Market Research

When conducting market research businesses need to take risks and may be uncertain on the performance of those risks, however market research allows businesses to minimize the risk.

Market research in a dynamic market can be difficult as it can be hard to gauge what is an acceptable metric and one that will not change or become inaccurate. Businesses invest thousands in trying to calculate what the next big trend will be and even more in advertising.

  • Selling Products is the ultimate goal for market research, however it may allow a business to better define its product for market
  • Dynamic markets can provide access points for rapidly growing start-ups
  • Markets can be dominated by Oligopolies, Monopolies or have low demand, which can mean that a business will struggle to set-up there
  • Market research could be very expensive for a business and it has many pitfalls and benefits

There are a number of techniques that businesses can use to identify if they should set-up a business.

  • Competitor Analysis, anything that allows a business to know what the otherbusiness competing are up to is competitior analysis.
  • Crime Levels, Crime can ruin a business so it is important that a business is in a safe loaction, a jewlers in a poor area won’t do very well.
  • Average Wage, wages could contribute to the staffing levels available for the businesses.
  • Footfall, people who walk past the business.
  • Client Need, Some business may setup new premisises as a client has created a demand.
  • Overhead, a rented building with too high overhead may not be viable as a solution.
  • Start-up Cost, some businesses cannot create a start-up without initial funding, especially if their project has great risk.
  • Population/Target Market, local area business may not be able to set-up a business because the demand is so low.
  • Public Opinion, some people may not like the idea of a business setting up in a particular area.
  • Local Economy, the local area may not be affluent enough.
  • Building Space, some business premises may not be large enough.

Some Market Research Techniques

Businesses can use multiple techniques to find out these aspects, such as:

  • Internet
  • Survey
  • Observation
  • Landlord Conversation
  • Questionnaire

market research creative study

Market research does have limitations,

  • You cannot constantly keep asking the same customers
  • You cannot ask some questions
  • Data could be inaccurate
  • It is expensive
  • It is not always your own data
  • It product idea could be stolen
  • The market could be fast changing
  • There could be leading questions or biased interviews when asking individuals

 

 

Stock Control and Resource Management

Just In Time is a lean production technique, It involves ordering a product right as it is about to run out, but before the business has to stop manufacture, this allows a business to work effectively when creating a product that requires a lot of parts and accessories.

types of stock control and resource management arrows
Raw MaterialsWork in ProgressFinished Goods
Bought from suppliers   Supplier may not be able to meet demand   Supplier could not raise prices   Used in assembly or as ingredients   Parts for assembly Not Sellable   Costs business money to make into product   May be a slow process   Wine   May cost staff hours if long time delays i.e. building houses Needs moving for social events   Christmas Gifts

This table shows the disadvantages of holding stock at different levels of the stock control process.

Why hold stock?

  • Fundamentally holding stock allows production to take place
  • To satisfy customer demand
  • As a precaution against delays from suppliers
  • It allows efficient production
  • It allows for seasonal changes
  • It provides buffer between production process

Main influences on Stock

  • The need to satisfy demand such as demand influxes or lower commodity prices.
    The a need to manage working capital, stock control for example could mean a product is depleted without being replaced.
    Risk of losing value, such as the stock market price. Food and vegetables such as flowers may also decrease in value over time.

Low stock levels

  • Lower stock holding posts.
  • Lower risk of obsolescence.
  • Less capital tied up in stock. So the business is more liquid.
  • Consistent with operating on lean production.

High stock levels

  • Production is always fully supplied so there are never any delays as the product never runs out.
  • Potential for lower costs by ordering in larger quantities.
  • The business is better able to handle unexpected changes in demand or the need for higher output as they will have the stocks available.