of market segmentation (3)

A

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

24
Q

cons of market segmentation (4)

A

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

25
Q

market map

A

A market map refers to a two-dimensional diagram that shows the attributes or characteristics of a product in comparison to rivals’ products

26
Q

pros of market mapping (3)

A

Market gaps can be identified which may enable a business to come up with ideas for new products

Comparisons can be made between a business’s products and those of its rivals - where are the business’ products positioned about its rivals?

Market maps are simple to construct and offer a visual illustration of a products position in the market

27
Q

cons of market mapping (3)

A

A gap in the market may exist because it is not profitable to fill

Mapping a market may require primary research which can be expensive

Only two criteria can be chosen which may prove too simplistic

Markets are often dynamic and a market map only provides insight at a specific point in time

28
Q

disposable income

A

Money that households have left from their salary/wages after they have paid their taxes

29
Q

indirect competition

A

Indirect competition occurs when firms sell different products but compete with each other for the customers disposable income (e.g: cinema vs netflix)

30
Q

direct competition

A

Direct competition occurs when the business is targeting customers with exactly the same product as a competitor

31
Q

what are the 5 methods of a business getting a competitive edge?

A

price, quality, location, product range and customer service

32
Q

pros of lower price (1)

A
  • competitive advantage due to lower price
33
Q

cons of lower price (1)

A
  • not profitable/ breakeven higher
34
Q

pros of high quality (2)

A

Competitors who offer high-quality products can differentiate themselves from rivals and establish a strong brand
They can also command higher prices (premium pricing) which can lead to greater profitability

35
Q

con of high quality (1)

A
  • hard to compete with lower-priced rivals
  • since high quality props means higher costs
36
Q

pros of close location (1’

A

competitive advantage over rivals who are located further away from customers since it is more convenient for customers to shop at this store

37
Q

cons of close location

A
  • may have high rent costs
  • lower profit margins
38
Q

pro of large product range

A

can attract a broader customer base and increase customer loyalty by meeting a variety of customer needs

39
Q

con of large product range

A

may struggle to manage the complexity of their business and maintain consistent quality across all their products

40
Q

pros of good customer service (2)

A

Competitors who provide excellent customer service can differentiate themselves from rivals and establish a loyal customer base
They can also generate positive word-of-mouth recommendations

41
Q

con of prioritising good customer service

A
  • may have to employ more workers/pay more
  • higher costs
42
Q

SWOT analysis

A

a method for identifying and analyzing internal strengths and weaknesses and external opportunities and threats that shape current and future operations and help develop strategic goals.

43
Q

how does competition impact price?

A

- may have to offer lower prices
- in order to stay competitive (otherwise rivals will have USP of price)

44
Q

how does competition impact product development?

A

may increase the speed of development of new features - or entirely new products
- in an attempt to differentiate products

45
Q

how does competition affect marketing decisions?

A
  • have to analyse competitor’s actions
  • business needs to ensure that their advertising is (better?)
46
Q

how does competition affect operational decisions?

A
  • deciding on the best method of production (job, batch or flow production)
  • deciding on their location
  • etc.,.

business (11 decks)

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