Spotting a business opportunity Study Guide

Market research is crucial for businesses to understand their target customers, market conditions, and competition. It helps in making informed decisions about product development, pricing, promotion, and distribution. There are two main categories of market research: primary and secondary. Primary research involves collecting new data directly from sources, tailored to specific business needs. This can include surveys, interviews, focus groups, and observations. Secondary research, on the other hand, involves gathering and analysing existing data that has already been collected by others. Examples include government statistics, industry reports, articles, and company records. Both methods have distinct advantages and disadvantages, making the choice dependent on the business's specific objectives, budget, and time constraints. A business needs to compare these methods to determine the most suitable approach for its specific purpose.

Market segmentation is the process by which businesses divide a broad consumer market into sub-groups based on specific shared characteristics. This strategic approach allows companies to tailor their marketing efforts and product offerings more effectively to meet the distinct needs and preferences of different customer segments. By understanding these segments, businesses can allocate resources more efficiently, develop targeted advertising campaigns, and ultimately enhance customer satisfaction and sales. Common methods of segmentation include geographical location, demographic factors such as age and income, and psychographic elements like lifestyle.