1.2 - spotting a business opportunity

What are customer needs?

Price, quality, choice, convenience

Why is it important to identify and understand customers?

To generate sales, for business survival

What are the purposes of market research?

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

What are the different types of market research?

Primary research, secondary research , qualitative market research data, quantitative market research data

Methods of primary research

Survey, questionnaire, focus groups, observation

Methods of secondary research

Internet, market reports, government reports

What is the role of social media in collecting market research data?

What is the importance of the reliability of market research data?

How can businesses segment the market?

Location, demographics, lifestyle, income, age

What does it mean to segment a market?

Part of a market which contain customers who have similar characteristics or buying habits

What does it meant to segment the market by location?

Based on where people live e.g. Regions, cities or neighbourhoods

What is demographic?

The structure of the population

How can demographic be segmented?

Age, gender, level of education, race, religion, family size

What does it meant to segment the market by lifestyle?

Based on the way that people live their lives e.g.hobbies

What does it meant to segment the market by income?

Affects how and what you buy

What does it meant to segment the market by age?

Might target an age range or stage in life

Why segment the market?

So you can understand customer needs and meet them and they will buy your products + make the best use of your marketing budget and advertise effectively

What is a benefit of market segmentation?

Can target a specific group of customers and know what they want

What is a drawback of market segmentation?

Some products need to cross over different segments so there might be less sales than expected e.g. Mercedes need to cross income, age and location

What is market mapping?

A tool used by businesses to analyse competing businesses in the market

What are the two variables used tor a product in market mapping?

Quality and price

What is the purpose of market mapping?

To spot gaps in the market, where certain market segments are unmet by rival businesses

What are the benefits of market mapping?

Helps identity potential gaps in the market (opportunities), helps to identify competition, supports market segmentation, helps businesses to make decisions about marketing and positioning its brand

What are the limitations of market mapping?

Based on opinions and perceptions rather than accurate data, only compares businesses based on two variables- price and quality

What is the definition of competition?

Rivalry between businesses who operate in the same market

What are the types of competition?

Direct competition, indirect competition

What is direct competition?

A competitor who sells the same type of product or service

What is indirect competition?

A business that provides competition became it sells a substitute product e.g. Instead of crisps you may decide to buy chocolate

What is product range?

Having lots of products to choose from which can attract customers e.g. Ikea

Strengths of competitors based on price

Competitors may offer lower prices, discounts or better value for money

Weaknesses of competitors based on price

Competitors could be more expensive or offer poor value for money

Strengths of competitors based on quality

Some may have higher quality products that last longer or feel more reliable

Weaknesses of competitors based on quality

Products may be low quality, unreliable or easily damaged

Strengths of competitors based on location

A competitor might be closer to customers, have easier parking or be in a busier area

Weaknesses of competitors based on location

Hard-to-reach stores, awkward parking or a spot with low footfall

Strengths of competitors based on product range

May offer a wider variety of products, giving customers more choice

Weaknesses of competitors based on product range

Limited variety, out-of-stock items or not keeping up with trends

Strengths of competitors based on customer service

Strong reputation for helpful staff, quick responses, or a smooth returns process

Weaknesses of competitors based on customer service

Long waiting times, unhelpful staff or bad reviews from customers