1.2 - Spotting a Business Opportunity

Question 1

1.2.1 - What are the four main customer needs?

Answer 1

• Choice: When buying products, customers like to have a choice because different customers have different tastes and needs.
• Quality: Customers assess quality as a product’s suitability and their opinion will depend on expectations.
• Price: Customers will be influenced by price, especially by low prices.
• Convenience: Convenience refers to how easy it is for customers to purchase desired products.

Question 2

1.2.1 - Why is it crucial for businesses to meet customer needs?

Answer 2

• Generate sales:
  
  • Customers will continue to buy products
  • Repeat custom ensures that the business generates
    cash flow.
• Business survival:
  
  • As the reputation of the business grows, more and
    more consumers are likely to buy its products.
  • This should lead to increased profits making it likely
    that the business will continue to operate

Question 3

1.2.2 - What are the reasons for market research?

Answer 3

• To identify and understand customer needs
• To identify gaps in the market
• To reduce risk
• To inform business decisions.

Question 4

1.2.2 - What is primary research and how may businesses do this?

Answer 4

Market research carried out for the first time:

• Survey/ Questionnaire
• Observation
• Interviews
• Focus Group (small gorup of people discussing a product)

Question 5

1.2.2 - What is secondary research and how may businesses carry this out?

Answer 5

Market research which is information that has already been gathered:

• Internet
• Government Statistics
• Company Reports
• Newspapers
• Trade Associations
• Books

Question 6

1.2.2 - What is the difference between quantatative and qualitative data?

Answer 6

QuaLitavtive - Data is non-measurable opinions and judgements
QuaNtitavtive - Data is measurable numbers and statistics

Question 7

1.2.2 - Why is social media crucial to market research?

Answer 7

Social media is a cheap way of understanding customers. It allows a business to:

• Deepen their understanding of the market
• Identify popular trends
• Improve their products and marketing
• Save time conducting market research

Question 8

1.2.2 - Why is validity and reliability of research data important?

Answer 8

All your buriness desicions are based off it and so invalid and unreliable information will lead to a business making harmful mistakes that will limit their chance of profit and growth.

Question 9

1.2.3 - What are market segments?

Answer 9

• Part of a market that groups buyers with similar buying habits, such as:
• Location
• Demographic
• Age
• Income
• Lifestyle

Question 10

1.2.3 - What is a market map and what is it used for?

Answer 10

A market map is a four quadrant map based on two features of a product (e.g. high/low price and high/low quality) to allow a business to identify a gap in the market

Question 11

1.2.4 - What features of competitors products may businesses monitor?

Answer 11

• Price (Are their prices in a similar competitive range)
• Product range
• Quality (Are they delivering quality similar/ better)
• Customer service
• Location (Are they closer to their target market)

Question 12

1.2.4 - What may a business conduct to analyse its competitors and how they should effect their desicions?

Answer 12

A SWOT analysis (Strengths, Weaknessess, Opportunites, Threats)