1.2 Spotting a business opportunity

1.2.1 Customer needs are identified by

doing market research

1.2.1 Customer needs are satisfied by

an integrated marketing mix

1.2.1 Customer needs are revisited by

ongoing research and relevant changes to the marketing mix

1.2.1 Identifying and understanding customers needs is important in order to

Provide a good or service that customers will buy as demand equals no survival.
Generate sales as it attracts need customers and keeps existing customers.

1.2.1 What are the 4 customer needs

Price
Quality
Choice
Convenience

1.2.1 What is Price

the amount of money charged for a product or service

1.2.1 What is Quality

meeting the needs and expectations of customers

1.2.1 What is choice

When different customers have different tastes

1.2.1 What is convenience

a product that makes life easier for customers

1.2.1 What factors are taken into account when pricing goods and services

Market research
State of the economy
Competitor's prices

1.2.1 How does Quality affect customer expectations

e.g McDonald's- better ingredients equals an expectation of higher prices and vice versa
Fast service equals expectations of standard procedure and reasonable prices

1.2.1 Why is choice important

Different customers have different tastes, businesses must take into account the diverse range of products that consumers are looking to buy.

1.2.1 Why is convenience important

Lifestyles have changed and people have busier lives so people need quick and simple ways to get thier goods and services e.g
Home delivery, 24 hrs service and the use of the Internet to order and track products
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1.2.1 Why is it important to research the market to identify needs and wants

As failure to do this leads to unsatisfied customers and no demand. This makes the business unable to compete or make a profit.

1.2.2 What are the 2 kinds of market research

Primary and Secondary research

1.2.2 What is primary market research

Data collected first hand for a specific research purpose

What is secondary market research

Using existing information that has been collected by a third party for a different purpose

1.2.2 What is quantitative data?

Numerical data that can be analysed and placed into a graph

1.2.2 What is qualitative data?

non-numerical data that is based on people's opinions.

1.2.2 What is the purpose of market research

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

1.2.2 What will market research help a business understand

It's customer needs and wants
The competitor's actions, strengths and weaknesses
The market place e.g size and trends.

1.2.2 What insight can businesses gain from researching customers needs and wants.

Trends and patterns in buying behaviours
Likes and Dislikes
Factors influencing choice
Attitudes to the businesses marketing mix

1.2.2 How does Market research help to identify gaps in the market

Assess what is current in the market
Identify market opportunities
Helps develop new business ideas

1.2.2 How does market research help to reduce risk

Provides an understanding of market trends
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1.2.2 What methods does primary research consists of

Survey- Asking people questions to find out info, views and opinions
Questionnaire- A set of pre-written questions to ask consumers
Focus groups- An in-depth discussion with a small group of people
Observation- Watching and recording how customers behave

1.2.2 What methods does secondary research consist of

Internet- Looking in-line at data or competitors info
Market reports- Information collected and published about a specific market
Government Reports- Information gathered and published by the government

1.2.2 What are the advantages of Primary Market research

Specific to the needs of the business
Info is up to date
Can be sometimes cheap e.g focus groups

1.2.2 What are the disadvantages of Primary market research

Time consuming
Some methods are small scale so data doesn't represent a typical consumer view and lacks accuracy
Not collected by an expert so there may be errors
Certain methods can cause biased answers
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1.2.2 What are the advantages of Secondary Market research

Tend to be cheaper and quicker to gather as it is already collected
May be from an expert source
Collected on a large scale so lots of data provided

1.2.2 What are the disadvantages of Secondary Market research

Can be out of date
Sources may be unknown and data may be unreliable
Often have to pay for it so it can be expensive

1.2.2 How does social media help a business to research its market

Allows businesses to analyse trends and make their findings up to date.

1.2.2 Why is reliability important?

Reliability is necessary for validity
Those undertaking the research may have ulterior motives leading to bias
Reliability is necessary for quality
Reports are only as good as the quality of research and information.

1.2.3 What is market segmentation

Involves dividing a market into parts that reflects different customers needs and wants.

1.2.3 Why is market segmentation important?

1. Identify groups of customers with similar needs and analyze their characteristics and buying behavior

2. Provides marketers with information to help them design marketing mixes

3. Segmentation is consistent with marketing concept of satisfying customer wants and needs while meeting organization's objectives

1.2.3 What sections are included in market segmentation

Location- relating to different geographical units e.g nations, cities and religions
Demographics- Relating to the population e.g culture, religion and gender
Lifestyle- relating to hobbies, interests and how they live their lives e.g healthy living
Income- relating to different income segments e.g socio-economic groups
Age- relating to how old they are e.g similar ages=similar interests

1.2.3 Explain one benefit to the business segmenting the market

By segmenting the market, they can target men. They can then identify the specific customer needs and adapt their products. The product will then be more likey to sell leading to them easily meeting their customers needs. This attracts more customes; therfore leading to greater revenue.

1.2.3 What is Market mapping

A tool used to identify gaps in the market and the competition, it helps to see what segment of the market is less provided.

1.2.3 What factors can a market map look at

Quality
Ease of use
Ease of access
Price

1.2.3 Benefits of Market mapping

Helps to identify potential gaps in market
Useful for analysing competitors
Encourages use of market research and segmentation

1.2.3 Limitations of Market mapping

Just because there is gap doesn't mean there is demand
Not a guarantee of success
How reliable is the market map?

1.2.3 Explain one benefit of using a market map

One benefit is that it identifies a gap in the market. This is because it helps to identify competitors products and what segments are not provided for. This leads to the business adapting or developing a new product therefore allowing the business to meet the unprovided needs and wants.

1.2.4 What is a market

a place where buyers and sellers come together to exchange goods and services for money

1.2.4 What is competition?

the rivalry among businesses to sell their goods and services in the same markets.

What do competitors try to do

Try to be better than other businesses in order to gain customers, sales and profits.

1.2.4 What is the competitive environment

The dynamic external system in which a business competes and functions.

1.2.4 The strengths and weaknesses of competitors is based on

Price
Quality
Location
Product range
Customer service

1.2.4 How does price affect the competitive environment

The businesses with lower prices have an advantage to help attract customers, however lower prices may equals lower profits. This means lower costs so cheaper suppliers or smaller workforce. If every competitor starts to lower their prices a price war might start.

1.2.4 How does Quality affect the competitive environment

Some business may compete on better quality products which allows them to charge higher prices however costs increases which lowers the profits. This is a risky factor as some customers may care more about price than quality.

1.2.4 How does Location affect the competitive environment

Having the most convenient location for customers is important e.g near a housing estate. Some business relocate abroad or out of town to lower costs and to have less competitors.

1.2.4 How does Product range affect the competitive environment

By selling a large range of products, means that they can use it as their brand awareness to increase overall sales. A greater amount of choice helps to attract more customers.

1.2.4 How does customer service affect the competitive environment

Good quality customer service leads to a strong reputation which increase brand awareness which increases sales and if repeated leads to greater market share. A helpful and friendly service wins customer loyalty.

1.2.4 How does competition impact a business

Price- business may need to lower prices to match competitors
Market share- loss of sales forcing a business to change elements of the marketing mix
Location decisions- move to a premises with a higher costs but have a greater footfall.

1.2.4 What is footfall

The number of people passing a particular location within a given time period

1.2.4 What is a niche market?

A narrowly defined segment of consumers with specific needs

1.2.4 What is a monopoly?

when a single group controls the production of a good or service

1.2.4 When might a business face no or minimal competition

In a niche market
In a geographical location that targets a small local market
A market with a dominant market leader that makes it difficult for other businesses to enter the market
Exclusive rights to a product, brand or territory