Paper 1 Flashcards

(102 cards)

1
Q

mass market characteristics

A

generic products - similar in function. STandardised

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Example mass market

A

Bic pens, Primark clothes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

niche market characteristics

A

Specialist products and services. Change in taste and preferences can be devastating to demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Example niche market

A

Nespresso, Ferrari,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

PESTLE FACTORS

A

Political, Economic, Sociological, Technological, Legal and Environmental

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Market share formula

A

total sales of company divided by total sales of the market x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

growth rate formula

A

final value- initial value divided by initial value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

impact of more competition

A

Impact of more competition:
Reduce prices = impact on revenue
Increase marketing to retain customers = increase in costs
Increase quality = increase in costs
Improve customer service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Impact of less competition

A

Higher sales due to few options
Can raise prices as a result - revenues will be higher
Higher profits = higher investments and dividends (if shareholders are present)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Opportunities from ⬆profits for ⬇ competition:

A

⬆ investment - capital e.g. machines = EOS/⬇cost per unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Dangers from ⬆profits for ⬇ competition:

A

Become lazy or complacent
May not invest
Rivals enter the market and offer something better than you

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Product orientation

A

business worries about the internal factors before worrying about changes in the market

Businesses can maybe make revolutionary breakthroughs that the market may not have expected

BUT is the product adapted so customers want it? A business focusing on a solar powered car is great but how many people want it?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Market orientation

A

Marketing is easier to establish here as the customer is at the heart of the product.

BUT market research is needed which can take time and money - what if the rivals get their first and you are playing catch up

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

advantages of primary data

A

Addresses specific issues that the business wants to know
Up to date
Can understand customer feelings better

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

advantages of secondary research

A

Ofter free - Google search
Provides a good overview of the market
Large scale, reliable research - usually anyway

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

disadvantages of primary research

A

Expensive - can cost thousands to do properly
Risk of bias - leading questions
May need to look at other data to understand the findings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

disadvantages of secondary research

A

Out of date
Generic - not tailored
Can be expensive depending on what you use - Mintel reports cost 2-3k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

limitations of research

A

There are 2 main limitations to conducting market research:
Sample size is too small: This means the results may not be representative of the whole market and so incorrect decisions could be made.
Sample bias: The respondents selected may mean that certain types of people are over represented in the sample - their views may skew from those of the whole market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

pros of market segmentation

A

Meet customers needs better
⬆ Brand loyalty
⬆Repeat customers
Price sensitive customers = ⬆prices
⬆Revenue and profits. Margins increas

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

cons of market segmentation

A

Higher costs
R+D
Production - lower units produced = ⬆cost per unit
Marketing - need to market to each customer differently
⬆Product range = EOS exploited.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Market Positioning

A

Deciding on how you want customers to perceive you products. This can be done by market mapping, adding value, competitive advantage and differentiation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

two ways to achieve competitive advantage

A

Lowest cost producer - cost competitiveness

Differentiation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

how is lower costs achieved

A

Producing more efficiently
Use of machinery to produce more
Lowest quality (that is accepted by consumers)
Lowest price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

how is differentiation achieved

A

Accrual differentiation
Design
Functions
Taste
Performance

Perceived differentiation
Branding
Advertising
Sponsorship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Increase in Demand is caused by:
Price of substitutes rising Price of complements falling Income of consumers rising Expectations that the price will rise in the future Tastes, fashion and preferences Increased Advertising in a market Population increasing Seasonality - energy in the winter
26
Increases in Supply are caused by
Factor input costs falling Technology increasing Indirect Taxes falling Subsidies increasing Good Weather New firms entering the market
26
Decrease in Demand is caused by:
Price of substitutes falling Price of complements rising Income of consumers falling Expectations that the price will fall in the future Tastes, fashion and preferences - outdated Decreased Advertising in a market Population falling Seasonality - energy in the summer
27
Decreases in Supply are caused by:
actor input costs increasing Technology falling Indirect Taxes increasing Subsidies falling Bad Weather Firms leaving the market
28
Price inelastic
number is less than 1
29
price elastic
number is greater than 1
30
Determinants of PED
Substitutes Nessecity Addictive Percentage of income
31
Normal/Luxury Good
positive number, as income rises, demand for these goods increases.
32
Inferior Good
negative number,as income rises demand for these goods decreases
33
Determinant of YED
Type of good - luxury of necessity - Luxuries will have a bigger demand change when incomes change Income spent of the good/proportion of income - the more it takes up the more elastic in demand it will be. Houses are a big price and so a fall in income = a larger change in demand for houses Confidence/expectation - how long will incomes fall for? Temporary blip = no impact. Low confidence in the economy e.g. recession = bigger change in demand.
34
social trends influencing product design
Sustainability Waste minimisation and reuse Recycling Ethical sourcing
35
pros of price skimming
High prices to create desirability Early adopters will pay a high price Rapid profits to pay off costs of innovation Appropriate when selling unique products/innovative ones
36
cons of price skimming
WIll deter buyers who think its a rip off or will wait till it drops in price Early buyers frustrated when price falls Image suffers
37
pros of price penetration
Low prices = low risk sampling (customers try it) Low price = high sales volume = low cost per unit Helps to develop a habit for buying it - may pay higher price later Appropriate when selling standardised products.
38
cons of price penetration
May translate to a cheap image Customer expect lower prices - price elastic
39
pros of cost plus pricing
uarantee profit to be made Appropriate when no worry about competition
40
cons of cost plus pricing
Unrealistic price may be charged if market changes
41
pros of predatory pricing
Once rivals leave, prices can be increased to the max Appropriate when firms are more powerful than local ones
42
pros of competitive pricing
Customers shouldn’t be put off buying the product Appropriate when taking on powerful rivals
42
cons of predatory pricing
It can be illegal
43
pros of psychological pricing
Help nudge customer into make a purchase if they are thinking about it Appropriate when selling impulse purchase products
44
cons of competitive pricing
Little control over price so could impact revenue and profits
45
cons of psychological pricing
Only effective on impulse purchases
46
what influences pricing strategies
PED LEVEL OF DIFFERNTIATION NEED TO MAKE PROFIT STAGE OF PRODUCT LIFE CYCLE
47
Development stage
R+D. Getting the product ready. No sales
48
introduction stage
sales are low
49
maturity stage
growth in sales slows and reach their peak
50
decline stage
Sales begin to fall until the product is withdrawn or extension strategies used
51
issues with the lifecycle
t can encourage managers to make rash decisions that move the product too quickly through the cycle e.g. we are expecting the product to go into decline as sales dip so we slash the promotion used. This speeds up sales dropping and so falls into decline much quicker than expected
52
extension strategies
changes to product changes to promotion
53
question mark
May be successful. May just been introduced in a rapid growing market. Heavy investment to boost sales
54
rising star
The future money makers in a rapid growing market with high market share. High spending to maintain this but to fight off rivals attracted to this market
55
cash cow
in a stable market with high market share. Generate money through low marketing spend. Profits used to invest in previous two.
56
dog
low share and low growth - unattractive. May be removed
57
internal recruitment pros
Quicker/CHeaper Promotions = morale SKills already known
58
external recruitment pros
Bigger pool of applicants New ideas can be gained - innovation Better skills
59
Benefit of training
Higher skills = boost in productivity and innovation Wider skill range = flexibility Motivates staff to staff
60
On the job training Issues
Less knowledge of methods used elsewhere - may need to be trained again With targets to be met, training may take less of a priority
61
Costs of training
Large financial cost Normal operations may suffer (short term costs) Staff may not be more attractive to other businesses (head-hunting)
62
On the job training
Tailored to the companies way of working Can gain feedback on mistakes from workers Saves time and workers are working at the same time
63
Ways to select staff:
Interviews Common method where you ghetto know the staff member on a better level BUT bias on behalf of the interviewer Tests and profiling Aptitude tests are used to judge the skill levels if high skills are needed. Profiling helps to identify the personality traits BUT is subjective Assessment centres Better assess all skills with all candidates within a series of tasks BUT expensive
64
65
pros of tall structure
Close supervision Communication between teams will be strong Promotions
66
cons of tall structure
Staff feel over-supervised Overall communication may be poor Less innovation
67
pros of flat structure
Increased delegation - motivation Innovation may happen Less layers = lower costs
68
cons of flat structure
More mistakes - are workers trained enough Less promotions
69
Taylor characteristic's
Money motivates Division of labour Paid for your output Workers complete one task again and again
70
mayo characteristics
Linked to Taylor Money wasn’t just the main motivator Importance of teamwork and freedom of work Productivity improved
71
maslow charcteristics
Looked at what influenced our motivation 5 stages (see next slide Each need must be met to improve motivation The need to use different techniques for different stages and workers
72
herzberg characterisitics
Motivated workers want to do the best at all times and accept change He said that there are a few motivators that genuine will motivate workers The businesses needs to have in place a set of hygiene factors in order to allow motivation to happen Meeting both needed = employee offer their best.
73
stages of malow
self actualisation self-esteem love/belonging safety pyscholgical needs
74
roles of an entreprenuer
Creating a business idea Spotting an opportunity Market research Running and expanding the business
75
why we set up businesses
Profit max - make as much as we can but could cause issues in the long term - customers and quality Profit satisficing - sacrifice short term profits to build a long term brand Work from home Independance Ethical/social stance
76
Unlimited Liability
if the business ceases trading and the value of the assets in the business does not equal the debt - personal assets are taken
77
Limited Liability
opposite to unlimited liability - more likely to take risks and attract shareholders
78
sole trader
All MNCs started life as this or partnership. Owner has full control over decisions Owner keeps all profits Easy to set up as a business BUT Unlimited liability Hard to raise finance Common error: Sole traders do employ staff.
79
Partnership
A business may start with a group of people -collective idea Shared burden of responsibility Easier to raise finance between you BUT Unlimited liability Maybe disagreements
80
Private Limited (Ltd
As sole traders and partnerships grow - the need to access higher finance and grow is needed. May turn to become Ltd Limited liability gained Attracts shareholders - bigger finance/experience Take more risk BUT Lose control
81
Public Limited (PLC)
Businesses that wish to grow globally may need major sources of finance - the stock market is where you can gain this High rates of capital gained Limited liability BUT Loss of control Increase cost to be on the stock market Focus on profit
82
Common Business issues
Matching production to demand Growing the business and your customers find empty shelves as you couldn’t increase production is business suicide Financing growth Growth will require added finance costs due to more workers, new spaces to produce. Finding the right finance that doesn’t have excessive costs is key Overtrading A boom in sales could catch you off guard and so you have to make big capital investments and as such have higher cash outflows = cash flow crisis
83
Delegating WHereas once the entrepreneur made all the decisions - now as a leader they will need to delegate to ensure efficiency - control is hard to give up Communication When growth happens, good communication is vital! The owner will need to still know what is going on to make the correct decisions - workers may be resistant to tell managers what problems there are Coordinating more people With more people comes more responsibilities. All staff need to know what to do. The leader wants to achieve their objectives and so need to be able to steer people in the right direction. Can they keep them motivated and productive?
84
implications to businesses economic growth
New export opportunities UK businesses should target China and India as the UK economy has slowed down Offshoring production Able to lower production cost and boost profit margins Increased domestic competition Growth in other markets may increase domestic businesses in those markets to export to the UK, increasing competition
85
mplications of economic growth Implications to customers
Increase in skill level as the types of jobs shift from primary to secondary jobs Increase in need for managers and so expanding income levels Loss of jobs as businesses look to offshore Access to more choice and lower prices
86
benefits of fdi
Avoid problems when exporting If you make a product in a country you will sell in then it removes the hassle of organising onward transport to get the good to the final customer Avoid transportation costs Moving products around the world to sell is a big cost - more so when they are large like a car AVoid trade barriers No impact of import tariffs if made in that country - hence why Nissan make cars in the UK to send to the EU pre-BREXIT Lower operating costs Land and labour may be less compared to the home country
87
factors contributing to increased globalisation
Trade Liberalisation: Removal of trade barriers has led to businesses being able to have cheaper imports and higher demand for exports e.g. China Reduced cost of transport/communication Containerization has led to the ability to charge lower prices due to the high volume of goods that can be shipped. EOS. Better communication has allowed global growth to be more efficiently managed Growth of global labour force High skills at a lower cost has led to more offshoring and outsourcing. Helped to overcome skills shortages Migration Access to works from all over the world. SUpport economic growth Increased significance of TNC/MNCs MNCs become a threat to local businesses. These have hi8gh EOS and look to seek higher sales.
88
pros of trade blocs
Higher demand pushes up production and allows for EOS but protects from foreign MNCs outside the bloc. As well, cheaper import costs of materials if we can get from inside the bloc Free movement of labour (iff applicable) = higher skills
89
cons of trade blocs
Stiffer competition for domestic producers - may lag behind and lose out to producers who are lower cost than us If we import from outside the bloc, this will increase costs - May not be able to get resources still but have to have common external tariffs - cannot make your own deals
90
Push Factors:
Saturated markets New customers may need to be found if all customers have been exhausted in the current market. Either widen the range or new markets Competition If MNCs enter the market and can competed better than you, it may be time to look at newer markets with less competition to survive Extending the product life cycle As a product starts to decline, moving it into a new market may create extension strategies/restart it
91
Pull Factors:
Economies of Scale Boosting unit sales globally will in turn help to achieve economies of scale. Focusing production in a few locations that help reach global customers help to keep unit cst lower and boost profit margins/competitiveness Offshoring/Outsourcing The lure of lower costs of operation overseas is a great pull factor. This could be setting up production or moving production to a third party (pros/cons on next slide) Risk spreading The lure of selling in more countries where demand is mitigates against one economy entering recession
92
Indicators used to assess a new market
GDP per capita Annual economic growth Ease of doing business Political stability Population
93
indicators used to assess a new production location
GDP per capita Location in a trade bloc Geographical location Raw materials Ease of doing business
94
reasons for global mergers and joint ventures
spread risk entering ne markets aquiring new brands securing resources global competitiveness
95
POLYCENTRIC APPROACH (LOCAL MARKETING)
You adapt fully to the market you are going into. New name, new brand.
96
ETHNOCENTRIC APPROACH (GLOBAL MARKETING)
You take your successful domestic brand and enter new markets with it. No changes.
97
GEOCENTRIC APPROACH (MIXED MARKETING)
he use of a standardised approach (Ethno) but catering to the needs of the market (Poly). Happy medium.
98
what affects global marketing
Depends on the…product sold Commodities sell without needing to adapt to local needs/marketing. Businesses reliant on marketing need to adapt, e.g. services. Depends on the…country Going into China/India you will need to adapt to culture; especially food companies to meet religious needs, e.g. no beef in India.
99
Why control MNCs?
Safety concerns MNCs use lax regulations to get away with unsafe production Short term mineral extraction Host countries should be compensated for this Weakening local cultures Mcdonalds and KFC making chinese people switch from local food to fast food Lack of commitments MNCs will leave when the country gets weaker/MNC has got all the benefits
100
ways to control mncs
political influence social media pressure groups legal control