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Business And Economics - Unit 1 > Unit 1.3.3 > Flashcards

Unit 1.3.3 Flashcards

0
Q

Why do businesses need market research?

A

To identify what’s happening in the market not
To predict what might happen in the market in the future
To explore new possibilities in the market

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1
Q

What is market research?

A

Any kind of activity that gives a business information about its product or service, it’s customers, competitors or the market it operates in

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2
Q

What does market research do?

A
  • Gives information that can be used to make better informed decisions about the business and it’s future
  • Allows businesses to understand the consumer behaviour, to make decisions that make them more responsive to customers’ needs and to increase profits
  • Helps to give business a competitive advantage by improving its products and/or services and successfully marketing them
  • Crucial for any business to start up the reduce the risks involved
  • Essential for established businesses to keep up with market trends and remain competitive
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3
Q

What are the two main categories of market research?

A

Primary and secondary

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4
Q

What is primary research?

A
  • The gathering of information first hand from an original source that has been collected before
  • Also known as field research
  • Examples include questionnaires focus groups and direct interviews
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5
Q

What is secondary research?

A
  • Finding and using information that has already been gathered by someone else
  • Also known as Desk research
  • Can be done by reading books and journals and using online information
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6
Q

What are the advantages of primary research?

A
  • Can be designed to specifically suit the business
  • Information will be up to date and directly relevant
  • Information gathered is not available to competitors
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7
Q

What are the disadvantages of primary research?

A
  • Can be expensive to collect particularly it employing an agency
  • Can take a long time
  • Can give misleading information if questions not worded correctly or there are errors in sampling
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8
Q

What are the advantages of secondary research?

A
  • Can be done quickly particularly online

- Can be much cheaper than primary research

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9
Q

What are the disadvantages of secondary research?

A
  • May not be exactly specific to researcher’s needs
  • Can be dated
  • May not be accurate particularly if an online source
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10
Q

What is quantitative research?

A

Based on numerical data measures things and produces statistical information. The main types of quantitative research are sampling and questionnaires

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11
Q

What is qualitative research?

A

Based on consumer’s attitudes and opinions and tries to identify why customers behave the way they do. The main types of qualitative research are focus groups and interviews

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12
Q

What is sampling?

A

A smaller section or sample of the market representing the whole

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13
Q

What are the requirements of sampling?

A
  • Useful and accurate

- Not biased

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14
Q

What is a random sample, stratified sample and a quota sample?

A
  • Random sample: a group of people selected so as to be representative of the population as a whole
  • Stratified sampling: Targeting one particular segment of the market that you want to find out about
  • Quota sampling: Segmenting the market into groups that share specific characteristics. The research then focuses on a specific number (quota) of each group
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15
Q

What are the advantages and disadvantages of random sampling?

A
  • Advantages: can be effective and accurate
  • Disadvantages: Hard to be truly random in practice
    Needs large sample sizes to be accurate
    Can be expensive
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16
Q

What are the advantages and disadvantages of stratified sampling?

A
  • Advantages: Targets market effectively
  • Disadvantages: Difficulty in identifying appropriate strata
    More complex to organise and analyse results
17
Q

What are the advantages and disadvantages of quota sampling?

A
  • Advantages: Cheap and effective way of sampling

- Disadvantages: Ned to be careful in drawing up quotas to avoid bias

18
Q

How is market size normally measured?

A

By the total sales of all the businesses in that market added together

19
Q

How is market share expressed?

A

By the total sales (£) as a percentage of the overall market

20
Q

What is market growth?

A

An increase in the demand for a product

21
Q

What is a mass market?

A

A very large market with a high value of sales by volume. Occurs when one product is aimed at the largest group of customers for a product or service

22
Q

What is a niche market?

A

A small part of an overall market that has special characteristics like providing a luxury product or service with little competition

23
Q

What is market segmentation?

A

Dividing the market into groups of consumers with similar characteristics like age, gender etc

24
Q

In what ways can the market be segmented?

A
  • Socio-economic grouping
  • Income, age and gender
  • Size and composition of customer households
  • Geographical location
  • Ethnicity and/or religion
  • Educational background of customers
  • Hobbies and interests
25
Q

What are the advantages of segmentation?

A
  • The more precisely a segment can be identified and provided for the more likely it is that a sale will be made
  • Segmenting the market reduces direct competition
  • A premium price may be charged if market segments get exactly what they want
  • Encourages the development of brand loyalty
26
Q

What are the disadvantages of segmentation?

A
  • Can be expensive to research and identify different segments
  • More costly to develop and market different products for different segments rather than just one standardised product
  • Targeting one particular segment may mean ignoring other
  • Even if segments are identified, reaching them may be another problem
27
Q

What is market positioning and product differentiation?

A
  • Market positioning: how individual products or brands are seen in relation to their competition by the consumers
  • Product differentiation: Occurs hm business make their product a little if different from competing products
28
Q

What is repositioning?

A

Repositioning a product in the market for a benefit such as competitive advantage and to change customer perspective

29
Q

What is market mapping?

A

The use of a grid showing two features of a market such as price and consumer age

30
Q

What are the advantages of market mapping?

A
  • Enables a business to spot gaps in the market

- Can help a business to differentiate its product from the competition

31
Q

What are the disadvantages of market mapping?

A
  • Can be hard to categorise some products and services

- Identifying a gap does not mean there is a need for a product to fill it. More research must be done

32
Q

What is competitive advantage?

A

Any feature of a business that enables it to compete effectively with rival products based on price, quality, service, reputation or innovation

33
Q

What does adding value mean?

A

Altering the product so as to increase its value to the customer

34
Q

What are the advantages of adding value?

A
  • Products are perceived good value for money and may be based on a low prices or a reputation for quality
  • A brand image may become associated with technical excellence or appealing design features
  • Competitive advantage applies to services as well as manufacturers it is easy to see how better staff training might improve the services offered in a hotel or fitness centre
35
Q

What is a product trial/test marketing?

A

The launching of a product on a limited scale in a representative segment of the market to measure initial reactions

36
Q

What are the advantages of product trial/test marketing?

A
  • Shows wether that the product is viable before rolling it out to the rest of the market
  • Avoids the cost of a full-scale launch as well as providing useful market data which may then be used if necessary to adapt or modify the product
  • Expensive yet cheaper than a nationwide product launch
37
Q

What is opportunity cost?

A

The cost of the next best alternative that has been sacrificed. When choices are made the alternative has been sacrificed and that will be the opportunity cost

38
Q

What is the trade-off?

A

A trade-off is a situation where having more of one thing leads to having less of another. It involves a more gradual lessening of one variable in order to get more of another

39
Q

What are stakeholders?

A

Individuals or groups with interest in the actions of a business they include employees, owners and shareholders, customers, suppliers, local community, competitors and the government

40
Q

Explain the three views regarding the significance of stakeholder interests

A
  • Profitability: shareholders are the owners of the business and their primary interest is in profitability
  • Employees: all stakeholder interests should be taken into account when business decisions are taken
  • Environmental issues: stakeholder interests are an important factor in ensuring the long-term success of the business

Business And Economics - Unit 1 (3 decks)

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