Topic 1.2 Spotting A Business Opportunity Flashcards
What are 4 customer needs
Price
Quality
Choice
Convenience
Why is identifying and understanding customers important
Generating sales
Business survival
Market share
The percentage of a market held by one company or brand
The purpose of market research
To identify and understand customer needs
To identify gaps in the market
To reduce risk
To inform business decisions
Methods of market research
Primary and secondary
Methods of primary market research
First hand research to father precise information
Survey, questionnaire, focus group, observation
Methods of secondary market research
Internet, market reports, government reports
Companies usually start with secondary market research
What are two types of data
Qualitative and quantitative
What is qualitative research
In-depth research into people’s opinions and views
Usually carried out amongst a small number of people
Tend to be ‘open’ questions - detailed
What is quantitative research
Collecting lots of answers to specific questions
Tend to be ‘closed’ questions - numerical/measurable e.g. yes/no, rating of 1-5
Benefits of using social media for market research
Cheaper than other forms of research - can often be free
Save time putting information together, e.g. some online questionnaires put the results into a graph instead of the researcher doing this themselves
Allows businesses to spot the latest tastes and trends, and monitor the behaviour of their competition
What are the advantages of having reliable market research data
The business can make properly informed decisions
Reduces risk
Less money is wasted
Higher chance of business success
What is market segmentation
Dividing customers within a market into smaller groups with common needs or wants
Finding a product or service that fulfils those needs or wants
Ways in which a market can be segmented
Location
Demographics
Lifestyle
Income
Age
How to complete a market map
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Set out key features of a market
Plot where each brand fits in
Spot gaps in the market
Why identify gaps in the market
To show where the sector is overcrowded
To sport a producer being over-reliant on one sector
To spot new opportunities
Advantages and disadvantages of market mapping
Advantages: customisable, clear, easy to read and spot gaps
Disadvantages: biased, might not include all brands/products, doesn’t use all information
Competitive environment
The strength of competition between companies in the same market
Emerging markets (countries) are often competitive
What do you base the strengths and weaknesses of competitors on
Price, quality, location, product range and customer service
Impact of competition of the business
Offer quality products and services
Keep prices down
Bring in new innovative products
What might fierce competition force firms to do
Cut costs by cutting staff
Take short term action e.g. cutting prices
Adopt unethical practices e.g. dumping waste
