1.2 - Spotting a business opportunity Flashcards Preview

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Flashcards in 1.2 - Spotting a business opportunity Deck (72):
1

What customer needs must a business consider? (4)

Price, quality, choice, convenience

2

Convenience

A product or service’s ability to fit in well with a customers lifestyle or routine, the ease with which it can be used and/or it’s easy-to-reach location

3

Why are customers influenced by price?
What will a price a customer is willing to pay depend on?

Customers are influenced by price, especially low prices, and the price a customer is willing to pay will depend on the value they place on that product

4

What is Quality and what is it linked to?

Quality is a product’s suitability or fitness for purpose, and this is linked to their expectations, e.g. how much they pay
Quality is also linked to customer service, and how much it meets their expectations

5

Why do customers like to have choice?

Customers like to have a choice because different customers have different tastes and needs
It can also help customers make buying decisions e.g. with internet

6

How can convenience affect a business?

Convenience is an important factor as it determines the decisions customers make for products and services
Customers needs for convenience can help a business reduce its costs

7

What does a business need to know in order to generate sales?

A business needs to know hat it’s customers want, as if a brilliant idea doesn’t meet their needs then they won’t buy it

8

What can impact business survival?

The needs and behaviours of customers can also impact whether the product or service survives, so businesses have to make sure they follow these

9

Market research

The process of gathering information about the market and customer needs and wants in order to help inform business decisions, including product design and marketing

10

Viable

Able to work properly or successfully

11

What are the purposes of market research?

The purpose of market research:
To identify and understand customer needs
To identify gaps in the market
To reduce risk
To inform business decisions

12

Primary research + examples

Research that is carried out to answer specific issues and questions e.g. focus groups, questionnaires, surveys

13

Focus group

A group of people who discuss their views of a product, service, advertisement or idea, either face-to-face or online

14

Surveys + ways in which this can be done

Surveys ask people questions in order to measure their opinions. This can be done through:
Online
In person / face-to-face
Over the telephone
Through the post

15

Questionnaires

A questionnaire is a set of questions with a choice of answers. They need to be carefully planned in order to provide useful feedback

16

Focus groups role

A focus group is a group of people who are asked about their view,s opinions, beliefs and attitudes towards a product, service, advertisement or idea

17

Target market

A particular group of consumers at which a business aims its products and services

18

Sample

A portion of the population asked for their opinions in order to draw conclusions about the behaviour of the whole population

19

Generation Y

(Also known as the Millennials) the people born shortly before the 21st century, usually defined as born between 1980 and 2000

20

Observation

This means watching how customers behave naturally when they don’t think they are being watched. It is effective as research is less likely to be biased. However, ethics need to be considered.

21

Data

Information, particularly statistics, that can be collected and analysed

22

Biased

Unbalanced or inclined to agree with a particular judgement or idea rather than presenting the evidence fully

23

Ethics

Moral principles or standards that guide the behaviour of a person or business

24

Secondary research

This is research using existing sources of information that has previously been researched

25

Source

A place, person or thing, such as a book or report, that can provide information to be used in research

26

Internally sourced information

Data, statistics and research that the business has accumulated in the past

27

Externally sourced information

Information published by people or organisations that isn’t related to the business
E.g. internet, market reports and government reports

28

Chamber Of Commerce

A local association that promotes the interests of businesses in a country or region

29

Trade association

Organisation founded and funded by businesses that operate in a specific industry

30

Analysis

The process of looking at data to identify patterns or trends

31

The use of data in market research

Market research is based on data analysis, which reveals useful information from a set or sets of data

32

Qualitative data

Data gathered by finding out what people think and why they think that way in order to understand people’s habits or preferences

33

Quantitative data

Quantitative data is gathered by asking people for information about their habits and lifestyles using a tool such as a questionnaire

34

Uses of qualitative data

Products and services
Designing and packaging
Advertising and marketing messages
Price changes

35

Advantages of qualitative data

Provides depth and detail
Helps a business to listen to what customers want

36

Disadvantages of qualitative data

Relatively small sample surveyed
Responses are very subjective
Results can depend on skills of interviewer

37

What kinds of questions are used for qualitative data?

Open questions, that aren’t yes or no

38

What kinds of questions are used for quantitative data?

Closed questions, like yes or no

39

Incentive + link to business

Someone such as a payment or gift that encourages someone to do something, such as fill out a business survey

40

Uses of quantitative data

To see if there is a market for the product/service
Statistics

41

What has social media allowed businesses to do? (4)

Deepen understand the market
Identify popular trends
Improve products and marketing
Save time on market research

42

Understanding the market

If the business uses something like a Facebook page they can see what customers like and dislike

43

Identifying popular trends

By setting up automated searches relating to a brand, a business can see how often they’re business is talked about on social media

44

Improving products and marketing

Social media platforms can help businesses to see how people talk about the business, and by joining in with discussions they can learn new things about this own business

45

Saving time

Social media can provide much larger samples, and because they are generally used casually they can encourage participation and honest feedback

46

The importance of the reliability of market research data
What causes most market research errors?

When a business uses market research results to make decisions, it has to be confident that results are accurate. Most errors can be traced to problems in validity and reliability of data gathering

47

Validity

A measure of how god the design and methods of research are and suggests whether the findings of the research can be trusted

48

Reliability

An indication of whether the research results from a sample are representative of a wider group or the whole population.

49

Identify 6 market segments

Location, Demographics, Behaviour, Lifestyle, Income, Age

50

What is market segmentation?

Market segmentation is the process of dividing a target market into smaller categories by grouping together consumers with a particular need or interest

51

Segmentation

the process of breaking something up into smaller parts

52

Demographics

relating to the structure of a population

53

MS - Location

A business may choose to divide its market into groups based on where they live

54

MS - Demographics

A business may choose to divide the market by factors like sex or family type

55

MS - Behaviour

This divides the population based on people's behaviour e.g. during Valentine's

56

MS - Lifestyle

This divide refers to the way in which customers live their lives. Customers can be sorted into groups defined by the things they like to do in their spare time

57

MS - Income

This is segmenting customers based on their income; the amount of money they earn

58

MS - Age

Customers needs and wants change as they get older, so businesses may target certain products at certain age groups

59

What is market mapping?

Market mapping is the process of creating a diagram, known as a market map that identifies all products in a market and maps the against 2 of their features

60

What does a market map allow businesses to do? (3)

see all the products or services in the market
identify its competitors
spot any gaps in the market

61

Axes

the reference lines on a graph

62

Direct competitors

Businesses that sell the same type of product or service

63

Indirect competitors

Businesses that don't sell the same product or service but still find themselves in competition with one another

64

Understanding the competitive environment - what must a business do?

A business must know its target market very well. It must be able to sell the right product in the right place, product, promotion and price (4Ps)

65

What can strengths and weaknesses of competitors be based on? (5)

Price, Quality, Location, Product Range, Customer Service

66

Strengths and Weaknesses - Price

A business may charge higher prices than its nearest competitor. The competitor has a strength in this way

67

Strengths and Weaknesses - Quality

A business may have lower quality products than its nearest competitor, which is a weakness for the business

68

Strengths and Weaknesses - Location

A competitor's business may be located at a railway station which receives higher footfall. The business is at a weakness

69

Strengths and Weaknesses - Product range

A business may make a wider variety of products than a competitor, giving it a strength

70

Strengths and Weaknesses - Customer service

A business may be rude to its customers, meaning it has a weakness

71

The impact of competition on decision making

Competition can make businesses more likely to innovate or think of new product ideas in order to get ahead of competitors, or to take control of the costs in order to make a profit

72

SWOT analysis

a study undertaken by a business to identify the strengths and weaknesses, opportunities and threats