Topic 1.2 Spotting a business opportunity

Question 1

What is the purpose of market research?

Answer 1

The purpose of market research is to help a business to understand its customers, competitors and the market in which it operates, in order to make informed decisions about its products and services.

Question 2

Purpose of market research

Answer 2

-Identify gaps in the market or opportunities
-Identify and understand competitors
-Understand trends in the market, such as market growth
-Inform business decisions and reduce the risk associated with making business decisions
-Understand how well the business is doing, such as customers’ opinions of its products
-Identify and understand customer needs

Question 3

Examples of primary research

Answer 3

-survey (cost effective, however, response bias)

-questionnaire (a lot of data can be collected from a large group of consumers

• therefore the company will get a wider view, however, closed ended questions does not give participants the chance to give their opinion - therefore the data gathered may not be accurate, it may be biased)

-focus group (gives detailed information - the business will have better knowledge of how customers feel, however, one member in the group can influence others to think the way he/she is thinking)
-observation (easy to organize, however people can behave differently if they know they are being observed)

-social media

Question 4

What is primary research?

Answer 4

Primary research (field research) is collecting information that did not exist before. This firsthand contact with customers is valuable to a business in understanding its market.

Question 5

What is secondary research?

Answer 5

Secondary research (desk research) is the process of gathering secondary data, which is information that already exists.

Question 6

Advantages and disadvantages of primary research

Answer 6

ADVANTAGES:
- The information collected will be up to date.
- The questions asked can be tailored to ask specific questions relevant to the business.
- It allows the business to have direct contact with existing and potential customers.
-Effective at collecting qualitative data
-Provides detailed information

DISADVANTAGES:
-Can be time consuming to collect
- Often more expensive
-Difficult to collect

Question 7

Examples of secondary research

Answer 7

-internet
-market reports
-government reports
-local newspapers
-telephone directories

Question 8

Advantages and disadvantages of secondary research

Answer 8

ADVANTAGES: