How does market research reduce the risk of starting a business?

Why businesses research their market, finding gaps and reducing risk, surveys, questionnaires, focus groups and observation, secondary sources, and choosing research for a new service.

What you need to know

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Key term

State four purposes of market research.

Key term

What is market research?

Key term

What is a gap in the market?

Questions from this subtopic

Each one with the model answer underneath.

1
What is market research?
Model answer
Market research is gathering and analysing information about customers, competitors and the market. Market research helps a business make better decisions.
2
State four purposes of market research.
Model answer
Market research identifies customer needs. Market research finds gaps in the market. Market research reduces the risk of a new idea. Market research informs business decisions.
3
What is a gap in the market?
Model answer
A gap in the market is a need that no existing product or business currently meets. A business that fills a gap can win customers with no direct competition.
4
How does market research reduce the risk of starting a business?
Model answer
Research shows whether enough customers want the product before money is spent. A business can then change or drop a weak idea early.
5
How can market research inform business decisions?
Model answer
Research can guide choices on price, product features, location and promotion. Decisions based on evidence are less likely to fail than guesses.
6
What is primary research?
Model answer
Primary research is new information collected first-hand by the business for its own purpose. Primary research is also called field research.

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