Business Exam 1

Question 1

What is a benefit and a drawback of targeting a niche market?

Answer 1

+ Adds value-higher profit margin.
Less competition
More customer loyalty.

• Small market
  sometimes harder to get attention

Question 2

What is a benefit of adding value?

Answer 2

Business can charge more. Higher profit margin.

Customer loyalty.

Question 3

What does differentiation mean?

Answer 3

How you/your company is different from others/competitors.

Question 4

What are the 3 factors which influence supply to a market?

Answer 4

1) Price
2) Cost of production
3) Subsidies

Question 5

What are the 3 factors which influence demand to a market?

Answer 5

1) Trends
2) Seasonality
3) Income

Question 6

What does “price elastic” mean

Answer 6

A change in price in a product/service will have an affect in demand

Question 7

What does “price inelastic” mean?

Answer 7

A change in price in a product/service won’t have much affect in demand

Question 8

What does demographic segmentation mean?

Answer 8

Where business can categorise and target people based on demographics. e.g age, gender.

Question 9

What are other examples of segmentation in a market?

Answer 9

In a market people can get split up into groups based on their similar characteristics.

Question 10

What is a star product in the Boston Matrix?

Answer 10

They are the big market share holders, generate most cash.

Question 11

What are three product extension strategies?

Answer 11

1) Re-Branding
2) Price discounting
3) Seeking new markets

Question 12

What are three social trends impacting on pricing?

Answer 12

1) Lifestyles
2) Buying habits
3) Average disposable income

Question 13

What are three social trends impacting on promotion?

Answer 13

1) Attitudes toward green or ecological products
2) Influencer marketing
3) User platforms

Question 14

What is a benefit and drawback of being an ecomerce business

Answer 14

+ No physical shop, more money advertising.
+ More convenient for customer
- No connection with customer/business
- Cost of delivery, hassle with refunds/returns.

Question 15

How do you calculate market share?

Answer 15

Total sales of company/Total sales of market x100

Question 16

How do you calculate market growth?

Answer 16

New market size - Old market size

/ Old market size x 100

Question 17

How do you calculate PED?

Answer 17

% change in quantity demanded/ % change in price

Question 18

How do you calculate YED?

Answer 18

% change in quantity/ % change in income(Y)

Question 19

What are the benefits for a company having customer loyalty from their target audience?

Answer 19

+ Improves profits, sales success, allows sustainable growth.

Question 20

What are two ways competitors can influence a business?

Answer 20

1) Differentiation

2) Customer service

Question 21

What is competitive pricing strategy?

Answer 21

where the final prices on their products or services have been evaluated against the prices of their competitors

Question 22

What is Destroyer (predatory) pricing strategy?

Answer 22

strategy used to eliminate competition. It involves a business setting a very low price in order to attract customers away from competitors.

Question 23

What is a skimming price strategy?

Answer 23

This involves setting a higher price for a new product when it first enters the market. (e.g new iPhone)

Question 24

What is a penetration price strategy?

Answer 24

When businesses introduce a low price for their new product or service. The initial price forces them to match the offer.

Question 25

What is a Psychological price strategy?

Answer 25

The practice of using the power of psychology to push consumers to spend.