Flashcards · 1BS0 · Topic 1.2

Spotting a business opportunity flashcards

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The four customer needs named in the specification: Price, quality, choice and convenience.
Why identify customer needs? Generating sales: Offering what customers want means more of them buy.
Why identify customer needs? Business survival: A small business cannot afford to make something nobody needs.
Give one business response to each customer need: price, quality, choice, convenience: Price: value ranges, discounts. Quality: better materials, checks. Choice: more flavours, sizes or styles. Convenience: late opening, delivery, online ordering.

The four purposes of market research: Identify and understand customer needs; identify gaps in the market; reduce risk (not remove it); inform business decisions.
Primary and secondary research methods in the specification: Primary (new, first-hand): survey, questionnaire, focus group, observation. Secondary (existing, collected by someone else): internet, market reports, government reports.
Qualitative and quantitative data: Quantitative: data in number form (42% would buy); shows how many. Qualitative: descriptive data such as opinions, feelings and reasons ('the packaging feels cheap'); shows why.
How does social media help market research?: It is cheap and quick; polls, comments and reviews; it reaches people who would not answer a street survey.
Limits of social media for market research: Followers already like the business; anyone can vote; replies may not match the target market.
Five checks on whether research data is reliable: The sample is large enough; it represents the target market; questions are not leading; data is up to date; the source is trustworthy.

Market segmentation: Dividing a market into groups of customers with shared characteristics.
The five bases for segmentation in the specification: Location, demographics, lifestyle, income and age.
Market mapping: Plotting businesses on two axes (often price and quality) to see the competition and any gap.
How to use a market map, and its main limit: Plot each competitor, look for empty areas (possible gaps) and crowded areas (strongest competition). An empty area may mean there is no demand, so test the gap with primary research first.
Why do businesses segment their market?: To aim the product, price and promotion at the group most likely to buy, instead of spending on everyone.

The five factors for judging competitors' strengths and weaknesses: Price, quality, location, product range and customer service.
How competition affects decisions: price: Match, undercut or stay above rivals.
How competition affects decisions: quality and service, and range: Quality and service: improve if rivals are better. Range: widen to fill a gap, or specialise.
How competition affects decisions: location and promotion: Location: pick a site near or away from rivals. Promotion: highlight what makes the business different.
A business has sales of £21,000 in a market worth £140,000. What is its market share?: Market share = business sales ÷ total market sales × 100 = 21,000 ÷ 140,000 × 100 = 15%.