1.2 Spotting a Business Opportunity (Edexcel GCSE Business): Flashcards
Exam code: 1BS0
1/510Still learning
Know0
- FrontCustomer Needs
Define market.
Was this flashcard helpful?
Cards in this collection (51)
Define market.
A market is any place where buyers and sellers can meet, such as a shopping mall or the Amazon website.
What is the difference between a customer need and a want?
A need is essential, such as food or shelter, whereas a want is a non-essential desire, such as Nike trainers.
The aim of marketing is to identify, anticipate and satisfy customer needs and wants in a way that makes the business a .
The aim of marketing is to identify, anticipate and satisfy customer needs and wants in a way that makes the business a profit.
Define market research.
Market research is the process of systematically gathering data from consumers that can be used to influence business decisions.
What are the four main customer needs a business should understand?
The four main customer needs are price, quality, choice and convenience.
True or False?
A want is something a customer considers essential, like food or water.
False.
A want is a non-essential desire (e.g. Nike trainers); a need is what is essential, such as food or shelter.
Why do customers value convenience?
Customers value convenience because they want products that are easy to access and use, including factors such as location, online ordering and fast delivery.
How does understanding customers' price needs benefit a business?
It helps the business price its products competitively and offer promotions that appeal to its target market.
True or False?
Offering customers more choice can increase customer satisfaction and loyalty.
True.
Understanding that customers want choice helps a business offer a range of options, which increases customer satisfaction and loyalty.
How does understanding the quality customers expect benefit a business?
It helps the business create products that meet customer expectations, leading to customer loyalty and positive word-of-mouth advertising.
Ensuring business survival is crucial to both new and businesses.
Ensuring business survival is crucial to both new and established businesses.
What are the two main benefits to a business of understanding its customers?
Understanding customers helps a business with generating sales and ensuring business survival.
Define market research.
Market research is the objective collection, compilation and analysis of information about a market.
Give two purposes of carrying out market research.
It helps a business reduce risk when launching new products and identify and understand customer needs and wants.
Define primary research.
Primary research gathers new information directly from consumers in the target market, using methods such as surveys and interviews.
Define secondary research.
Secondary research is the collection and analysis of data that already exists, such as market reports or government statistics.
Purchasing a market report from a specialist company such as Mintel is an example of research.
Purchasing a market report from a specialist company such as Mintel is an example of secondary research.
True or False?
Primary research is usually cheaper and quicker than secondary research.
False.
Secondary research is usually quicker and cheaper; primary research can be expensive and time-consuming.
Give one advantage of primary research.
It is focused on the needs of the business, is up-to-date, and is not available to rivals.
Give one disadvantage of secondary research.
The data was collected for other purposes, so it may lack relevance, be out-of-date, or not be factually correct.
What is a focus group?
A focus group is a free-ranging discussion led by a specialist to collect detailed feedback on the marketing mix, usually from a small group of 12–15 people.
What is observation as a method of primary research?
Observation involves studying consumer behaviour, such as watching how packaging or product placement affects customer choice.
Define test marketing.
Test marketing is providing free samples to the target market for a limited time to gauge their response to a product.
What is the difference between quantitative and qualitative data?
Quantitative data is based on numbers (e.g. sales figures), whereas qualitative data is based on opinions and explanations (e.g. why customers feel a certain way).
Data based on numbers, such as sales figures or market share, is called data.
Data based on numbers, such as sales figures or market share, is called quantitative data.
True or False?
Social media allows businesses to gather primary research quickly and at low cost.
True.
Online polls can gather thousands of responses in hours at very low cost, and build an interactive relationship with customers.
Give one limitation of quantitative data.
It can reveal what is happening (e.g. sales are falling) but not the reason why, and it may be out-of-date.
Define market segmentation.
Market segmentation is the process of dividing a single market into sub-markets, or 'segments', each with a slightly different set of consumer characteristics.
Give three ways a business can segment a market.
A market can be segmented by geographical location, demographics, age or gender, and behaviour and lifestyle.
Market segmentation divides a single market into smaller sub-markets called .
Market segmentation divides a single market into smaller sub-markets called segments.
Give one advantage of market segmentation.
Products and marketing can be tailored to meet the needs of different consumer groups and targeted more precisely, which is less wasteful than mass marketing.
True or False?
Everyone within the same market segment behaves in exactly the same way.
False.
Not everyone within a segment behaves the same way, and consumers can belong to multiple segments at once.
Give one disadvantage of market segmentation.
A segment may be too small and unprofitable to cater for, and segmentation requires more detailed market research, which can be costly.
Define market mapping.
Market mapping is a tool for identifying the position of a product within a market compared to rival products.
How many criteria can be shown on a market map at once?
Only two criteria at a time, such as price (high/low) and quality (high/low).
If there are no spaces left on a market map, it indicates the market is .
If there are no spaces left on a market map, it indicates the market is saturated.
What might a gap on a market map indicate?
A gap may indicate a market niche — an opportunity for a new product — but it must be researched carefully, as the gap may exist because it is not profitable to fill.
True or False?
A market map only shows a product's position at a single point in time.
True.
Markets are dynamic, so a market map only provides insight at a specific point in time.
Give one benefit of market mapping.
It helps identify gaps in the market for new product ideas and is simple to construct, giving a clear visual comparison with rivals.
Define competition.
Competition occurs when at least two businesses provide goods or services to the same target market.
What is the difference between direct and indirect competition?
Direct competition is targeting customers with exactly the same product as a rival; indirect competition is when firms sell different products but compete for the same customers' disposable income.
Cinemas and theatre companies competing for customers' spending are an example of competition.
Cinemas and theatre companies competing for customers' spending are an example of indirect competition.
Give two benefits of competition for customers.
Competition can lead to lower prices, better quality products, and better customer service.
True or False?
A lack of competition encourages businesses to innovate and lower their prices.
False.
The absence of competition reduces incentives for businesses to innovate, be efficient or offer lower prices.
On what factors do businesses usually assess their competitors?
Businesses assess competitors on price, quality, location, product range and customer service.
How can offering lower prices give a business a competitive advantage?
It attracts price-sensitive customers looking for the best deal, and economies of scale can lead to higher profits.
True or False?
The more businesses there are in a market, the more intense the competition.
True.
The more businesses in a market, the more intense the competition.
Name the four areas of business decision-making affected by competition.
Competition affects pricing, product development, marketing and operational decisions.
Businesses must consider competitors' prices to stay while remaining profitable.
Businesses must consider competitors' prices to stay competitive while remaining profitable.
How can competition affect a business's product development decisions?
It can increase the speed of development of new features, or of entirely new products.
How can competition influence a business's marketing decisions?
A business must develop marketing strategies that differentiate it from competitors, analysing rivals' actions when deciding on advertising and promotions.
Sign up to unlock flashcards
or