Precise Flashcards
What is market mapping and the advantages and disadvantages?
It’s how products/ businesses are viewed compared to competitors based on two characteristics
+Helps decide if a business should join a market (gap in the market/opportunity)
+Can compare businesses
+Helps better understand competitors
+Understand customers perspectives
- Only based on two variables
- Perceptions of customers are complex and may not fit the model
- Stakeholders may have a different view of where the business is
What is market positioning?
Factors a business may consider when positioning a product in market maps.
- Attributes of the product
- The Origin of the product
- The reputation of the business (The classification of the product)
What are the 7 factors that lead to a change in demand?
Substitutes - Eg buying Pepsi over coca cola
Complementary - Eg Buying milk with cereal
Consumer income - Inferior / normal goods
Preferences - Changes in consumer tastes
Advertising & Branding -
Demographic -
External stocks -
Seasonality - Eg garden furniture demand rises during spring
What are the 6 factors that lead to a change in supply?
Cost of production - Eg wages, maintenance, raw materials, energy, rent
Introduction of new technology - help lower costs
Indirect taxes - Eg VAT
Government subsidies - Money given to a firm from the gov
External stocks - Factors beyond the control of the business eg weather
Price of related goods - The price of the good could encouraged supply
What factors effect the PED?
Time (Customers Substitute) -
Competition -
Branding -
What factors effect the YED?
- If the good is a necessity
- If its a luxury good
What are the two types of promotion with examples?
Above the line - promotion that involves advertisements Eg -Informative advertisements -Persuasive advertisements -Reassuring customers
Below the line - promotion that does not involves advertisements Eg -Free gifts -Coupons -Loyalty cards -Competitions -BOGOF offers
What are distribution channels?
The stages the products have to go through to get from the producer to the consumers
What are intermediary’s?
A link between the producer and consumer
What is direct selling?
When a producer markets their products directly to consumers
What changes in the design mix that reflect social trends and what is ethical sourcing?
- Design for waste minimisation
- Design for reuse
- Design for recycling
Ethical sourcing - Only using materials, services ect from suppliers that respect the environment, treat workers well and provide a safe working environment
What is a private limited company (LTD) and the advantages and disadvantages?
A business owned by shareholders protected by limited liability
\+Limited liability \+Control over who buys shares \+Perceived as more reputable \+Raising capital \+Less chance of conflict between owners and shareholders
-Shared profits
-Financial documents are published
-Shares can only be traded privately
-
What is a public limited company (PLC) and the advantages and disadvantages?
A business owned by public shareholders on the stock market who are protected by limited liability
+Raise large amounts of capital
+Has greater media exposure
- Volatile share prices
- Directors are accountable to thousands of shareholders
- PLCs news can spread fast (negative or positive)
What are the advantages and disadvantages of stock market floatation for a business?
+Can raise large amounts of capital as it is easy for the public to buy shares through a stockbroker or bank
+Shares don’t have to be repaid and no interest is applied
+The business can also gain recognition through this method
- Time consuming
- Expensive
What is an emerging market?
An economy with low to middle per person income
A nation of a nation whose economy mimics that of a developed nation but does not fully meets the requirements to be a classified as one
Tries to transition from a closed market to an open market
Which countries are emerging markets?
(Hint: The BRICS economy/ The MIST economy)
Brazil, Russia, India, China, South Africa
Mexico, Indonesia, South Korea, Turkey
What are the 2 implications of economic growth for individuals and businesses?
Trade opportunities for businesses - consumption may be growing and is likely that consumers have more disposable income.
Employment patterns - unemployment rates, labour cost and productivity are good indicators for businesses. High unemployment rates in a country may not be worth exporting products to, however, they may be good for factory work.
What is Trade Opportunities for businesses?
Because of the growth of an emerging economy, consumption may be growing and is likely that consumers have more disposable income.
- Increased FDI
- Opportunities for exporting to developing economies
- Better infrastructure leading to productive manufacturing
What are the indicators of growth?
Gross Domestic per person (GDP) - A measure of economic activity. Can be hard to compare against other nations with different currencies
Literacy - educated employees lead to better quality workforce and products and service
Health - indicates living standards of people and how much money they may have
Human Develop Index (HDI) - eg life expectancy. Can be used to asses likely demand, income and skills within a country
What are the disadvantages of trading blocs for a business?
• Increased size of market means more competition : Constantly have to innovate and
invest to maintain competitiveness : Financial strain and potentially lower profits
• Less resilient to economic shocks (e.g. EU recession) : Will have a knock on effect to all
businesses/branches of business within the trading bloc : Significant fall in profits and
sales
• Firms may not get an agreement that suits them : Competitive disadvantage to other
multinational corporations (e.g. Higher costs with regulations or taxes) : Loss of global
market share
