Definitions Flashcards
Business activity def
what the business does to provide its customer with a product or service
Enterprise def
spotting an opportunity to provide a product or service taht the customer is willing to buy
State
no explanation needed 2 things
Explain
develop point with linked statements using “this is better because “
Business objectives
make new products increase sales and boost advertising
Business Plan
sets out how the owners/managers of a business intends its objectives without a plan the business will drift
potential business risks include financial and strained relationships and ____
Health
purpose of business plan
FOCUS on the idea
ORGANISED
USP
unique selling point
rewards of risk taking
profit
self satisfaction
independence
Business plan advantages
review ideas
reduces risk
review progress
secure finance
reduce failure
Business plan problems
poor quality or lack of experience
time and effort
constant updates
Sole traders
owned and controlled by one person
does not stop from employing more people
Advantages of sole traders
owner keeps all profit
control - in complete control
finance - can be set up with very little
set up - easy and cheap
financial info - is private
disadvantages of sole traders
illnes
Unlimited liability
the owner of the business risks losing his personal possessions to pay of debts
Partnerships
business which is owned and controlled by a min of 2 people
e.g vets. dentist
Advantages of partnerships
different skills to offer
more capital - grow in size
Disadvantages of businesses partnerships
profit has to be shared
disagreements
unlimited liability
Sleeping partner
invest money into the business but do not take part in day to day running of the business
LLP
limited liability partnerships
llp disadvantages
registered with companies house which costs money
Deed of partnerships
legal document signed by 2 or more people to agree on deal in advance legally cannot back out once signed
capital
the amount of money the business has
rival business
competitors
a person who takes the risk of starting and running a business
entrepreneur
Private limited companies advantages
easier to raise finance as can sell shares
original owner are likely to retain control
Private limited companies disadvantage
finance limited to friends and family
public limited company advantage
limited liability protects their personal wealth of the shareholders
public limited company disadvantages
greater cost to set up as a ltd
risk of being taken over
Maxamise profit
make as much profit as possible
What is market share
the % of total ales that a business has in a specified market
what is a stakeholder
any person who has an interest of the business
internal stakeholders
inside , employees
external stakeholders
outside , competitors
organic/ internal growth
when the business grows naturally by selling more
Merger
two or more firms join to create a new business
Takeover (acquisition)
this is when one business buys another business. in case of a limited company, this means buying more than 50%
Horizontal
a business joines with another business at the same stage of production ( kelloggs - nestle )
Backwards vertical
a business joins with its suppliers / the previous stage of production
(kellogs - to farm )
forward vertical
a business joins with its the next stage of production e.g kellogg to sainsburys
diversification
a buiseness joins in a different market e.g lidl - boots
Marketing
Is concerned with finding the needs for the consumers and then meeting those needs promotion product price place
Market Research
Is all about collecting information on whether or not their products or services will be brought
What is the purpose of carrying out market research
To provide you with answers of what your customers want
Why should negative comments be ignored (market research)
Learn from mistakes and adapt pricing
Should market research be carried out as a one off or an ongoing basis?
Ongoing as everything always changes
Primary market research
Is any type of research that is new bring collected for the first time (e.g questionnaire interview focus groups trail)
Questionnaire advantage
Can easily target particular customers (supermarket entrance e.g)
Can distribute to many respondents to get varied opinions
Cheaper than other primary market research methods
Questionnaires disadvantage
Not at all customers will fill in all of the gaps leaving gaps in results data
Customers may not understand all of their questions
Focus groups
A group of consumers who are selected to represent the target market brought together to discuss their feelings on a product/market
Focus group’s advantage
Because focus groups are chosen to represent the target market for a business, the data from them is usually very accurate
The ability to ask further questions (compared to questionnaires) means that more in depth response are gained
Focus group disadvantage
Are squally small in size, which limits the quantity of responses
The deletion of people to take part is time consuming and so expensive
Trails
A product or service sold for a short amount of time to test to see whether or not the consumers like the product
Trails advantage
A business can establish wether the idea would have a positive on overall sales which reduces the risk of failure
A business May save in the long term if they identify that customers are not demanding the business is offering for sale
Trails disadvantage
Trails are costly to set up in the short term
They are chosen Kay not fully reflect the target market which may lead to unreliable conclusions
Websites
Most companies put information about them selves and their prdocts on the internet all of which can be used by other competitors business as secondary data
Website advantage
It’s a quicker way to obtain data compared to primary market research methods
It is cheaper way to obtain data compared to primary research methods
Website disadvantage
The data Nat not be up to date and some data me be incorrect
The research might not be exactly what the business is looking for
Census data
Is data collected by the government every 10 years, questioning the entire population on the income, occupation lost was April 2021
Internal data
This refers to psst figures, profits and comments from customers this can be used for future decision making and is usually stirred in computer systems
Newspaper and magazines
Information cab be identified form reading news paper and magazines for example ideas to develop new products and the products services that competitors are offering
Quantitive data
(Numbers) can be used to create % and graphs this makes it easier to analyse
Typically, quantitative data can be incorporate responses from a larger number of people
Qualitative
Can offer more in depth information
The data/opinion may be more useful in satisfying the market research brief
Market segmentation
Is playing the market for a product into the market for a product parts or segments
Age gender income occupation location lifestyle
How does segmentating the market help to save money?
Businesses need tu deliver their marketing message to a relevent customer audience. By seamenting markets, the turget customer cun be reucheu more often and at a lower cast. For Instance, turgeting customers of womens’ per Fume in the magazines that women are most likely to reco.
By segmenting the market, businesses can learn about different groups of customers ano then develop ufferent produces to meet the needs and wants of these customers, forexamoe a watch brand can develop a portFolio of produce meeting the needs of the customers of vifferent ages, incomes, y enciers und lifestyles.
What are the 4 ps
Product, Place, Price and Promotion
Promotion
Is concerned with how a business inform its customer about a product or service and then persuades them to buy
(Radio tv billboard social media posters)
Social media
Social media accounts are cheaperto operate (Not free. as there will be some costs involved i.e. staff).
2. Customers are more likely to take notice of advertisements as they have demonstrated an intered in the business by choosing to follow it.
3. Larger numbers of people use social media.
4. Social media pages are quicker. to update that other methods.
Social media disadvantages
It can be time consuming tomanage
• negative feedback from customers may be viewed by other customers
Radio advantage
Radio advertising is cheaper than TV advertising.
• Radio is portable and so can reach customers anywhere (i.e. work). This also includes in the car and listeners may be able to visit the business before reaching their destination.
Radio disadvantage
One problem is that the product cannot be seen.
• A further problem is that listeners may skip adverts.
Websites advantage
Most businesses will have their own website.
• Websites can be used to send a particular message to buyers in an attempt to persuade customers to buy from that business i.e.
Krochet Kids.
• Videos can be used to show the product in more detail i.e. ASOS.
Website disadvantages
Setting up and maintaining a well designed/complex website can be expensive which can be an issue for smaller businesses with limited funds.
• Therefore, smaller businesses may use simpler websites to provide basic information such as price lists.
Loss leaders
is a product priced below cost-price in order to attract consumers intoa shop or an unline fore the purpose of making a croduce a loss leader is to incorage custemers to make further purchaser of profitable goods unire they are in the snop.
Distribution channel
All of the organisations through which a product must pass between its point ofproduction and purchases by the consumer
Wholesaler
A large storage centre ableto take in deliveries directfrom procucers The role of a wholesaler is to ‘bulk buy” This means buying in large quantities from a producer and then selling smaller amounts to a retailer
Distribution channel
All distribution channels begin with a p..ocucer (The business making the product).
• All distribution channels end with the c.ustomelThe person buying and using the product).
• Distribution channels can include intermediaries. These are
‘third parties’ between producers and consumers, and can include retails and wholeswers
• Examples of reetsvis. include Marks and Spences. and Jack
• Wholesalers store and break bulk…. to supply retailers with smaller quantites
Digital distribution
-distripition of goods digitag by downicading from a website or app ie a song purchesedfrom Apple music.
