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business paper 1 > market segmentation > Flashcards

market segmentation Flashcards

1
Q

market segmentation definition

A

dividing market into groups of buyers

consumers in each segment share one characteristic e.g age, income

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2
Q

names of different segments

A

demographic segments-age, gender

geographic segments-neighbourhood, city, country

income segments-lower income vs higher income customers

behavioural characteritsics-lifestyle, hobbies and interests e.g into gym so want high protein content

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3
Q

makret mapping

A

measuring two extremes

adv-can reveal gaps in market
adv-can see how much consumers are willing to pay
adv-can see who closest competitors are

dis-subjective, what one person sees as high quality another may not
dis-simply things too much,e.g not mentioning locations within map

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4
Q

competitive advanatge

A

condition which allows firm to be more profibatble than its rivals

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5
Q

ways in whcih businesses can gain competitive advantage

A

USP/product differentiation
good customer services
innovation
advertising and branding
after sales services
lowerr costs

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6
Q

added value

A

increasing the differene between how much the product is sold for ahe price customers pay

added value=price porduct sold for-cost of making product

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7
Q

supply

A

quantity of a product that suppliers are willing and able to supply to a market

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8
Q

demand

A

quantitiy of a product that consumers want and are able to buy in given price at given time

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9
Q

factors affecting demand

A

substitutes-porducts that replace another product e.g increase in price ofo margarine, increase in demand for butter
advertising and branding-allows consumers to be loyal and make repeated purchases to stop demand falling
demographics-changes in population e.g increase in healthcare means increase in demadn as people living till older
fashio tastes and advnaces in technology
a
consumer income-lower income will increase demand for cheaper goods, high income will increase income for expensive products
external shocks-risk of flooding increases demand for sandbags

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10
Q

factors affecting supply

A

cost of prodcution-if cost of production rises to make product becomes more expensive to manufacturer prodcut, business will want to make less, reduce supply

indirect taxes-tax is placed on good, makes it more expensive to produce, reducing supply
subsidies-if subsidies given, increase demand as have more money
new technology-more efficient so cheaper, increase supply
external shocks-e.g war, spend more on efforts of war so reduction in supply
d

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11
Q

price elastic products

A

when price elaticity of demand is greater then 1

changes in price have big effect on demand e.g luxury products

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12
Q

price inelastic products

A

when price elastcity of demand is less than 1

changes in price have little effect on demand e.g neccessity

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13
Q

how do you calculate sales revenue

A

selling price x sales volume

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14
Q

income elasticy of demand calculation

A

percenatge chnage in quanity demanded divided by percenatge change in income

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15
Q

what type of income easlticy of demand do neccesity have

A

have postive income elasicy of demand which is less than 1

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16
Q

design mix

A

function-whether its fit for purpose
aestethics-does it look good
costs-is it costly to produce

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17
Q

promotion

A

part of marketing mix

used to help persuade consumers to buy products

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18
Q

what is viral makreting

A

when businesses get users to pass on adverts to their freinds e.g through social networking platforms e.g email

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19
Q

what are sales promotion

A

using free gifts, special offers, buy 1 get 1 free

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20
Q

direct marketing

A

marketing sold through post to consumers

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21
Q

what are the 3 types of branding

A

cooperate branding-how a business presents itself to customers
adv-trust will assume products are of a high quality

product branding-inidividual prodcts that the cooperate brand makes
adv-people willing to pay for a trusted well known brand
dis-expensive to pporcue and people may not be willing to pay high price its charged at

own branding-bradning from in house
adv-reduces costs, cheaper to produce as no distinctive logo
adv–cheaper alternative for consumers
dis-people may associate low price as being low quality, losing sales
dont get same sense of wellbeing as they do when getting own brand product

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22
Q

what is rebranding

A

changing design, promotion and pricing of existing brand

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23
Q

adv of creating strong brand

A

adds value to product allowing business to charge highe prices
makes product less price elastic
people become more loyal to brand
assume its higher quality

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24
Q

what are ways to build a brand

A

have a USP e.g prodcut differentiation advertsing

sponsorships

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25
Q

emotional branding

A

where business matches bradning of product with values, inspiratiosn of tagret audience to trigger an emotional response

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26
Q

what are the 6 methods of pricing stregties

A

price skimming
penetration pricing
cost plus pricing
predatory pricing
competive pricing
psychological pricing

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27
Q

price skimming

A

first use high initial price then slowly reduce price after year or so

adv-can quickly recover makreting and development costs
adv-people may associate the high price as being higher quality so are willing to pay price
adv-feel of being the first one, see it has having lots of value, boosting products image

dis-poeple may not be willing to pay high price
dis-those that payed initial high price may be furstarted that peole are now getting iit for cheaper price
less liely to purchase agin
sales are lost

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28
Q

penetration pricing

A

when products are sold at low price when reach makret, then sloly increased

adv-low prices attract lots of consumers and gain market share

dis-hard to keep consumers in long term as may not be willing to pay the higher price now charged/may lsoe customerrs
dis-may damage how the brand image is perceived

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29
Q

cost plus pricing

A

when firm adds a percenage mark up to costs of making or buying a single product
unit cost plus unit cost divied by 1– timees mark up

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30
Q

predatory pricing

A

where firm delibertly lowers there cots to push another firm out and then increases the prices back up again
illegal in EU laws

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31
Q

compeitive pricing

A

firm monitors prices of competitiors tand their reduces their pirces to below or eual to comeptiors to gain comeptive advanatge

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32
Q

psychological pricing

A

using 1.99 as seen as lot cheaoer then 2 porund

chrage higher prices as people associate as being higher quality

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33
Q

changes in social trends affecting pricing strategies of firms

A

businesses may need to make themselves more price competitve sas easier for customers to comapre prices and pick cheaper price

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34
Q

distribution

A

route a product takes from maufactuer to consumer

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35
Q

two stage channel-direct selling

A

direct selling or ecommerence

manufacturer-consumer

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36
Q

indirect selling-3 stage channel

A

manufactruer-retailer-consumer

conveint stores

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37
Q

indirect selling-4 stage channel

A

manufacturer-wholesaler-retailer-consumer

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38
Q

what does wholesaler do

A

buy goods from manufactruer in large bulk then sells it to retailers in smaller quantities

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39
Q

adv of wholesalers

A

used as storage cupboard

make distribution quicker adn SIMPLIER for retailer-as dont haev to make individual trips, cuts down number of journeys and paperwork

manufacturers are paid straigth away rather then having to wait for retailers to sell the product

can store more goods then retailers can-storage cupboard

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40
Q

dis of wholesalers

A

need trusted relationship with wholesaler to assure will get goods in time

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41
Q

multi stage channel of distribution

A

where business uses several channels of distribution at once e.g direct selling e.g ecommernace and selling in reatil shops
advnatge-gives flecxibility

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42
Q

online distribution

A

where goods and services are streamed and downloaded rather then a physical good brought

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43
Q

adv of online retailing

A

enviroment-no travelling
no package costs

consumer gets service rigth away, immediate distribution

any issues, much easier to update

acroynm- custard pie
customers get cheaper price then normal
p
immediate distrubution/gets it striagth away
e

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44
Q

dis of onlien retailing

A

high in IT skills, may need extensive training which can be expensive

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45
Q

product life cycle

A

devlopment stage
introduction stage
growth stage
maturity stage
decline stage

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46
Q

development stage

A

research and development stage
high costs and sales not yet being made to cover costs
high failure rate as oftne not enough demand

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47
Q

introduction stage

A

stage where product is lauched
high costs being made on promotion and advertsing product to make sales
sales go up, but sales reveue had to pay for fixed costs of development costs before prodcut can make profit
competition is limited

48
Q

growth stage

A

sales grow fast ‘increase in new customers and repeated customers
competition is attrcted to makret

49
Q

maturity stage

A

sales reach peak
enough sales been made to cover fixed costs of development
lots of compeittion
at saturation, where market is full andd reached full growth, sales may begin to drop

50
Q

decline stage

A

where product sales decline, product does not appeal to customers anymore

51
Q

what are extension stragies

A

way to increase products life cycle for longer

e.g product development, reforming or redesigning a product
changing design of packaging,making it more up to date etc

52
Q

boston matrix

A

compares makret growht and makret share

question marks-all new products. have high market growth but low makret share
are not yet profitbale and need heavy marketing to give them a chance

cash cows-high market share but low makret growth. at maturity phase of porduct life cycle
already been promoted so sold in higvolues
bring in lots of money

stars-high market share and high makret growth. at growth stage

dogs-low makret share and growth, lost cause

53
Q

mass marketing strategies

A

needs to appeal to whole market instead of individual makret segments

product needs to have mass appeal
expesnive advertising campiagns
sponsorphips
prodcut endorsemtn deals

54
Q

niche marketing strategies

A

more emphasises on making a product whcihc is difefrentiated or unqiue compared to what is avaliable in mass market

may need more effective makret research to find out what customers want

55
Q

B2B marketing

A

business sells product to another business
e.g surgical gloves are sold to doctors

56
Q

B2C marketing

A

business selles to consumer
e.g ready meals to consumers in shops

57
Q

customer loyaly

A

having good before and after sales is key

after sales service is important to custpmers, able to get any help with any porbelms with their product after buying it

58
Q

saver schemes

A

collect points based on amount they spend
e.g tesco clubcard

58
Q

loyalty cards

A

help tie customer to partcilaur service e.g getting stamp ach time vist
after serval visstics, get free drink
good as makes repeated customers

59
Q

how are employees an asset to a business

A

bring in skills nad knowledge into a business

60
Q

how are employees costs of a business

A

paid wages or salarys which costs money to business

61
Q

what is a wage

A

paid to worker based on amount of work they do

62
Q

what is a salary

A

fixed amount that is paid monthly

63
Q

what is dissimisal

A

contract of employmeent ends-choice of employer not employee

64
Q

redundancy

A

persons job is no longer needed
in other words, fired
could then cost money to business for reducnacy payments to employees who been in business for over 2 years

65
Q

zero hour contracts

A

no guanterred hours
adv-more flexible so can commit to other things
dis-little finanical security
dis-no obligation to work so may be hard for business to find people in busy times

66
Q

outsourcing

A

where one business outsources business acivit/task to another busines

67
Q

recuritment

A

finding best person for job

68
Q

selection process

A

interviews-one to ine wither face to face or online

assessment days-they have to do actvities such as group exercises

in tray exercises-given scenroi to member of staff be given list of tasks to complete
candidate has to put tasks in order in terms of importance and say what action should be taken place for each task

69
Q

internal recuritment

A

recuriting someone from within the business

70
Q

external recuritment

A

recurting someone from outside the business

71
Q

adv of internal recurimten

A

cheap and quick

know person gets along with members in business

makes people more motiavted to gte promotion

72
Q

dis of internal recurtiment

A

may cause resentment between workers if dont get chosen

leave one vacancy that then needs to be filled

73
Q

adv of external recuritment

A

brings new ideas into business

may have business knowledge from other buisnesses

more choice of candiates

74
Q

dis of external recuritment

A

expensive

long process

make take longer as have to have introduction phas/ longer induction process

75
Q

recurmtent has costs

A

epensive due to cost for vacancys etc

76
Q

induction training

A

introdcuing person to wrokfocre and their new role

if bad introduction training, may not know what they are doing
not enjoy new jobe
more likely to leave

77
Q

on the job training

A

traning inside the business

78
Q

off the job training

A

traini g outside of business

79
Q

adv of on teh job training

A

job specific
lower costs

80
Q

dis of on the job training

A

may slow down production as not fully prodctuve durng trainers
not expertise
no new ideas brought into business

80
Q

adv of off the job training

A

brings in new ieads

people are experitise

81
Q

dis of off the job training

A

not job specific

no actual benefit to business

expensive

82
Q

what is chain of command

A

path of communcation and authoirty up and down the heriarchy

83
Q

tall structures

A

have lots of levels in their heirarachy
long chains of command-meaning can negatively impact communcation and efficiency
getting communcating too and from can be very time consuming
narrow span of control

84
Q

adv of tall strcutures

A

lots of layers of management so lots of chances for promotion, can be motivating for employees

85
Q

flat organisations

A

few levels in heiarchy
poeple are given more freedom and responsbility
wide span of control

86
Q

centralisaed organisations

A

where senior manager makes all decisions (at top of business)

87
Q

adv of centralised organisations

A

have high level of experinece
means decisions are made qucikly as dont have to consult anyone
good if workers are not skilled

88
Q

dis of centralised organisations

A

may be demotiavting for employees as dont have say

dont spend much time on shop floor so slow to notice consumer trendds

89
Q

decrentralised organsiations

A

authorty is shared out to more junior employees

90
Q

adv of decentraisedd organisations

A

may have more knowledge on their department/sector

can be motivating for staff as get a say/may feel more valued

day to day decisions can be made quickly without having to ask senior managers

91
Q

dis of decentraised organsiations

A

may not have enouvgh experince at making decisions

may not be able to see overall situation and needs of organisation

92
Q

taylors scientific managemtn

A

belived people motivated by money
believed people do minimum amount of work when left to own devices
favoured division of labour-breaking work down into small repeative tasks
paid workers according to quanitty they produced
adv-fewer workers needed due to increased productivity
dis-reduce quality, may become boring, demotivating

93
Q

herzbgers two factor theory

A

two motivating factors
hygeine factors
motivating factors

94
Q

mayo human relations theory

A

one group working conditions stayed same
other gorup workign conitions consistently changed e.g number of rest breaks
foudn that group with working conditions consistemyl changing were the most productive
hwoever, not because of chanhe of working conditions its due to changed in management and teams

95
Q

non finanical motivation

A

job enlargemnt-give employee greater range of work to do at same level

job enrichement-giving workers more challenging work

job rotation-moving tasks from one to another r

96
Q

what is peiceowrk

A

workers are paid per unit produced

97
Q

commisiom

A

money paid to worker for compelting task

98
Q

what are the 4 types of leadership styles

A

autocratic-where leader makes decisions on their own
adv-good if workers are unskilled
adv-decisions are made qucikly/have lots of experince
dis-staff dont have say so can be demotivating

patternalistic-softer from of autocratic style where consult workers about decisions being made and help peraude them that decsions are in their interest

democratic-leader encourages workers to partcipate in decision making process
they discuss issues with workers and delegate responsiabilty
adv-motiavting
dis-time consuming

lasissez faire-hand off form of leadership. leader might offer employees little cupply but barely interfer with running of the business
adv-motivating
dis-haev little experince so may make wrong decsisions putting running of business at risk

transformational leadership-wher a business needs to dramtically change
has ideas of changes and needs to inspire staff to make these changes

99
Q

entrepreneur

A

one or two people who set up a business

100
Q

roles of entrerenurs

A

creating and setting ,up a business
running and developing business
brining innovation to business world

101
Q

barriers to entrepreneuship

A

may lack money
often occurs when business idea has large start up costs e.g initial investment of large machinery
way to overcome barrier-raising capital e.g getting a loan

lack in confidence
can overocme this by strongly believing they can do it

102
Q

characteristics of entrepreneurships

A

hard wroking-may need to work over hours day and night

self confident-needs to beleive in tehri own abailities and judgment for business idea

risk taker-needs to willing to try things that culd potentaially gace a negative outcome

103
Q

what specific skills do entrepreneurs need

A

communicator with many different people

good team working skills

solving problems

104
Q

what are the financial motives of setting up a business

A

profit maximisation-means making as much profit as possible

profit satisfying-means making enough profit, not pushing to maximise it

may make enough to haev happy liestyle and no more
means shareholders are satisfied but no more

105
Q

non finanical motives of being an entrepreneur

A

work from home-flexible hours

your own boss, have freedom to pursure own ideas can be motivating

106
Q

what does an entrepreurn have to prepare for when movig from a entreprenur to a leader

A

delegate responsibility-develop trust that these people can carry out task as well as them

may find it easier if hire peole with similar beliefs, prinicples and visions

develop emoitonal intelligence-be able to recognise emoitons of others and respond to them appropriately
important to keep them motivated

become less reactive-need to make decisions slower and consider and consult other staff
would have made decisions much quicker when alone

107
Q

private limited companies

A

business owned by shareholders, each protected by limited liability

108
Q

adv of private limited companies

A

limited liability (can only lose out on what they invest in)
own personal growth is protected
making it attractive to potential investors

easier to raise capital
take on new shareholders and number of people, gives them chance to bring in new shareholders
therefore, brining in money

reputation-trust worthy and reliable and larger in scale
help attract customers

109
Q

dis of private limited companies

A

shared profits-have multiple shareholders, profits will be split either ways

110
Q

public limited companies

A

business owed by shareholders
shares are traded publicly
shares are sold publicly during a process as a stock market flotation

111
Q

adv of public limited company

A

large amount of capital raised (flotations)

benefit from greater media exposure and may be seen as more prestigious and reputable

112
Q

dis of public limited company

A

stability of a PLC is vulnerable to changes in sahre price

directors are accountable to thousands of shareholders

113
Q

exam hint question: should a private limited company consider becoming a public limited company

A

business paper 1 (54 decks)

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