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A Level Business > Component 1 Booklet 3 > Flashcards

Component 1 Booklet 3 Flashcards

1
Q

What is economies of scale?

A

As the business grows the cost per unit falls

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2
Q

What are inferior goods?

A

A good that decreases in demand as a consumers income rises and rises in demand as consumer income falls

Example-Payday loans

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3
Q

What is Market Size?

A

The total number of sales of all businesses in the market

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4
Q

What is a Service Market?

A

It offers a service and is intangible therefore you can’t touch,taste,smell or see it you experience it instead

Example-insurance

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5
Q

What are normal goods

A

A good that increases in demand as consumer income rises and falls when consumer income decreases and price remains constant.

Example-Most every day goods-Chocolate

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6
Q

What are luxury goods?

A

Similar to normal goods but are expensive and often scarce.

Increases in demand as consumer income rises and decreases when it falls

Example-high end sports car

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7
Q

What are monopolies?

Key characteristics

A
  • single producer/seller
  • large barriers to entry
  • 25% or more market share
  • they were much more common 30 years ago than now as there used to only be really one gas supplier,telephone supplier etc
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8
Q

What is a Product Market?

A

This is tangible therefore you can see,taste,touch,smell it

And can be:

  • consumer
  • trade
  • commodities
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9
Q

What is a trade market?

A

Sellers target their goods/services at other businesses

Example:Colleges buying stationary

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10
Q

What is a consumer market?

A

Sellers target goods/services at the end user(usually is the general public)

Example-The Cereal Market

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11
Q

What is a Mass Market?

A

Sellers target a whole market in the same way

Example-Cars

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12
Q

What is a Niche Market?

A

Sellers target a smaller segment of a larger market where customers have specific needs/wants

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13
Q

What is a global market?

A

Buyers are targeted by businesses based anywhere in the world(either via e commerce or direct selling)

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14
Q

What is a Local Market?

A

Buyers are targeted by locally based businesses usually based on where they live,work or socialise

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15
Q

Why is competition healthy to have within markets?

A
  • drives up standards and quality
  • keeps prices down for consumers
  • gives the buyer a wider range of choice
  • can force innovation
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16
Q

What is competition?

A

The level of rivalry between different sellers seeking the same buyers at the same time.

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17
Q

What is a Market?

A

Where buyers and sellers interact(directly or indirectly) to trade goods,services or money.

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18
Q

What is Oligopolistic Competition?

Key characteristics

A
  • a few dominants in the market
  • strong brand identity
  • prices stable over long periods
  • Barriers to entry exist

-many large industries are oligopolistic in nature.Example-Supermarkets or Department stores

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19
Q

What is Monopolistic Competition?

Key characteristics

A
  • large number of small businesses in competition
  • few barriers to entry
  • products similar but still differentiate from each other
  • each business tries to offer something different but are all essentially competing for the same customers.
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20
Q

What is Perfect Competition?

Key characteristics

A
  • Large number of businesses competing
  • No ones business is large enough to influence others
  • no market leader/price maker
  • no barriers to entry/exit
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21
Q

What is a seasonal market?

A

•Goods/services where there are large variations in sales based on the time of year

Example-Christmas

22
Q

What are Market Trends?

A

Changes that have or are occurring in the market

23
Q

Why is market share so important for a business?

A
  • The greater the share the more likely the stability of the brands performance in a market place
  • A product with a low share is vunrable to things like pricing policies of competitors,promotions by competitor firms and loyalty to stronger brands.
24
Q

How can businesses work on increasing their market share?

A
  • sell a wider range of products
  • improve quality of products
  • more promotional offers/advertising
  • increase number of stores
  • take over/merge with another company
  • innovation(differentiate from competitors)
  • strengthen customer relations.E.G:loyalty cards
25
Q

How do you calculate market share?

A

Sales sold by company
_________________________ x100

total sales sold in market

26
Q

What is Market Share?

A
  • the proportion of the market that a company has

* The proportion of a total market value held by each company or product

27
Q

What are demographic changes?

A

Demographic=age,gender,religion etc

Population demographic changes-
•ageing population or baby booms

28
Q

What are technological changes?

A

•innovation,obsolete,fads(fazes)

Example-DVDs,mp3 players,vinyl

29
Q

What are social changes?

A

•Change In trends,tastes and fashions

30
Q

How do you calculate market size(per period)?

A

Number of units sold in market
X
Average selling price in market

31
Q

What are economic changes?

A

•changes in disposable income

caused by:interest rates,inflation,exchange rates

32
Q

What is Market Value?

A
  • The total value of all sales in the market

* Measured In Pounds,Dollars and Euros

33
Q

What is Market Growth?

A

•The extent of which a market is growing in size

34
Q

How is Market Growth measured?

A

•measured by total value of spending and looking at growth/decline from previous year.

35
Q

What is Market Volume?

A

The total number of products/services sold in a market

36
Q

What is B2B and B2C?

A

•B2B is business to business.
For example-Trade Markets

•B2C is business to consumer
For example-Consumer Markets

37
Q

What is differentiation?

A

A way of telling products apart(where products have slight differences)

38
Q

What is homogenous?

A

There is no difference between the goods sold by one business or any other business

39
Q

What is a price taker?

A

Businesses must accept the going price of the market place

40
Q

What is a price maker?

A

Companies that have significant influence over prices charged for products/services

41
Q

What are cartels?

A

An agreement amongst businesses to keep prices high

Example-Airline industry’s and supermarkets

42
Q

What are some examples of consumer exploitation?

A
  • false/misleading adverts
  • cartels/collusion
  • price fixing
  • restricting competition
  • unethical practises
  • if a product/service does not fulfill its purpose.E:G-quality issues
43
Q

What is Market Segmentation?

A

Dividing a market into sub groups with common features(needs/wants) so that specific products/services can be accurately targeted at each segment

44
Q

What rules apply to market segmentation?

A
  • all segments must have critical mass
  • segments must be recognisable so they are different enough to make producing worthwhile
  • must be targetable
45
Q

What is critical mass?

A

You have to have a large enough segment to produce for therefore Got to have enough people in the market

46
Q

What are the 3 types of market segmentation?

A
  • Demographic
  • Psychographic
  • Geographic
47
Q

What is Demographic Market Segmentation?

A

Segmented based on age,social class,gender,income

Example-Banks offer different accounts to different age groups

48
Q

What is psychographic market segmentation?

A

Allows targeting of groups on personality and emotionally based behaviour-attitudes,opinions and lifestyles.

Example-Differentiating cars by emphasising different features-safety and capacity of family car.

49
Q

What is Geographic Market Segmentation?

A

Segmented based on regions of the country-rural,urban,suburban.
Global marketing often requires different products for different countries

Example-Global brands such as McDonalds and Coca Cola require different ingredients in different countries

50
Q

What are benefits of market segmentation?

A
  • can enhance the profits for businesses
  • more opportunity for business to grow-market expansion
  • enables business to better match customer needs
  • can enable a business to increase market share through more competitiveness
51
Q

What is Target Audience?

A

Who your product is aimed at

A Level Business (10 decks)

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