Evaluating a business oppertunity

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What is market research?
Any kind of activity that gives business information about its product or service, its customers, competitors or the market it operates in.
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Why do businesses need to do market research?
To identify what is happening in the market currently, To predict what might happen in the future, to explore new possibilities in the market.
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What does market research do for businesses?
Helps make better informed decisions, can understand consumer behaviour and tilor products to customers needs, help give a competitive advantage, reduces risk, need to keep up with market trend and remain competitive.
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What is primary research?
To gathering of information first hand from an original source, it often involves going out and asking people questions
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What is secondary research?
Finding and using information that has already been gathered by somebody else
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What are the advantages of primary research?
Can specifically suit the businesses needs, information will be up to date and relevant, information is not available to competitors.
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What are the advantages of secondary research?
Can be done very quickly online, can be much cheaper than primary research.
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What are the disadvantages of primary research?
Can be expensive to collect particularly if employing an agency, can take a long time, can give misleading information form incorrectly worded questions and errors
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What are the disadvantages of secondary research?
May not be specific to researchers needs, can be dated, may not be accurate particularly if an online source.
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What is quantitative research?
It is based on numerical data, measures things and produces statistical information.
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What is qualitative research?
Based on consumers attitudes and opinions. Tries to identify why consumers behave the way the way they do.
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What is sampling?
When a small section or sample of the market is chosen to represent the market as a whole.
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What is random sampling?
A group of people selected to represent the population oa a whole. Interviewing random people as they walk by will produce a based sample. The people ask wil change based on the time in day
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What is stratified sampling?
Targeting one particular segement of the market that you want to find out about.
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What is quota sampling?
Segmenting the market into groups that share specific characteristics. The research then focuses on a specific number in that group.
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What are the advantages of random sampling?
Can be effective and accurate.
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What are the advantages of stratified sampling?
Targets markets effectively.
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What are the advantages of quota sampling?
Cheap and effective way of sampling.
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What are the disadvantages of random sampling?
Hard to be truly random, needs large samples to be accurate, can be expensive
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What are the disadvantages of stratified sampling?
Difficulty in identifyin appropiate strata, more complex to organize results.
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What are the disadvantages of quota sampling?
Need to be careful in drawing up quotas to avoid bias.
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What is market size?
Measured by the tota sales of all businesses in that market added together.
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What is market share?
An individuals sales expressed as a percentage of the total sales in that market.
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What is market growth?
Is an increase in demand for a product.
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What is a mass market?
A very large market with very high volume of sales.
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What is a niche market?
A small part of a overall market that has certain special characteristics, may include providing a specialised or luxury product or service.
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Are smaller markets often less or highly competitive and why?
Less competitive because there are fewer competing businesses and profits may be to small to attract big businesses.
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What is market segmentation?
Means dividing the market into groups of consumers with similar characteristics
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How can a market be segmented?
Socio-economic grouping, income, age, gender, size and composition of household, geographical location, ethnicity/religion, education background, hobbies and interests
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What are the advantages of segmentation?
The more precise the segment the higher chance of a sale, reduces direct competition, premium may be charged if market segment gets exactly what they want, encourages brand loylaty.
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What are the disadvantages of segmentation?
Can be expensive to research and identify, more costly to develop and market for different segments instead of one general product, may ignore other segments, reaching a segment may be difficult.
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What is market positioning?
How individual products or brands are seen in relation to their competition by consumers.
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What is product differentiation?
Occurs when businesses make their product different. Gives a USP to attract customers and may change perception of the function of the product.
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What is market mapping?
Use of a gid showing two features such as quality and price. It shows potential niches and gaps in the market.
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What are the advantages of market mapping?
Enables a business to spot a gap in the market, can help businesses to differentiate it products from other markets.
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What are the disadvantages of market mapping?
Can be hard to catagorise some products and services, dentifying a gap does not mean there is a need for a product to fill it more research must be done.
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What is a competitive advantage?
A feature of a product that enables it to compete effectivly.
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What sort of thing can give a product an advantage?
Price, quality, service, reputation, innovation, convenience, staff training
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What is adding value?
Atlering the product to increase its value. This can be done by improving the product or locating it where customers want it.
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What is a product trial?
When a product is launched in a limited scale in a representitive segment of the market to measure initial reactions.
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How do product trials help businesses?
Show if a product is viable before rolling it out, avoids cost of full scale launch and gives useful market data so the product can be adapted.
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What are the disadvantages of product trials?
It is expensive, a production line needs to be set up for a product that may be unsuccessful, it may provide advance information to competitiors.
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What is oppertunity cost?
The cost of the next best alternative that has been sacrificed.
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Why does oppertunity cost happen?
Resources are scarce and choices have to be made.
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When is oppertunity cost useful?
When the ultimate benefits of the spending decision may be uncertian.
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What is a trade off?
A situation when having more of one thing leads to having less of another. It is linked to oppertunity cost.
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What does a trade off involve?
A more gradual lessening of one variable in order to get more of another.q
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What is a stakeholder?
An individual or group with an interest in the actions of the business.
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Give some examples of stakeholders?
Employees, customers, suppliers, local community, competitiors, government, managers, owners.
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How will stakeholders needs differ?
Owners want profits, employees want higher wages, customers want lower prices. Local communities may have to put up with traffic and pollution.
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Other cards in this set

Card 2

Front

Why do businesses need to do market research?

Back

To identify what is happening in the market currently, To predict what might happen in the future, to explore new possibilities in the market.

Card 3

Front

What does market research do for businesses?

Back

Preview of the front of card 3

Card 4

Front

What is primary research?

Back

Preview of the front of card 4

Card 5

Front

What is secondary research?

Back

Preview of the front of card 5
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