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Business Studies
Revision
Pack 11 - Market Research
Market Research is the collection, collation and analysis of data relating to the marketing and consumption of
goods and service
...

Themes - The market, The product & The competition
Types
Primary Research

Secondary Research

Test marketing - launching in a specific area

The internet

Focus groups - getting a group of consumers together to
discuss the product

Government publications eg census

Questionnaires

Competitor info - annual reports

Consumer Panels - consulting with a group of consumers
over a period of time

Intranet

Observation - mystery shoppers/watching consumers

Existing market research reports

Advantages of primary research

Disadvantages of primary research

Data can be collected that directly applies to the thing
It can be expensive to collect because you have to do it
being researched > relevant > better decisions based on it yourself > needs to be efficiently planned
> reduces risk
The business which initially collects the data will be the
only organisation with access to it > creates a competitive
advantage because you can get info they can’t

It can take longer than secondary research because the
data doesn't exist beforehand > conclusions take longer to
reach

Up to date > more useful > current consumer at that point

The sample taken may not represent the views of all the
population > a consequence is that you have less valid
info > could make wrong decisions

Advantages of secondary research

Disadvantages of secondary research

Relatively quick to east & quick to collect because data
already exists

Research may be biased

Relatively cheap to collect > not wasting as much money

Data may be out of date because it may have existed for
ages > inaccurate & conclusion harder to come to (not
recent > unreliable)

Historical data may be used which can show a trend
overtime > makes it easier to predict future trends

Data may not be relevant because it may be out dated or
collected for a different reason

It can be used before carrying out primary research >
helps establish the most useful

Business Studies
Revision
Pack 11 - Market Research cont
...
g
...
g
...
This usually means the collection of statistical data (e
...
facts and figures)

Common methods of qualitative research

Common methods of quantitative research

Focus groups > one time

Surveys

Interviews > personal or telephone

Government publications

Consumer panels > over a period of time

Sales figures / Accounts

Business Studies
Revision
Pack 12 - Market segmentation
Market segmentation is breaking down a market into sub-groups with similar characteristics
...


Geographically

Demographically

Psychographic

Behavioural

-By where they live e
...

rural/urban
-Type of house,road or
area

Gender/social class/age/
income/ethnicity/religion

By lifestyle & personality

By how they act,
e
...
loyalty/usage rate/
time & date of
consumption

Drawback > evidence
that consumer tastes are
becoming more uniform
across geographic
boundaries

Drawback > consumers
can try to defy
consumption patterns
associated with their
demographic groups

Drawback > can be
difficult for businesses to
collect data about the
beliefs/attitudes/lifestyles
of consumers (may
require expensive
research)

Drawback > on its own it
may fail to adequately
capture a target market
for a business > may
employ a variety of the
segmentation methods
...
g
...
g price wars

If one sector declines, it is likely to be compensated
for by growth in other sectors > as long as they
diversify (goes into varies markets)

Specialised products (meeting exact customer
needs) may be supplied by competitors appealing to
individual market segments > mass market products
can become too generic

Large numbers of customers > greater revenue

High advertising costs to establish / maintain ‘brand’
> expensive methods

Average costs can be reduced due to economies of
scale > eg bulk buying discount

Can be expensive to set up production facilities >
because of the huge scale of it > high capital
expenditure > spending on anything > long term
(fixed assets

High sales and lower average costs can potentially
mean high profits > economies of scale
Potential to establish high brand image > advertising
> above the promotion line

Niche Marketing involves a business aiming or targeting a product at a particular, often small, segment of a
market; where customers have specific needs and wants

Advantages of niche marketing

Disadvantages of niche marketing

Suitable for small firms/start ups as initial set costs
tend to be lower > in relation to advertising > assets
e
...
machinery

Niches can disappear as a result of changes in
economic conditions, fashions or tastes
...

Characteristics
• risk taker
• innovative
• determined
• confident
• passionate
• organised
• decisive
• hard working
Reasons for becoming an entrepreneur
• Money
• success
• be your own boss
• choose own hours
• freedom to make decisions
• financial independence
• seen opportunity
• spotted a gap
• capability/skill
• desire to create something new
• to make a difference > charity
Why are entrepreneurs important to the UK economy
• Provide jobs/reduces unemployment
• Increases tax revenue & GDP (Gross Domestic Product)
• New products > creates a choice > competitive pricing
Factor Inputs

Land

Labour

Capital

Enterprise

Physical plot of land the
business bases itself on

The workforce of a
business

Refers to tools, machinery
& equipment that
businesses use

The skill needed to make
an idea i
...


Natural resources eg coal,
forests, fertile soil etc

Skilled / Unskilled workers

Also refers to the money
invested by the owners to
set up a business

Innovative - coming up with
new ideas

Renewable resources eg
fish, forests and water
(anything which nature
replaces)

Training and education

Capital Intensive - means
that a business is reliant
upon machinery eg factory
(opposite to Labour
Intensive which is reliant
on workers e
...
school)

Risk taking - the willingness
to take risks in the search
for rewards and at the same
time weighing up the impact
of failure; taking calculated
risks

Non renewable resources
eg coal & diamonds

Flexible working practices

Initiative - the willingness to
take action and to take the
lead

Changes in employment
patterns

Thinking creatively- looking
for solutions to problems
and seeking out
opportunities

Business Studies
Revision
Pack 15 - Entrepreneurs cont
...
These are often cheaper, however there may be opposition from environmentalists
...
Often left derelict for
years, some sites can be picked up quite cheaply because the government want the sites to be re-developed
...
Some key considerations:
Sustainability - renewable/non renewable
Cost - sourcing cheaper supplies abroad? Economies of Scale?

Equipment/Machinery/Vehicles
Capital/Producer goods - Goods used to produce other goods & services
Capital Intensive - reliant upon machinery
Labour Intensive - reliant upon workers

Business Studies
Revision
Pack 16 - Producing Goods and Services - Human Resources
The primary sector
Extracting raw materials from the land
...

The secondary sector
Where firms transform raw materials into manufactured goods
...
Can vary from global multinational to local small business
...

Flexible working practices - Refers to any employment practices other than full time workers
Core workers - full time employees, perform key tasks, have skills specific to that business, have job security
Periphery workers - part-time, temporary or self-employed workers, brought into the business when required
...
g
...


Part-time employees
Advantages of Part Time Employment

Disadvantages of Part Time Employment

Can keep costs down in smaller businesses

Less skilled/experienced

More Flexible

Poor communication

Cater for fluctuating worker needs

Less able to build relationships with colleagues &
customers

Highly motivated

Additional induction and training costs

Business Studies
Revision
Pack 16 -Producing Goods and Services - Human Resources cont
...
g maternity

Higher labour turnover > more people coming and going

Allows smaller firms to access highly specialised skills

Higher recruitment costs > training

Permanent Employment
Advantages of Permanent Employment

Disadvantages of Permanent Employment

More committed to long term issues

Job security may lead to lower levels of productivity

Staff feel more involved to work harder

High cost for employee rights e
...

• They’re often called in to a business in order to give their opinions on problems or situations a business finds itself
...

Advantages of Consultants

Disadvantages of Consultants

Bring in highly specialised skills

Consultants are extremely expensive to hire

They give independent external opinions offering a fresh
viewpoint

Can take time for the consultant to understand the
makeup of the business

New ideas and creativity
They may well have worked with other businesses in the
market so have an awareness of the outside market >
experience

Flexible Working Practices
Zero hour contracts
• When an employee is not guaranteed any hours
• Called in when they’re needed
• They may work any number of hours a week
• An advantage for the business > only pay when needed
Job Sharing
• Where a role is divided up between more than one person
• Advantage for the business - Wider range of skills/ideas & higher quality due to work load share
• Disadvantage for business - Communication & Increased training cost
• Advantage for employee - less work so less pressure, more flexible so fit around needs & shared work load
• Disadvantage for employee - Communication, less hours therefore less money & conflict
Shift Work
• Working hours over different patterns
• Increased wage for working shifts
• Unsociable hours
• Disrupted sleep patterns > health issues
• Advantage for business - Continuous production
Business Studies
Revision
Pack 16 -Producing Goods and Services - Human Resources cont
...
Usually involves interest payments
Short Term - Up to a year
Overdraft - Where a bank allows a customer to withdraw more than is in their accounts (up to an agreed amount)
Advantage - Quick access, Can extend limit, Solves cash flow problems
Disadvantage - Interest
Medium Term - 1-5 years
Bank Loan - A set amount borrowed from the bank for an agreed period of time
Advantage - Quick access, Get everything you need
Disadvantage - Interest
Long term (5 years +)
Share Capital - In the form of selling shares
Money raised through the sale of shares
Advantage - Quick, growth, raises awareness
Disadvantage - Lose shares, dilutes ownership, could lead to takeover, dividends
Loan Capital
• Bank loan
Advantage - Quick access, get everything you need
Disadvantage - Interest
• Mortgage loan
Advantage - Get the property in the end
Disadvantage - High interest
• Venture Capital
Advantage - Advice, Information
Disadvantage - Usually risky investment
• Government loan and grants
Advantage - Don't have to pay back
Disadvantage - Hard to get
• Debenture Loan (A loan by individuals/financial organisations for a specified length of time and secured against a
specified asset (usually property, similar to mortgage)
Advantage - Get a property to operate in, Usually a large sum
Disadvantage - Interest

Business Studies
Revision
Pack 17 - Financial resources cont
...

Buying items to be resold again and again is called Capital Expenditure (long term finance)
Money to purchase raw materials, pay rent, rates, staff etc
Money used for day to day issues is called Working Capital (short term finance)

Methods of financial control
Leasing - ‘rent’ equipment for an agreed period of time from owner - short term solution
Hire purchase - pay for product in instalments, then you own it
Budgeting - including zero budgeting > manager justifying every method of financial control - accurate

Stock Management - Implement stock management procedures such as JIT to reduce capital tied up as stock - not paying storage fees > reduces storage space
Labour Management - Examine workforce to look for possible methods of restructuring e
...
This allows a debt to be sold
on at a price lower than the value of the debt and the debt company will then chase the debt up on the company’s behalf
and keep the full value of the debt
...

-The market - data on size and growth of the market
-The customer - who is the target audience, where are they, how will they be reached
-The competition - who are they, their strengths and weaknesses
-The future - forecasts for changes in the market and how the business will respond
Strategy & Implementation: this analyses key decisions and strategies outlining who will carry them out, when by and
with what resources
-Pricing
-Promotion
-Sales strategies
-Location - Where, rent or buy premises?
-Production - how much in terms of volume
-Systems - stock control, quality control, financial management
Management team: describing members, their skills and experience
...

Financial plan: including a number of key financial documents such as profit and loss, balance sheets, cash flow forecasts and break even
...
g USP > promotional
campaign

Projections may be inaccurate e
...

Business Studies
Revision
Pack 19 - Methods of Production
Job

Batch

Flow

One off

Produced in sets

Continuous

Made to order

Same machinery

Identical products

Labour Intensive

Semi-labour intensive

Capital Intensive

More expensive

Flexibility

Lower cost per unit

Eg
...
loaves of bread, furniture, clothing

Eg
...

Ways to expand organically
- Open more stores/increase distribution
- Widen product portfolio
- Increase sales of existing products e
...
through advertising
- Target new markets
External Growth
When the firm is involved in a TAKEOVER or ACQUISITION of another firm, or it MERGES with another firm
...
g
...
g
...


More risk because possible clash of business cultures,
diseconomies of scale > more likely from rapid growth
...

Types of Merger

Backward vertical - previous stage of production
BenefitsForward vertical - next stage of production
BenefitsHorizontal - same lines of business/same line of production
Lateral - similar production techniques
Diversifying - different lines of business
E

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