business topic 1

• Enterprise


  The process of identifying new business opportunities and taking advantage of them
• Product


  A good or service provided by a business
• Good


  A physical item, e.g. a book
• Service


  An action performed by other people to aid the customer, e.g. hairdressing
• Enterprise can involve starting a new business or expanding an existing one
• Purposes of Business Activity


  • To provide a good or service
  • To meet customer needs
• Customer needs change over time, so businesses need to change their products to keep up
• Reasons for New Business Ideas


  • Changes in technology
  • Changes in what customers want
  • Products becoming obsolete
• New business ideas


  • They could either be original, or adaptations of existing products or ideas
• Entrepreneur


  Someone who takes on the risks of enterprise activity
• Three Qualities of Entrepreneurs


  • Organise resources
  • Take risks
  • Make business decisions
• Three Risks for Entrepreneurs


  • Financial loss
  • Little job security
  • Failure
• Three Rewards for Entrepreneurs


  • Success
  • Profit
  • Independence
• Competitor


  A business that sells the same products in the same market as another business
• Businesses need to understand customers

  To be able to meet customer needs and ensure the business survives
• Businesses compete with others

  To fill customer needs and persuade customers to buy from them instead of their competitors
• Five Ways to Compete

  • Pricing
  • Customer Service
  • Quality
  • Product Range
  • Location
• Customer Needs


  • Generally want to pay less for products
  • Want good customer service and are more likely to use a firm and spend more for good service
  • Want good quality products
  • Like to have a wider range to choose from to find a product that best suits them
  • Prefer not having to travel for or wait a long time when buying products
• How Firms Can Compete

  • Reduce prices to compete with similar products (but firm will make less profit per product)
  • Train staff to give good service, or provide added services to stand out against competition
  • Improve and emphasise quality of products (though this can increase costs)
  • Develop new products to get in product range-there's less competition for new products and the firm appears innovative
  • Open new stores or sell online to be more convenient
• Market Share


  The proportion of total sales in the market controlled by a business
• Five Ways Market Research Helps Firms


  • Find out general information about the market
  • Understand customers
  • Know who customers are
  • Know customers' needs
  • Know how to satisfy customers' needs
• Primary Market Research


  Market research that involves getting information from customers or potential customers, e.g. observations, surveys, questionnaires, focus groups
• Secondary Market Research


  Market research that involves looking at data collected by other people, e.g. market reports, government reports, articles from newspapers or the internet
• Primary research is up-to-date, relevant and specific to a product, can be targeted at specific markets
• Secondary research is cheaper than primary research, easy to find, instantly available
• Secondary research is often out of date, not always relevant, not specific to firm's product
• Primary research needs large samples to be reliable, often expensive, time-consuming</b>
• Quantitative Data


  Information that can be measured or reduced to a number
• Qualitative Data


  Information that involves people's feelings or opinions
• Reliable market research data where results can be repeated is important as it represents customers most accurately
• Market Segmentation


  When people within a market are divided into different groups
• Target Market


  The specific group of people that a product is aimed at
• Three Ways to Segment a Market


  • By Demographic (e.g. age, income)
  • By Location
  • By Lifestyle
• Market Mapping


  Helps a business understand its position in the market and the market's key features
• Market maps show two variables, one on each axis, and businesses or products are plotted on the map according to how customers view each one
• There is a gap in the market for a higher quality product with a lower premium price
• Aim


  An overall goal that a business wants to achieve
• Objective


  A measurable step that a business uses to work towards an aim
• Five Financial Aims


  • Survival
  • Maximise Profit
  • Financial Security
  • Maximise Sales
  • Increase Market Share
• Four Non-Financial Aims


  • Challenge
  • Personal Satisfaction
  • Independence and Control
  • Social Objectives