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Topic 1.2: Spotting a business opportunity (MARKET RESEARCH DATA (SIZE AND…
Topic 1.2: Spotting a business opportunity
CUSTOMER NEEDS
desirable and profitable products and services,
CUSTOMERS WANTS
Customers make a decision based on the balance of four factors:
Price
Choice
Convenience
Quality
MEETING CUSTOMER NEEDS
Price
Lowering prices --> higher competition
THE ROLE OF MARKET RESEARCH
PURPOSE
Identify gaps in the market or opportunities
Identify and understand competitors
Understand trends in the market, such as market growth
Inform business decisions and reduce the risk associated with making business decisions
Understand how well the business is doing, such as customers' opinions of its products
Identify and understand customer needs
Carry out market research appropriate to its size and and the nature of its market
Help a business to understand its customers, competitors and the market in which it operates, in order to make informed decisions about its products and services
TYPES OF MARKET RESEARCH
PRIMARY RESEARCH
(field research)
Collecting information that did not exist before (primary data)
First hand contact with customers is valuable to a business in understanding its market
ADVANTAGES
Highly accurate
Up to date
Specific
Effective at collecting qualitative data
Direct customer contact
METHODS
Focus groups
Observations
Experiments
Questionnaires
Social media
Surveys
SECONDARY RESEARCH
(desk research)
Collecting information that already exists (secondary data)
METHODS
Internet sites
Local newspapers
Government reports
Market reports
Telephone directories
Sales data
ADVANTAGES
More general
Less time-consuming
Effective at collecting quantitative data
MARKET RESEARCH DATA
SIZE AND SCALE
Market research can be expensive and small businesses may only do a little
Larger businesses may pay a market research company to carry out extensive primary research
Greater the sample size (proportion of the population) used --> more accurate the research will be
BIAS
RELIABILITY
EFFECTIVENESS
Effective market research, links quantitative and qualitative data
MARKET SEGMENTATION
Market segment --> a group of buyers with similar characteristics and buying habits
Segmenting a market allows a business to understand its customer needs and to target its customers better
SEGMENTATION OF A MARKET
Often based on the characteristics and needs of customers
METHODS
Age
Gender
Income
Location
Lifestyle
Demographics
ADVANTAGES
Meet specific customer needs
Differentiate its products
Focus on a specific group of customers
Target its marketing activity
Develop a unique brand image
Build close customer relationships
DISADVANTAGES
Targeting a range of different customers with different products and services can be costly