Business theme 1 Flashcards by Hayley Smith

Different ways a market can grow

Economic growth
Demographic changes
Social changes

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How can a business adapt to changing markets?

Market research
Investment
Developing a niche

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How can a business create brand recognition?

Differentiating products
Customer loyalty
Charge premium prices

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Difference between mass and niche market

Mass market- a very large market in which products with mass appeal are targeted
Niche market- a smaller market, usually within a larger market

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Key advantages of selling in a mass market

Higher sales and higher profits

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Disadvantages of selling in a niche market

May attract competition

Vulnerable because they are not spreading risk

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How is market share calculated?

sales of a business/total sales in market x100

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Advantages of giving products brand names

Creates customer loyalty
Charge premium prices
Differentiation

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Advantages to customer of online retailing

Greater flexibility

More choice

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What is a dynamic market?

A market that is likely to change overtime

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How might the nature of a market change overtime?

Size

Nature

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How can market research reduce risk for a business?

Confidence the launch of a new product will be a success

Respond more quickly to changes in the market

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Benefits a market orientated business might enjoy

Stronger position to meet the challenge of competition

More able to anticipate market changes

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Advantages of primary research

Quantify likely demand for a product
Provides an insight into consumer behaviour
Identify and anticipate customer needs and wants

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Sources of data for secondary research

Information from competitiors
Data from customer services
Sales figures

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Benefits of market segmentation

Produces different products for different market segments which can increase revenue
Creates customer loyalty

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Ways a business might position its products

Benefits offered by a product
USP
Attributions of the product

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Benefits of using market mapping

Helps to understand how customers see the brand in relation to competitors
Can reveal the price customers are willing to pay

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Ways a business might try to gain a competitive advantage

Product quality / design
Customer service
Economies of scale

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Ways a business could differentiate their products

Flexible pricing

Recognition

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What is the definition for added value? How might a business add value to its product

Where a business provides extra features for the customer that go beyond their standard expectations
Customisation
Packaging
Customer service

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List the factors of demand

Prices of substitutes / complements
Changes in tastes
Fashion and trends
Advertising and branding
Demographics
External shocks
Seasonality

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Examples of external shocks affecting demand

Competition

Social Factors

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List the factors leading to a change in supply

Changes in cost of production
Introduction to new technology
Indirect taxes
Government subsidies
External shocks

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List external shocks affecting supply

Weather Government Price of related goods

What is the formula for PED?

% change in QD / % change in P

List the factors influencing PED

Competition Branding Proportion of income spent on product

What are the interpretations for PED values?

Less than 1 = inelastic | More than 1 = elastic

What is the formula for YED?

% change in QD / % change in Y

What is a normal good?

increase in income leads to an increase in demand

What is an inferior good?

Increase in income leads to a decrease in demand

List the factors of YED

Necessities Luxuries Price relative to income

What are the factors in the design mix?

Aesthetics Cost Function

state the benefits of adapting product designs to changes in social trends

Products will sell more | Can be used as a USP

Examples pf advertising media

TV Radio Internet Newspapers

State examples of below-the-line media

loyalty cards | BOGOF offers

Benefits of strong branding

added value ability to charge premium prices reduced PED

what is cost-plus pricing

adding a standard markup to the cost of the product

implication of cost plus pricing

ignores market conditions

name an implication of price skimming

maximises revenue

name an implication of penetration pricing

grow sales quickly | pressure on rivals

factors determining the most appropriate pricing strategy

differentiation PED competition

Types of direct selling

Internet door-to-door selling direct mail

Types of extension strategies

Product adjustments: updating, add value

stages in the product life cycle

development: high costs Introduction: low sales, investment on promotion Growth: high sales Maturity: sales level off, extension strategies used Decline

explain the boston matrix

high market growth, high market share Stars high market growth, low market share: ??? low market growth, high market share: £ cow low market growth, low market share: dogs

Types of marketing strategies

Product Place Price Promotion

Implications of a flexible workforce

+Allows a business to expand and contract quickly in response to demand +Cheaper than employing full time staff -Less loyalty -poor quality of work

Implications of internal recruitment

Cheaper worker is familiar with procedures Can motivate workers

Implications of external recruitment

Brings in someone with new and different ideas | might attract larger number of applicants

Implications of on-the-job training

+output is being produced +cheaper -output may be lost with mistakes -may be stressful

Implications of off-the job training

+output not affected +training can take place outside work hours -No output -expensive

Advantages of centralisation and decentralisation

senior management has control of business communication may improve with less decision-markets motivates workers reduces stress on management

Types of organisational structures

Tall: long chain of command, narrow span of control Flat: long span of control, short chain of command matrix: getting different people together from different areas in the business to form a project

Summarise the motivation theorists

``` Taylor- financial motivates workers Mayo- personal satisfaction of workers maslow- physiological needs, safety needs, love and belonging, esteem needs, self-actualisation Herzberg- motivators: job satisfaction Hygiene: pay or conditions ```

list financial incentives to improve staff performance

commission bonus piece work

list non-financial incentives to improve staff performance

job enlargement job rotation teamworking

summarise the leadership styles

Autocratic: manager allocates tasks and insists on obedience Paternalistic: management make decisions however take into account employee welfare Democratic: encourages participation in decision making Laissez-faire: allows others freedom to make decisions

Lists the role of an entrepreneur

Creating and setting up business Expanding/developing business Anticipating risk

List characteristics of entrepreneurs

commitment self-confidence initiative

List skills of entrepreneur

organising financial management negotiating decision making

List business objectives

profit maximisation survival sales maximisation social objectives

implications of being a sole trader

owner keeps all profits owner can be flexible owner has all control owner has unlimited liablilty owner main struggle to raise finance

disadvantages of private limited companies

have to publish financial information profits are shared cannot raise as much finance as public limited companies