business revision- market research, market share, budgeting, production capacity

what is market research?

gathering data to understand current and future customer needs and nature of the market, reducing risk involved in developing new business ideas.

what do market researchers investigate? 3

consumers motivation and behavior, evaluate potential products and estimate expected sales.

how can market research be done? (2)

1. can be highly sophisticated using specialist researchers using statistical techniques to get most accurate results
2. basic e.g. feedback from customers

what opportunity does market research provide? (3)

gaps in the market
potential growth areas
suggesting ideas for successful marketing.

give 3 examples of top market research co.'s in the UK

1. kantar group
2. IPSOS MORI
3. survey monkey

Product Orientation

focus on creating products rather than needs of the market, priority is to develop the product and then sell.

Market Orientation 3

concentrate on consumer preferences + decisions based on good understanding of the market + supported by extensive market research

Primary Research

Collecting new data directly from original sources. E.g. questionnaires and in-depth interviews.

Secondary Research

gathering info from existing sources e.g. govt statistics internal info- customer records, accounting data

give two advantages and disadvantages of PRIMARY research

adv:
1. designed to meet exact need
2. info is relevant and up to date
disadv:
1.expensive+time consuming
2. care must be taken to avoid errors

2 adv and disadv of SECONDARY research

adv:
1. hard work already done by someone else
2. easy and cheap tp collect
disadv:
1. may not fit needs of business
2. may be out of date + inaccurate

uses of market research include: 4

1. understanding market and customer preferences
2. research competing products
3. quantifying potential demand + likely sales levels
4. developing and maintaining competitive adv

quantative research

analysis of numerical data to generate estimates of future sales levels

Qualitative Research

discovering customer's opinions, reactions and behaviors towards specific products

1. Sampling
2. bias

1. opinions of people chosen from specific group to find out about the whole group, size must be large enough to reflect variations in individual responses reasonably accurately.​
2.bias occurs if the sample includes a disproportionate number of people from a particular market segment

give 4 limitations of market research

1. only give accurate results if questions asked are well designed and aren't misleading
2. some markets so dynamic that market research is out of date before put to use
3. samples must be big enough to be representative but not so big that they become costly
4. MR tricky in foreign markets so need well-trained locals which can be costly

How can ICT be used to support market research? 3

1. primary research can be collected from digital communities created on FB and twitter with product-specific communities
2. online surveys + questioners can be useful
3. allows businesses to keep in touch with existing customers w brand loyalty

Market Segmentation

dividing target market into sub-groups based on shared characteristics--->product specifications + marketing strategies can be designed to fit the preferences of each market segment.​

how can markets be segmented? 4

socio-economic grouping, income, age and gender, hobbies/interests

what does segmentation mean for a business?

can design products to meet the needs of groups with distinctive preferences​-----> may enhance brand loyalty and lead to repeat purchases

why is market segmentation associated with niche markets?

there's less competition----> so possible to charge a premium price

why is market segmentation not so useful? 2

1. Producing for specific market segments can raise production costs and prices
2. Targeting mass market + cutting costs by focusing on a single standardised product may be more profitable.

what are the 4 main market segmentation types?

DEMOGRAPHIC > dividing a market into segments based on demographic variables
​BEHAVIOURAL > dividing a market into segments based on the different ways customers use or respond to a product and the benefits they seek. E.g. customers wanting a value for money impulse buy.
​GEOGRAPHICAL > dividing a market into different geographical units such as nations etc.
​PSYCHOGRAPHIC > dividing market into segments based on different personality traits, interests + lifestyles of consumers
​

give 4 benefits of market segmentation

1. marketing mix more effective e.g. better targeting of promotion
2. differentiate brand from competition
3. better matching of customer needs by creating separate products for each segment
4. can build sales e.g. encouraging customers to 'trade-up'

give 3 drawbacks of market segmentation

1. segmentation increases costs
2. dynamic so money spent become useless
3. data about each market segment is not always up-to-date or reliable​

market positioning

examine customer views on individual products or brands in relation to each other.

benefit of market positioning

helps businesses to design a product that fits the preferences of a target market, preferably one not particularly well catered for by other suppliers

Market mapping

process of finding the variables which differentiate brands in a market and then plotting them on a map- to identify a gap in the market.​

give 2 adv and disadv of market mapping

adv:
1. Enables business to spot gaps in the market
2. help a business to differentiate its products from the competition.
disadv:
1. Can be hard to categorise some products and services
2. identifying a gap does not mean there is a need for a product to fill it. More research must be done, to establish profit potential

what does competitive advantage mean and how do businesses gain this?

having an edge over rival products, to gain a competitive advantage businesses will cut costs, improve efficiency and compete on price to attract customers

give 5 examples of ways businesses gain a competitive advantage

1. Improve relationships with employees and suppliers.​
2. Improve the product itself and its image by changing the marketing strategy.​
3. branding
4. reputation
5. added value

product differentiation

where a business distinguishes its products or services from those of its competitors
Unique selling points (USPs), can be important-these are features that no competing product can match

give 4 ways a business can differentiate itself

1. reputation
2. customer service and after sale service
3. through value for money
4. through product features

Adding value=

selling price - costs involved in production or delivery of a service
increase worth placed customers place on a product by improving it nor creating a fresh image---->charge more

benefits of adding value:

1. more value---> higher price being charged + higher profit margins
2. customer loyalty and thus repeat purchases

budget

a forecast of future revenue, cost and profit

Favourable variance

actual figures differ from budgeted figures in a way that benefits the firm e.g. higher sales revenue than expected or lower costs than expected

adverse variances

actual figs differ in a way that's detrimental to the firm e.g. lower sales rev than expected

what is zero-based budgeting?

setting budget to zero each year then justifying every £1 of expenditure linked to achieving business objectives.

Delegated budgets

when junior employees are given budgeting responsibilities

budgeted figure - actual figure

variance

give 2 advantages of budgeting

1.allows co to do variance analysis- compare budgeted figures to actual figures e.g. positive V= signals opportunity where co can take adv, negative V= problem needs to be addressed quickly
2. may hep control costs (ideally using delegated or zero-based budgeting-historical budgeting can lead to wastage)

give 2 limitations of budgeting

1. unexpected changes occur e.g. new comp, sudden rising cost of raw materials, need to be flexible and willing to change budget
2. delegated/zero-based budgeting more time consuming + require some staff training
3. conflicts between departments on who gets bigger budgets

Job production

handmade, labour intensive production, often producing items made to order

give 2 adv and disadv of job production

adv:
1. unique high-quality items--->differentiated from comp--->price inelastic--->charge higher prices without losing many sales
2. low start up costs + less need to buy capital equip
disadv:
1. low production vol--->lower productivity--->higher unit costs-->low profit
2. skilled craftsmen may demand higher wages-->higher wages

Flow production

producing items in a continually moving process, usally capital intensive

give 2 adv and disadv of flow production

adv:
1. large vol production-->technical economies of scale from specialist capital equipment-->high productivity-->low unit costs+higher profit
2. lower unit costs-->prices can be lower so higher sales vol + increased profit
disadv:
1. higher start-up costs to purchase machienery--> borrowing/debt
2. mass-produced standardised items= lower prices

Batch production

produce identical products but can change/adapt items produced in next group/batch

2 adv and disadv of batch production

adv:
1. can change batches to produce wider variety of products THAN FLOW PRODUCTION
2. higher productivity and lower unit costs THAN JOB PRODUCTION
disadv:
1. provides less variety THAN JOB PRODUCTION
2. expensive+time consuming to switch between batches and store wider range of raw materials-->batch HIGHER COSTS AND LESS PRODUCTIVE THAN FLOW

capital intensive

lot of macienery used in production process so capital/machienery costs are high % of tot costs

Labour intensive

labour costs are a high % of tot costs

Productivity=opw

output per worker, this is the measure of efficiency
=tot production/no. of workers

Efficiency

producing at lowest unit cost, increased producivity will lead to higher efficiency BUT other factors e.g wastage, tech needs to be taken into consideration

give 4 ways to improve productivity

1. increase motivation(through financial rewards or non-financial methods e.g. increased deligation)
2. investment in machinery-->more capital intensive production
3. investment in education and higher levels of training
4. org of workplace, poor management can damage productivity while methods e.g high division of labour/Kaizen can increase productivity

waht is the link between productivity and competitiveness 2

increased productivity will lower unit costs + allow business to lower prices to increase competitiveness. can also compete via differentiation where branding, quality and customer service is more important than productivity