Market Research (Cambridge (CIE) A Level Business): Flashcards
Exam code: 9609
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Define market size.
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Cards in this collection (41)
Define market size.
Market size is the value or volume of sales of all businesses within a market.
Why might a large market size encourage a business to enter a market?
A larger market suggests more potential customers, giving greater opportunities to sell products and earn revenue. Investors are also more likely to support a business in a large market, as it promises better returns.
How is market growth calculated?
Market growth is calculated using this formula:
Market growth (%) = (Market size this year − Market size last year) ÷ Market size last year × 100
True or False?
Competition tends to be less aggressive in a growing market.
True.
When demand is rising, most firms can grow at the same time, so there is less pressure to cut prices or fight over market share.
A market's sales rose from $200m last year to $230m this year. What is the market growth?
The market grew by 15%. The $30m increase divided by last year's $200m, multiplied by 100, gives 15%.
If there are many competitors in a market, prices are often lower, which can reduce profit _____.
If there are many competitors in a market, prices are often lower, which can reduce profit margins.
Why is it difficult for a new business to compete with well-established rivals?
Established rivals may have strong brands, loyal customers or economies of scale, which make it hard for new firms to win market share.
Define market research.
Market research is the process of finding out information about a market by collecting, presenting and analysing information about customers' characteristics, profiles, and wants and needs.
Which consumer characteristics can market research identify?
Market research can identify characteristics such as age, gender, income level, occupation, location and lifestyle, tastes and preferences.
Define customer profile.
A customer profile is a detailed description of a target customer, built from data on their consumer characteristics.
True or False?
Identifying customer profiles has no effect on a business's marketing costs.
False.
Customer profiles reduce marketing waste, because targeting the right people avoids spending money on those who are unlikely to buy the product.
Customer profiles help divide the market into meaningful groups, which supports market __________.
Customer profiles help divide the market into meaningful groups, which supports market segmentation.
How does understanding customer needs and wants help a business?
It helps the business make sure that its products, and the price and location at which they are sold, closely match what customers want to buy.
Define primary research.
Primary research is the process of gathering information directly from consumers in the target market using field research methods such as surveys and interviews.
Define secondary research.
Secondary research involves the collection, compilation and analysis of data that already exists.
True or False?
Primary research can only gather quantitative data.
False.
Primary research can gather both quantitative (numerical) data and qualitative data, such as opinions and attitudes.
Why does observation usually need to be combined with other research methods?
Observation shows what consumers do but not why they do it. Other methods are needed to understand the causes of behaviour.
What is a key advantage of interviews over surveys?
Interviews allow follow-up questions to be asked, drawing out detailed opinions and perceptions and achieving high response rates.
In a focus group, participants may be reluctant to share their true ______ in front of others.
In a focus group, participants may be reluctant to share their true opinions in front of others.
True or False?
A key advantage of primary research is that its findings are not available to rivals.
True.
Primary research is focused on the needs of the business that carries it out, so competitors do not have access to its findings.
Define sampling.
Sampling involves getting opinions from a selected group of people in order to find out about the market as a whole.
True or False?
A smaller sample is more likely to reflect the whole market than a larger one.
False.
In general, the larger the sample size, the more likely the results are to reflect the market as a whole.
Define random sampling.
Random sampling is a method in which every member of the population has an equal chance of being selected.
How does stratified sampling select participants?
Stratified sampling selects participants randomly from subgroups of the population, such as age, gender, income level or education groups.
Quota sampling obtains a representative sample by setting specific _________ of each group of the population to research.
Quota sampling obtains a representative sample by setting specific proportions of each group of the population to research.
Why might secondary data lack relevance to a business?
Secondary data was collected by another organisation for other purposes, so it may not fit the business's needs and may not be factually correct.
Why is secondary research often suitable for a small business?
Secondary data is often free or cheap and quicker to collect, so it suits a business that lacks a large marketing budget or research expertise.
Why can unreliable market research data harm a business?
Unreliable data can lead to poor decisions that waste time, money and resources.
True or False?
If a survey is well designed, respondents' answers will always be accurate.
False.
Respondents may give answers they think sound good rather than what they truly believe, or they may guess or not take the questions seriously.
Secondary data may be unreliable because it may be ______ or collected for a different purpose.
Secondary data may be unreliable because it may be outdated or collected for a different purpose.
Define quantitative data.
Quantitative data is data based on numbers, such as sales figures, market share or ratings on a scale.
How is the mean of a set of data calculated?
The mean is calculated by adding all the numbers together and then dividing by how many numbers there are.
A shop records daily sales of 4, 6, 10 and 12 units. What is the median?
The median is 8 units. The two middle values, 6 and 10, are added together and divided by 2.
Define qualitative data.
Qualitative data is data that gathers descriptions or explanations, such as opinions and feelings, helping a business understand why customers behave as they do.
What is coding in the analysis of qualitative data?
Coding is where similar responses or themes are grouped together and each theme is given a code, so the business can identify patterns and common issues.
True or False?
A limitation of quantitative data is that it does not explain the reasons for outcomes.
True.
Numerical data may show that sales are falling, for example, but not the reason for the decline.
What does a pie chart show?
A pie chart shows how a whole is divided into different elements, such as total sales divided among product types.
Bar charts show data that are _________ of each other, such as sales per store.
Bar charts show data that are independent of each other, such as sales per store.
Define correlation.
A correlation exists where there is a relationship or connection between two variables in a scatter graph.
True or False?
A line of best fit that slopes downwards shows a positive correlation.
False.
A downward-sloping line shows a negative correlation, where as one variable increases, the other decreases.
When can a business extrapolate data from a scatter graph?
A business can extrapolate when a line of best fit can be identified and causation is determined. It can then extend the line to predict changes in either variable.
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