Topic 3 - Evaluating a business opportunity

Business studies unit 1

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Understanding Markets 1

  • Markets are where sales happen
  • There are 4 types of markets: 
    • Industrial markets
      • Where businesses sell to other businesses 
    • Consumer markets
      • Where firms sell to individual customers
    • Local markets
      • Where firms sell to customers who live nearby
    • Electronic or virtual markets
      • Where buying and selling is done over the internet 
  • Market analysis lets business spot opportinities in a market by looking at market conditions. Market conditions are: 
    • Market size
      • Businesses estimate the size of their market by the total number of sales in the whole market 
    • Market share
      • Business like to know what share of the market they have, e.g. 1/4 Pc's sold were Dell, so Dell has a 25% market share
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Understanding Markets 2

  • Businesses try to increase their market share by increasing demand for their products 
  • If they sell more products, they make more profit
  • Markets are segmented into groups of simiar customers for analysis, examples are:
    • Income
    • Social Class
    • Age
    • Gender
    • Ethnic groups 
    • Family size
    • Life style
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Market Research

  • Market research is done for 3 main reasons:
    • Helps businesses spot opportunities
    • Helps businesses to work out what to do next
    • It helps businesses to see if there plans are working
  • Quantative research produces numerical statistics (fasts and figures) 
  • Qualitative research looks into the feelings and motivations of consumers 
  • Primary research is where a business gathers new data
  • Secndary research is done by analysing sata that's already available
  • Market research needs to avoid bias to increse its accuracy 
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