Evaluating a business opportunity

1. Businesses need to sell their products for more than the cost of its inputs. This requires consumers to be willing to pay a high enough price because of the value they place on the product or service that they are offered. (5, 5)
6. Plotting the position of suppliers/brands against key characteristics of a product. (this helps to identifying gaps in the market) (6, 6)

2. The best alternative given up a choice is made. (e.g. Choosing to go on a holiday might then cause you to give up ideas of getting a new car- the opportunity cost is getting a new car) (11, 4)
3. the difference between the price of the finished product/service and the cost of the inputs involved in making it. added value is the increase in value that a business creates by undertaking the production process. (5, 5, 4)
4. Based on opinions, attitudes beliefs & intentions. Answers question such as “why”, “would” or “how”. Aims to understand why customers behave in a certain way or how they may respond to a new product or service. (Focus groups and interviews) (11, 4)
5. Concerned with data and addresses questions such as “how many”, “how often”, “who”, “when” and “where”. Based on larger samples & therefore more statistically valid. The main data methods of obtaining quantitative data are the various forms of survey (12, 4)
7. Businesses setting the wishes of customers and what they are willing to pay as the top priority to guide production and marketing decisions. (6, 11)

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