Miss M Al-Saad

Question 1

Why do businesses exist

Answer 1

Business exist for multiple reasons
- To provide goods/services that meet needs & wants of their customers
- to achieve a specific social, ethical or environmental purpose
- To create wealth for owners or other stakeholders in the business

Question 2

What is a mission statement

Answer 2

Mission statements are long term goals that a business strive to achieve
It is a broad statement of why the business exists

Question 3

Benefits of a good mission statement

Answer 3

• it can be used as a marketing tool to attract customers
• it can be used to motivate employees
• it can attract future shareholders
• As a starting goal for a business

Question 4

What are objectives

Answer 4

Objectives are specific, short term goals that business want to achieve/maintain in the business
Objectives should be S.M.A.R.T (Specific, measurable, achievable, realistic & time based)

Question 5

What does S.M.A.R.T mean in a business

Answer 5

Specific
Measurable
Achievable
Realistic
Time based

Question 6

Objectives can be corporate and functional.
What does corporate mean

Answer 6

Corporate objectives are meant for the whole business

Question 7

Objectives can be corporate and functional.
What does functional mean

Answer 7

Functional objectives are based in a specific financial department
They may be HR, Operations, Finance, Marketing

Question 8

What are output levels

Answer 8

Output levels are the number of goods or services produced by a industry, company or economy in a timeframe

Question 9

What are variable costs

Answer 9

Variable costs are things that change almost immediately depending on the levels of output

Question 10

What are fixed costs

Answer 10

Fixed costs are costs that don’t immediately change depending on the output levels in the business

Question 11

Examples of fixed costs

Answer 11

Insurance, Mortgage, Rent, Salaries

Question 12

Examples of variable costs

Answer 12

Raw materials, Packaging supplies, Commissions, Salaries

Question 13

What is capital expenditure

Answer 13

Money spent by a business or organisation on acquiring or maintaining fixed assets

Question 14

What is revenue expenditure

Answer 14

Any money spent in the business to cover short-term expenses

Question 15

Examples of objectives

Answer 15

To (achieve):
Specific levels of profit
Specific levels of growth
Specific levels of cash flow
Survive as a business
Social and ethical targets

Question 16

What is revenue

Answer 16

Revenue is the total amount of money a business earns from selling goods or services.

Question 17

Cash cow products mean?

Answer 17

Products that have high market share in a low growth market

Question 18

What is a product portfolio

Answer 18

The range of products a business sells (aka the product mix)

Question 19

Benefits of a wide product portfolio

Answer 19

• more revenue as there’s more products available for purchase
• different products are at different stages of the product life cycle (products in growth/maturity stage can provide cash sales to develop products in the research & introduction stage)

Question 20

Problem child products mean

Answer 20

Low market share in a high growth market

Question 21

What is penetration pricing

Answer 21

Charging a low price for new product to secure a place in the market
The goal is to attract customers away from competitors by offering a lower price

Question 22

Psychological pricing

Answer 22

Charging prices below significant figures.
E.g £9.99, £19.99, £49.99

Question 23

What is Dynamic pricing

Answer 23

Businesses setting highly flexible prices for products based on current market demands

Question 24

What is revenue

Answer 24

The value of products sold during a particular period

Question 25

What is a sole trader

Answer 25

• Owned alone
• Finance is provided by the owner (capital)
• Owner is entitled to ALL profit

Question 26

Advantages of sole trader business

Answer 26

• Complete control of the business
• more flexible
• quicker, easier & cheaper to set up than a LTD

Question 27

Disadvantages of sole trader

Answer 27

• Unlimited liability - personal possessions at risk if business is in debt
• Owner is only source of capital/finance

Question 28

Disadvantages of sole trader

Answer 28

• Unlimited liability - personal possessions at risk if business is in debt
• Owner is only source of capital/finance

Question 29

Niche marketing

Answer 29

Aiming a product at a small segment of a larger market

Question 30

Benefits of niche marketing

Answer 30

High sales due to lack of competition
Can charge high prices
Can establish customer loyalty

Question 31

Marketing segment

Answer 31

Separating the market into group of people with similar characteristics

Question 32

Types of segmentation in markets

Answer 32

• Demographic (age/gender)
• Geographic
• Income (socio-economic grouping)
• Behavioural

Question 33

Types of segmentation in markets

Answer 33

• Demographic (age/gender)
• Geographic
• Income (socio-economic grouping)
• Behavioural

Question 34

Disadvantages of niche marketing

Answer 34

• Will attract competition from large firms
• High average costs because of low volume sales
• Not enough customers to generate specific profits

Question 35

Mass Marketing

Answer 35

Devising products with wide appeal and promoting them to all types of customers

Question 36

Benefits of mass marketing

Answer 36

• Potentially high sales due to larger number of potential customers
• Lower average costs can allow lower prices to be charged

Question 37

Drawbacks of mass marketing

Answer 37

• Harder to establish a USP
• Greater amount of competition

Question 38

Consumer marketing (B2C)

Answer 38

Selling to the general public

Question 39

Business to Business Marketing (B2B)

Answer 39

Selling to other business

Question 40

Market mapping

Answer 40

Selecting two key variables that differentiate brands within a market then plotting a position of each brand