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A-Level Business > Theme 1 > Flashcards

Theme 1 Flashcards

1
Q

Mass Market

A

This is a market that is aimed at the general population eg regular toothpaste

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2
Q

Niche Market

A

This is the subset of the main market and addresses a specialists need eg sensodyne toothpaste

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3
Q

Mass Market Characteristics

A

.A product is sold to all consumers in the same way to please all consumers eg: Coca Cola

. Many products can be sold on a global scale with merely a few language tweaks eg: Disney films,Microsoft software,Oreo Cookies

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4
Q

Mass Market Examples

A

Types of cars such as Ford,Volkswagen and Skoda

Toothpaste such as Colgate

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5
Q

Advantages of operating in a mass market

A

Large Scale production means economies of scale and lower average unit costs

Large Volume of Sales means high revenue

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6
Q

Disadvantages of operating in a mass market

A

Constant fierce competition

Struggle with flexibility as they are making 1 type of product which need to be differentiated to keep demand high increasing costs

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7
Q

Why is branding important

A

Branding is important as it helps instil loyalty in customers

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8
Q

Niche market characteristics

A

A subset of the main market and caters to a particular segment of the market that is not being met by other providers

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9
Q

Niche Market Examples

A

SuperCars eg Ferrari Lamborghini Koenigsegg

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10
Q

Advantages of niche market

A

Easier to target customers

Charge Premium price

Small scale production allows flexibility

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11
Q

Disadvantages of niche market

A

Very risky as demand may not be constant

Higher unit costs so no economies of scale

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12
Q

Market Share Equation

A

sales of x/total sales in the whole market x 100

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13
Q

Market Size

A

The size of the market is the TOTAL of all the sales of all the producers in that market

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14
Q

E-Commerce

A

Is the process of buying and selling products using the internet

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15
Q

Effect of competition on a business

A

Production of a higher quality product or service otherwise customers will purchase elsewhere

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16
Q

Effect of competition on a homogenous market

A

Firms will have to compete on non-price factors such as promotions,deals and bundles

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17
Q

Risk

A

The possibility a business will have lower than anticipated profits or experience a loss rather than a profit

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18
Q

What is risk influenced by

A

Raw material cost,competition, the overall economic climate and government laws

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19
Q

Uncertainty

A

When businesses are unable to predict external shocks of future events eg COVID 19

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20
Q

Product Orientation

A

When a business looks only at its products and production process to think of a new product or what to make next

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21
Q

When is Product Orientation appropriate

A

When there is little competition in the market
When there is limited consumer knowledge
When funds are limited and customers buy what’s available

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22
Q

Examples of Product Orientation

A

Apple. Creates iPhones and iPads and create innovative without taking into consideration what consumers want

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23
Q

Market Orientation

A

When a business has a sensitivity to customers requirements

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24
Q

Benefits to business of effective market research

A

Reduced risk
Understand consumer behaviour
Quantify potential consumer demand for a product
Understand how much consumers are willing to pay for a product
Identify potential competitors

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25
Q

Benefits to a business of researching their market

A

Reduces risk and cost of poor decision
Help develop marketing plan
Help a business react to and prepare for changes in the market

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26
Q

Primary Research

A

Primary research is the process of finding out intel first hand that does not exist in secondary research

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27
Q

What is primary research

A

Primary research is when an individual or a business sets out to find information on their own without the use of the internet and external sources

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28
Q

Methods of primary research

A

Questionnaires
Observation
Customer interviews
Test Marketing
Focus Groups

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29
Q

Questionnaires

A

A method that consists of asking a customer questions that are specific to you and monitor their responses to come to a conclusions

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30
Q

Observation

A

Is the process of subtly observing customers and to identify marketing tactics and behaviour of customers

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31
Q

Customer interviews

A

The process of getting customers face to face and asking them straightforward questions about upcoming business plans and their thoughts on the matter

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32
Q

Test Marketing

A

When businesses sample a product or service and have customers try them out to see their reactions

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33
Q

Focus Groups

A

The process of gathering different customers into one place and have them discuss among themselves future plans of the business and whether they want them or not

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34
Q

Secondary Research

A

Secondary research is the process of finding and using information that already exists

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35
Q

Methods secondary research

A

Government Sources
Trade Publications
Market Reports
Internet Sources
Newspapers/Magazines/TV/Radio

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36
Q

Government Sources

A

Are government issued sources. Things such as the ONS-Office of National Statistics which provide news and updates that concern the nation as a whole

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37
Q

Trade Publications

A

A source that feeds news to a specialist industry.

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38
Q

Market Reports

A

Is the process by which smaller companies purchase a market report in order to achieve their marketing objectives

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39
Q

Internet Sources

A

Sources such as blogs,social networks and media as well as articles based on news that concerns a business

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40
Q

Newspapers/Magazines/TV/Radio

A

Most of these sources concern the local community. It consists of local news as well as local economic issues that may concern a business and its activities

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41
Q

Qualitative Research

A

Research that consists of a group or individual’s feelings,thought and opinions

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42
Q

Quantitative Research

A

Research that consists of mathematical statistics such as graphs and charts and numerical values

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43
Q

Sampling

A

Is the process of choosing the right people to be part of the research

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44
Q

Bias

A

Is when results cannot he trusted because of the way the research was carried out

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45
Q

Types of Bias

A

Interview Bias
Biased Questions
Respondent Bias

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46
Q

Websites

A

Websites use many pop-up adverts in an effort to sell their product to consumers. Pop ups literally pop up while you’re on any website that may not even be related to the product. Another way firms use websites as market research is through emails. When you purchase an item off a website they require an email address which then late is used to send promotional offers,flyers and news about their items in hopes you purchase from them again

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47
Q

Social Networks

A

Twitter can be used as market research through the use of hashtags which can get that particular product name trending. It can also help a brand or company to gather quantitative information about customers

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48
Q

Business Databases

A

Business databases are online systems used by supermarkets such as Sainsbury’s to target a previous customers orders by recommending and reminding customers to purchase a particular product that they purchased previously. The company gathered this data along the way and stored it in a database

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49
Q

Market Segments

A

is an identifiable group of individuals or part of a market where consumers share one or more characteristics or needs

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50
Q

Segmentation by location

A

business may decide to sell its product in just one country, one region, or in an even smaller area depending on what type of product or service they provide

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51
Q

Market segment demographics

A

Statistical data relating to the population and particular groups within it

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52
Q

Segmentation by lifestyle

A

Customers can be grouped according to the way they lead their lives and the attitudes they share

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53
Q

Segmentation by income

A

The population can be segmented according to annual salary (e.g. £15,000, £30,000 etc.) or type of job and social class

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54
Q

Segmentation by age

A

Dividing a group of people based in their ages

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55
Q

Segmentation by gender

A

Dividing a population based on their gender

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56
Q

Market mapping

A

Market mapping is the process of finding the variables which differentiate brands in a market and then plotting them on a map

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57
Q

Examples of market mapping

A

Modern and Traditional
High Quality and Low Quality

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58
Q

Uses of market mapping

A

Could be used to identify a gap in the market
Can be used as a start up as to what a business should make
Tells a business who its closest competitors are

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59
Q

Competitive Advantage

A

An advantage a business has over its opposition

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60
Q

Way a business can achieve a competitive advantage

A

Added Value
Price
Quality
Reputation
Branding

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61
Q

Product differentiation

A

When a business variate in a type of product to attract customers

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62
Q

Methods of differentiation

A

Reputation
Customer Service
Value for money
Product features

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63
Q

Added Value

A

is the difference between the price that is charged to the customer and the cost of inputs required to create the product or service

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64
Q

How can a business add value

A

Design
Production
Marketing

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65
Q

How can value be added to foods

A

Processing
Additional Ingredients
Convenience
Packaging

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66
Q

Benefits of adding value

A

The more value that higher price that can be charged
Protection against competitors offering lower prices
Customer Loyalty

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67
Q

Demand

A

Is the amount of a good customers are willing and able to buy at a GIVEN price

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68
Q

How are price and demand linked

A

Price and Demand are linked. If the price for a product or service goes up, the demand will decrease because customers may not be willing to pay a higher price

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69
Q

Non-Price Factors affecting demand

A

Price of substitutes
Alternative brands
Price of compliments
Changes in consumer income
Trends fashions and tastes
Marketing Advertising and Branding
Population structure
Time of year
Weather and Climate
External Shocks

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70
Q

Price of Substitutes

A

A substitute is a product alternative. For example of a customer cannot afford to fly to a certain destination they may consider taking a ferry and train which would be cheaper. Another example is if coffee is too expensive then maybe buying tea could be considered

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71
Q

Alternative brands

A

If an alternative brand is available and the product is not available then this will affect demand. If customers are able to buy a similar product with a similar brand profile the demand for the main product may be affected

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72
Q

Price of compliments

A

A complementary product is one that needs to be used with another product. An example is buying the capsules for a coffee machine. As the price of the complimentary goods rise the demand for the main product falls

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73
Q

Changes in consumer income

A

As consumer incomes rise then demand for some products falls. For example microwaved meals will fall in demand as consumers will have more money to buy a fresher meal. Equally as consumer income rises consumers will have a higher disposable income to spend on luxuries and holidays.

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74
Q

Trends fashions and tastes

A

As trends in goods and services rise then demand for these products rise. Trends tend to be a change in consumer preference over time. Fads are short lived eg fidget spinners

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75
Q

Marketing Advertising and Branding

A

Marketing can also stimulate demand eg promotions can help to encourage sales. McDonald’s run the monopoly promotion every year. The marketing mix can help direct traffic to a certain sale or promotion. Advertising can stimulate demand and increase sales
Advertising can call the public’s attention to a product or service
It can also be used to launch new products, remind customers about how good established products are and build the image of the brand. Heavy branding on goods will help increase or keep demand stable

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76
Q

Population Structure

A

The UK population is getting older this means that different products and services will be in higher demand. Weddings are also going out of fashion which may mean that weddings cake demands fall

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77
Q

Time of year

A

Some products reach peak demand at certain times of the year

Christmas Tees during Christmas
Easter Eggs
Pumpkins at Halloween

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78
Q

Weather and Climate

A

Some products have a seasonality factor and may be affected by the weather and the climate
One example is an ice cream van’s Mr Whippy 99 ice creams

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79
Q

External Shocks

A

External shocks such as; terrorism, war, disease and health scares can change demand
For example after terror attacks in Tunisia travel agents have found it hard to sell holidays there
30 British tourists were killed on the beach

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80
Q

Supply

A

is measured in terms of the quantity of a goods or service a business is able and willing to make available for purchase on the market at a given period of time

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81
Q

How is price linked to supply

A

As a price paid by customers increase on a product or service businesses will want to supply more in anticipation of higher profits

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82
Q

Non Price factors affecting supply

A

Cost of production
Introduction of new technology
Indirect taxes
Government subsidies
External Shocks

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83
Q

Cost of production

A

If cost of production increases due to the rise of raw materials or an increase in minimum wage a business might:
.Produce less
.Increase price of product to increase revenue to previous levels

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84
Q

Introduction of new technology

A

New technology means that more goods can be supplied:
.mechanisation and automation of production process means supple can increase as more is being produced quicker
.Mass production methods improved to increase capacity

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85
Q

Indirect Taxes

A

When the government increases tax on goods such as petrol then supply will decrease

VAT/Customs Tax/Excise Tax are all indirect taxes and when applied to goods it makes supplying them less attractive. This can lead to a decrease in supply

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86
Q

Government Subsidies

A

This is a payment from the government to encourage more suppliers to enter the market and to supply more. With a subsidy there is an increase in supply because costs have been lowered thanks to the subsidy

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87
Q

External Shocks (supply)

A

External shocks may mean that the business may not want to supply at current levels, these shocks may be;
• Changes in oil price which can affect transport costs
• War, a business may not want to supply goods to a country which is at war
• Weather problems – particularly for crops
• Changes in labour laws (e.g. length of working week or minimum wage)

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88
Q

What does PED stand for

A

Price Elasticity of Demand

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89
Q

PED Formula

A

Final-initial/initial x 100 = % change in price
% change in quantity demanded/ % change in price

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90
Q

What does the PED value mean

A

Value more than 1=elastic
Value between 0 and 1=inelastic

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91
Q

Elastic Demand

A

Products and services that have elastic demand are responsive to a change in price
• This means if the business puts prices up, then demand will decrease
• If prices decrease then demand will increase. It stands to reason that if you make a product cheaper that more customers will want to buy it.

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92
Q

Inelastic Demand

A

Inelastic demand is for goods where if the price is changed the demand stays the same
• With inelastic demand there are few substitutes (e.g. insulin, petrol)

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93
Q

Factors influencing price elasticity of demand

A

Availability of substitutes
Frequency of purchase
Necessities
Luxury goods

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94
Q

What does YED stand for

A

Income Elasticity of Demand

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95
Q

What Is YED

A

A calculation used by business to estimate how demand will change in relation to income

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96
Q

Normal Goods

A

Normal goods are those for which consumer demand increases when income increases
•YED value would be >0 (a positive value)

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97
Q

Inferior Goods

A

Inferior goods are products where demand decreases as income increases
• YED value for an inferior good will be <0 ( a negative value)
• For example charity shop clothes might have a YED of -1.5

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98
Q

Luxury Goods

A

A luxury good is when an increase in income causes a larger increase in demand (it’s all about proportion)
• Yed value for luxury goods will be >1 positive

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99
Q

YED Formula

A

% change in quantity demanded/% change in income

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100
Q

Product and
Service design

A

The combination of factors needed in designing a product

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101
Q

What are the factors required in product and service design

A

Aesthetics
Function
Cost

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102
Q

Aesthetics

A

Style, design, aesthetics, look, appearance, elegance, class, charm, chic.

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103
Q

Function

A

Purpose, job, task, duty, ergonomics, usability, safety, reliability, functionality

Will the product or service be fit for purpose?
What does the product do?
How well does it perform?

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104
Q

Cost (economic manufacture)

A

What is the minimum cost that we can make this product for whilst retaining quality?
Can it be made efficiently?
Can it be produced for a lower cost
than the competitors?

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105
Q

Changes in the elements of the design mix to reflect social trends

A

Bespoke Design
Standard Design
Efficiencies
Design for waste minimisation
Re-use
Recycling
Ethical sourcing

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106
Q

Bespoke Design

A

Bespoke design means; custom made, custom built, tailor made to the consumer
.This could be a product such as a car or a service such as a wedding cake

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107
Q

Standard design

A

Standard design are products or services that are sold as standard, the customer cannot add any extra features or benefits

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108
Q

Efficiencies

A

Efficiencies in production can be achieved by changing the types of materials used or by updating the technology used in production

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109
Q

Design for waste minimisation

A

While waste is actually created by contractors on site, the decisions made by designers have a major influence on the type and amount of waste
Deciding what and how to build, whether to demolish or renovate, what materials to use and the design specifications for construction all impact on the waste created during a project

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110
Q

Re-use

A

Some products are made to be re-used, this gives consumers good value for money as they can use the product more than once

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111
Q

Recycling

A

Some products are made using recycled materials, this appeals to the green consumer and is good for the environment

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112
Q

Ethical sourcing

A

Ethical sourcing also means ‘ensuring that the products being sourced are created in safe facilities by workers who are treated well and paid fair wages to work legal hours. FSC AND FAIRTRADE

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113
Q

Promotion

A

The use of marketing tools to bring a product or service to the attention of potential buyers

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114
Q

Types of Promotion

A

Personal selling
Direct marketing
Above-the-line marketing
Below-the-line marketing
Public Relations (PR)
Sponsorship

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115
Q

Personal Selling

A

Is the process by which a salesperson interacts with the customers face to face on behalf of a business regarding a product or service

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116
Q

Direct Marketing

A

Highly focussed targeted mail based on what customers have bought before. Can be be mail,post or even a special offer to re-engage the customer

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117
Q

Above the Line advertising

A

Involves mass media methods for targeting larger and more general customers:
Radio
TV
Cinema
Print Adverts eg newspapers
Outside Adverts eg: billboards

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118
Q

Pros of ATL

A

ATL is tailored to reach a mass audience

Advert communication is repeated so the message is clear e.g. “simples” and “go compare”

Great for building brand awareness

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119
Q

Cons of ATL

A

Very expensive e.g. A radio ad on a national station can cost about £10,000 for a week

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120
Q

Below the Line advertising

A

Below-the-line (BTL) marketing is the same as direct marketing for reaching smaller but more targeted audiences

The main methods include:
• Public relations e.g. Ryanair PR stunts
• Search engines
• Events e.g. restaurant launch
• Social media marketing

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121
Q

Pros of BTL

A

Easy to measure if the campaign has reached an audience e.g. through number of website visits, conversion rates, click through rates

Easy and inexpensive to use social media to increase brand awareness

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122
Q

Cons of BTL

A

Extensive training on working social media and IT may be needed for marketing staff

Deeper understanding of customer or buyer behaviour is required e.g. what do they read, what websites do they visit

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123
Q

Public Relations

A

PR is unpaid communication about an organisation which appears in mass media

PR can include publicity stunts eg Felix Baumgartner from the Red Bull team

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124
Q

Sponsorship

A

Positive association of the product with a celebrity or a sport eg Selena Gomez with Pantene

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125
Q

Sales Promotions

A

BOGOFF
Price discounts
Money off coupons
Samples / giveaways
Special events
Point of sale

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126
Q

BOGOF

A

Stands for Buy One Get One Free

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127
Q

Pros of BOGOF

A

Very popular with shoppers

Encourages trial and use of the product

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128
Q

Cons of BOGOF

A

Loss of profit because there is an increase in costs, this will not be balanced by the increase in sales

Only useful in the short-term

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129
Q

Price Discounts

A

Price discounts means that the normal RRP of the product or service has been reduced

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130
Q

Pros of price discounts

A

Great way to clear old or out-of-date stock

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131
Q

Cons of price discounts

A

Customers may regard the business as a cheap option

Too many discounts and customers become suspicious e.g. the DFS sale that is always on

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132
Q

Money off coupons

A

Coupons can be used to capture new customers – to add an incentive

Coupons can also be used with existing customers to encourage an impulse spend

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133
Q

Pros of money off coupons

A

Coupons can help the customer feel they are getting better value for money

Coupons are available from websites, loyalty cards, store magazines and on the back of some packs to encourage repeat purchase

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134
Q

Cons of money off coupons

A

Reduced profits from the cost of running the promotion

Some customers may be waiting for the coupons before
they purchase

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135
Q

Samples/giveaways

A

This is where a business may send out or give customers free samples in order to persuade them to try the product for the first time

136
Q

Pros of samples/giveaways

A

Ideal for new product launches

Works especially well with some products e.g.
shampoo, food etc.

137
Q

Cons of samples/giveaways

A

Can be complicated to send in the post – needs a database of customers

Can be expensive as giving away some of the product for free

138
Q

Special Events

A

Special events are activities that the business does to encourage consumers to try the product

139
Q

Pros of special events

A

Encourages customers to attend

Rewards loyal customers with a
special event

Ideal for small businesses

140
Q

Cons of special events

A

Can be expensive

Hard to measure how valuable this
marketing is

141
Q

Point of sale

A

Point of sale display is usually a cardboard display stand located close to the till within a shop

142
Q

Pros of point of sale

A

Ideal way to promote new products

Works best with products that have an event or
holiday tie in e.g. crème eggs for Easter

143
Q

Cons of point of sale

A

Only successful if the product meets the needs of the customer

Needs to be designed and out to stores in time for the event / holiday

144
Q

Digital Communications

A

Online adverts
Mobile communications
“Advergaming”
Social media
Consumer generated content
Viral strategies

145
Q

Online adverts

A

banner and commercial classified adverts - including adverts within emails

pop-up adverts

146
Q

Pros of online adverts

A

Potential to reach large markets of customers shopping online

147
Q

Cons of online adverts

A

Customers may ignore the ads

Ads may get lost amongst all the content
and other ads

Click through ads can be expensive

148
Q

Mobile communications

A

Mobile communications includes smartphones, androids, tablets and other devices used on the go

149
Q

Pros of mobile communications

A

Mobile marketing can be used to extend the online reach so that customers can interact with the brand whilst on the move

150
Q

Cons of mobile communications

A

Small screen the message may be lost or distorted

Security issues of conducting transactions online

151
Q

Advergaming

A

An advergame is a video game which contains an advert for a product, service or business

For example in a car racing game the cars may pass billboards which are genuine adverts

152
Q

Pros of advergaming

A

Customers will be concentrating on the game so are more likely to concentrate on the brand message

Many games are multi-player reaching huge audiences

153
Q

Cons of Advergaming

A

If the game and the brand don’t make sense together the message is lost – wrongly targeting a game with car adverts for example

Many games are played by consumers too young to make a purchase decision

154
Q

Social Media

A

The process of using social media platforms such as Instagram,Facebook, etc

155
Q

Pros of social media

A

Customers can be kept informed of new products

Increases customer engagement with the brand

Can show customer service with a quick response

156
Q

Cons of social media

A

Blogs, twitter, Facebook pages all need to be updated on a regular basis which means hiring committed staff – which is an additional cost

157
Q

Consumer generated content

A

This means any form of
content such as video, blogs, discussion form posts, digital images, audio files, and other forms of media that was created by consumers

158
Q

Pros of consumer generated content

A

Opportunities for consumers to read reviews before they make the purchase e.g. Trip Advisor

Positive responses to complaints can be very valuable marketing and reputation enhancement for the business

159
Q

Cons of consumer generated content

A

Consumers have lots of ways of publicly complaining about a product or service ultimately having easy access to ruin a business reputation/image

160
Q

Viral Strategies

A

Viral marketing describes any strategy that encourages customers to pass on a marketing message to others, creating the potential for exponential growth in the message’s exposure and influence. Eg: BLM

161
Q

Branding

A

A brand is a characteristic name or symbol that distinguishes one product from another

162
Q

Types of branding

A

Corporate Branding
Product Branding
Own Brand Products
Rebranding

163
Q

Corporate Branding

A

Where one large business owns multiple brands. Such as Mars owning multiple chocolate brands.

164
Q

Pros of corporate branding

A

Spreads the cost of marketing across all the individual brands

Awareness of the company can be worldwide e.g. Coca Cola

165
Q

Cons of corporate branding

A

Takes a long time to build a solid brand image

Any unfavourable incidents e.g. a product recall and the whole brand suffers

166
Q

Product Branding

A

A product branding strategy will aim to show the customer the features and benefits of a product which will differentiate it from other similar products in the marketplace eg Kitkat is Red

167
Q

Pros of product branding

A

Branded products can command higher prices that non-branded

Good branding differentiates the product and creates customer loyalty

168
Q

Cons of product branding

A

Product branding may require a high investment

Product branding may take many years to build up

169
Q

Own Brand Products

A

Are home brand products such as Tesco may have its own version of coco pops

170
Q

Pros of own brand products

A

Boosts customer loyalty to the supermarket

Competes with manufacturers brands

171
Q

Cons of own brand products

A

Store brands are a mixed bag and can be made by numerous companies under the supermarket’s name, so ketchup might be great but cornflakes might taste like carpet tiles

172
Q

Rebranding

A

Where a business changes is:
Name
Symbol
Term
Design
Or combination of the above

eg: Old Spice wanting to change business image to a younger audience

173
Q

Benefits of strong branding

A

Added Value
Ability to charge premium prices
Reduced PED

174
Q

Ways to build a brand

A

USP’s (Uniques Selling Point)
Advertising
Sponsorship
Social Media

175
Q

USPS/Differentiation

A

These are the small details that makes one product or business different from another

176
Q

Advertising

A

Brand awareness is a sense of loyalty between customer and the advertiser

Customers purchase from brands they are familiar with

177
Q

Viral Marketing

A

is method of marketing whereby consumers are encouraged to share information about a company’s goods or services via the Internet

178
Q

Emotional Branding

A

Emotional branding seeks to create a bond between the consumer and the product by provoking an emotional response to the advertising

Long lasting attachment to a product is a strong brand loyalty

179
Q

Pricing

A

The process of a business choosing a pricing strategy in efforts to make profit or attract customers

180
Q

Types of Pricing strategies

A

cost plus
price skimming
penetration
predatory
competitive
psychological

181
Q

Cost Plus

A

Where the business sets a price to cover costs as well as a percentage on top to make profit

182
Q

Pros of cost plus

A

Protects the profit margins of the business
Easiest method of pricing to apply
Easy to estimate profit levels

183
Q

Cons of cost plus

A

This method of pricing does not take into account the prices of the competition

184
Q

Price Skimming

A

Where the business sets a high price for a product on launch to cover costs of R&D. Usually used by businesses who have established a brand name

185
Q

Pros of Price Skimming

A

A high starting price can establish an upmarket image

For innovative products it can be a great way to harvest high profits from early buyers who want the latest gadget / item / product and are prepared to pay a premium

186
Q

Cons of Price Skimming

A

Cheaper imitations of the product may appear on the market too soon and take sales away from the product

Risky strategy as customers may be put off from buying due to the high price

187
Q

Competitive Pricing

A

Where the business sets a price that rivals the competitors

188
Q

Penetration Pricing

A

Where the business sets the prices low at launch to attract customers then raise the price gradually

189
Q

Pros of Penetration Pricing

A

Works best with new products being launched to encourage consumers to try the product

190
Q

Cons of Penetration Pricing

A

Consumers may have bought anyway, even without the low start price

Expensive as it eats into profits by reducing sales revenue

191
Q

Predatory Pricing

A

Where a business sets a price that causes competitors to purposefully perish

192
Q

Pros of Predatory Pricing

A

The intention with predatory pricing is to drive competitors out of the market place or set a barrier to entry to discourage new entrants to the market

193
Q

Cons of Predatory Pricing

A

Depends on the price elasticity of the product, if it is low then a lower price won’t make much difference to customer demand

194
Q

Psychological Pricing

A

Where a product is priced a penny lower to appear cheaper

195
Q

Pros of psychological pricing

A

Ideal for products which want to project a premium image – the price might be part of the appeal

196
Q

Cons of psychological pricing

A

Psychological pricing strategy can be high risk, if comparable products are available for a lower price consumers could be tempted away

197
Q

Factors determining a price strategy

A

number of USPs/amount of differentiation
price elasticity of demand
level of competition in the business environment
strength of brand
stage in the product life cycle
costs and the need to make a profit

198
Q

No. Of USPs

A

Is a unique selling point that differentiates a product from another

199
Q

Price Elasticity of Demand (Elastic)

A

Homogenous markets have many alternatives therefore if price is too high customers will go to an alternative and price too low and customers will be put off

200
Q

Price Elasticity of Demand (Inelastic)

A

Unique products which have few alternatives will be able to command premium prices as consumers will be unable to switch and therefore willing to pay the price

201
Q

Level Of Competition

A

Little competition in a market will give customers little options therefore there will be a higher chance they purchase your product

202
Q

Strength of brand

A

How well the brand name is known affects how much people are willing to buy it. Brands with a strong name and reputation sell the most

203
Q

Stage in the product life cycle

A

Products will fluctuate in price depending where they are on the product life cycle. In the introduction pieces may be high however gradually lower as the product reaches the end of the product life cycle

204
Q

Cost and the need to make profit

A

A business will want to break-even and make a profit, break-even is the point where total costs equal total revenue

205
Q

Changes in pricing to reflect social trends

A

Online Sales
Price Comparison Sites

206
Q

Online Sales

A

Websites can offer lower price for products than brick and mortar shops as they do not have overheads such as rent

207
Q

Price Comparison Sites

A

Customers are now able to shop around and using these sites compare prices of insurance, where previously they would have had to phone a few companies to get quotes, this was time consuming and an expensive phone bill

208
Q

Distribution

A

is the process of getting the right product or service to the consumer in the right place

209
Q

4 Stage Distribution

A

Manufacturer
Wholesaler
Retailer
Consumer

210
Q

3 Stage Distribution

A

Manufacturer
Retailer
Consumer

211
Q

2 Stage Distribution

A

Manufacturer
Consumer

212
Q

Changes in distribution to reflect social trends

A

Online Distribution
Changing from product to service
Choice of distribution channel

213
Q

Online Distribution

A

The main benefit of the Internet is that niche products can reach a wider audience e.g. Low barriers to entry as set up costs are small

Can cater to a far greater geographically dispersed market than traditional local shops

214
Q

Changing from product to service

A

This is the concept that you do not have to own something to be able to use it e.g. music – not a physical product like a CD but an experience like a song you sing to yourself

215
Q

Choice of distribution channel

A

A. The nature of the product e.g. medicines need to be sold in a pharmacy under the careful eye of a fully trained pharmacist

B. The market

C. The nature of the business

D. The size of the business e.g. A small fledgling business may start with just an online business

216
Q

Marketing

A

The management process of identifying, anticipating and satisfying consumer demands for profit

217
Q

Marketing Strategy

A

The process by which the business chooses to promote its product or service to the market

218
Q

Product Life Cycle Stages

A

Research and Development
Introduction
Growth
Maturity
Decline

219
Q

Extension Strategies

A

updating packaging
adding more or different features
changing target market
advertising
price reduction

220
Q

2 ways a product can be extended

A

A. Change the Product
B.Rebranding or Relaunch of the product

221
Q

Product Modification

A

The process of adding things to a product to differentiate it from the original model eg: automobile industry such as the Honda Civic

222
Q

Rebranding

A

Process of updating or changing the name or design of a product name to create a new clean slate for the product eg: CIF and KIA

223
Q

Relaunch

A

Process where a product is withdrawn, altered and released in hopes to satisfy customers that time round eg: Burberry

224
Q

Promotion Extension

A

The process of shifting advertising to a new audience and target group eg: North Face from mountaineers to teenagers

225
Q

Boston Matrix

A

The Boston matrix is a marketing planning tool which helps managers to plan for a balanced product portfolio

226
Q

Star Product

A

High market share
High market growth
Example: Apple Products

227
Q

Question Mark

A

Low Market Share
High Market Growth

228
Q

Cash Cow

A

High Market Share
Low Market Growth

229
Q

Dog Product

A

Low Market Share
Low Market Growth

230
Q

Uses of the Boston Matrix

A

The Boston matrix is a good starting point when reviewing an existing product line to decide future strategy and budgets

231
Q

Limitations of Boston Matrix

A

Products may not be low or high market share they could be medium

High market share does not always lead to high profits, there are high costs also involved with high market share

232
Q

B2B Marketing

A

The process of a business using another business rather than consumers

233
Q

B2C Marketing

A

Means business to consumer. Where a business deals with the consumer directly.

234
Q

Customer Loyalty

A

The process by which a business uses marketing strategies to retain customers for a long period of time

235
Q

Ways a business can gain customer loyalty

A

Loyalty Cards
Saver Schemes

236
Q

Loyalty Cards

A

Can help improve customer retention as well as collect important data on the consumer which they can use later

237
Q

Saver Schemes

A

Where a customer can save money on future purchases depending on how many uses they have on the saver scheme

238
Q

Staffing

A

Staffing is the process of hiring, training and supervising employees in an business

239
Q

What are the different views of staffs

A

Staff as an asset
Staff as a cost

240
Q

Staff as a cost

A

Cost of recruitment
Cost of training
Cost of paying minimum wages
Cost of paying staff salaries and wages
Cost of staff welfare
Cost of redundancy

241
Q

Cost of recruitment

A

A business may carry out the recruitment themselves, costs add up, from the advert for the job to the employee time away from their job to carry out interview

242
Q

Cost of training

A

Staff training is often viewed as a cost rather than adding value, however companies with innovative learning and development programmes are increasing sales revenue and retaining their staff for longer

243
Q

Cost of minimum wage

A

Paying employees the lowest legal amount. If raised can increase costs for a business

244
Q

Cost of staff welfare

A

Staff welfare is an umbrella term that can mean anything and everything from facilities and benefits, to working conditions and retirement pension rates

245
Q

Cost of redundancy

A

When an employees job no longer exists eg through delayering have to be payed redundancy pay

246
Q

Multi-skilling

A

This means having a workforce that can be moved around from one job to another

247
Q

Pros of multi-skilling

A

Less staff are needed, those that are employed are used to capacity not standing around

More interesting jobs for the workers as there are a variety of tasks

248
Q

Cons of multi-skilling

A

Workers become a “Jack of all trades master of none”

Businesses lose the benefits of having specialist staff

249
Q

Types of work

A

Full Time
Part Time
Temporary
Permanent
Flexible
Zero Hour
Home working

250
Q

Full-time

A

Working all the usual hours required of an employee; usually 35 hours or more.

251
Q

Pros of full time

A

Employees are committed to the business and may be more productive

Loyalty to the business

252
Q

Cons of full time

A

Less flexible than part-timers, no-one to cover late nights and weekends

253
Q

Part-time

A

someone who works fewer hours than a full-time worker.

254
Q

Pros of part time

A

Good way to keep costs down while a business is growing

Part-time jobs attract a wide pool of applicants with experience and skills who might not want a full-time job

255
Q

Cons of part time

A

Employees might not give the business the commitment and loyalty that a full-time worker would

256
Q

Temporary

A

is one where the employer only needs extra staff to cover a seasonal period

257
Q

Pros of temporary work

A

Useful to meet seasonal demands, and work fluctuations

Useful to meet employee shortages

258
Q

Cons of temporary work

A

Injury rates are higher in temp workers

All staff will need some kind of training to get them started, this costs time and money

259
Q

Permanent work

A

an indefinite contract whereby you are employed by the company until either the employee leaves is fired or made redundant

260
Q

Pros of permanent work

A

Higher staff morale as they know they have a secure job

Employees have loyalty to the business which reduces absenteeism and increases productivity

261
Q

Cons of permanent work

A

Permanent staff can develop negative attitudes to work, or get involved in office politics and so may become lazy, uncooperative or disinterested in the business

262
Q

Flexible hours

A

is a way of working that suits an employee’s needs

263
Q

Pros of flexible hours

A

From a business perspective flexible working can keep valuable staff from leaving and can also cover busy periods

Can accommodate the work life balance needs of employees with busy lives and families

264
Q

Cons of flexible hours

A

Can sometimes confuse suppliers or customers who may want to speak to the same member of staff

The business may need extra staff to cover unmanned periods

265
Q

Zero Hour

A

Zeros hours contracts means that employees are “on call” to work when you need them, but they have no fixed hours of employment

The employer does not have to provide the employees with work

The employees can say no if the employer calls and offers them work that day

266
Q

Pros of zero hour

A

Great for a business where work can be unpredictable

Ideal where staff are needed at short notice

267
Q

Cons of zero hour

A

Employees might not give the business the commitment and loyalty that a full-time worker would

Employees may become unhappy with the zero hours and leave to find more permanent work

268
Q

Outsourcing

A

where a business gets another business to produce or provide for it hired on a contractual basis

269
Q

Functions that can be outsourced

A

Production
Payroll
Purchasing
Delivery

270
Q

Dismissal

A

Where an employee is fired from their role due to:

Absenteeism
Gross misconduct (showing up
drunk)
Theft of company money or property

271
Q

Trade Unions

A

is an organisation with members who are usually workers or employees. It looks after their interests at work

272
Q

Attributes of a leader

A

Innovators
Motivates
Original
Creates Change

273
Q

Attributes of a manager

A

Directs
Monitors
Problem Solves
Organises

274
Q

Types of Leadership Styles

A

Autocratic
Democratic
Paternalistic
Laissez-Faire

275
Q

Autocratic Style

A

This style is used when leaders tell their employees what they want done and how they want it accomplished, without getting the advice of their followers

276
Q

Democratic Style

A

Where the the leader takes advice from his employees and workers on a majority rule

277
Q

Paternalistic Style

A

Deriving from the word Peter meaning ‘father’. Is a parental style of management where the leader looks to rather than punish the employee but rather better them

278
Q

Laissez-Faire Style

A

Style of leadership is where employees can carry out activities and make decisions freely

279
Q

Entrepreneur

A

Is an individual who takes risks and sets up a business in hopes for high profits

280
Q

Intrapreneur

A

An employee within a large business who thinks like an entrepreneur

281
Q

Barriers to entrepreneurship

A

Entrepreneurial Capacity
Access to finance
Lack of training
Fear of failure
Lack of Confidence

282
Q

Entrepreneurial Capacity

A

The knowledge, attitudes and mindsets which come with being an entrepreneur

283
Q

Access to finance

A

The lack of finance or funding. This could pose an issue as they are not able to purchase the necessary assets and premises to start up a business.

284
Q

Lack of training

A

Individuals may not be sure what is required of them to start up a business and how to run and manage the business itself

285
Q

Fear of failure

A

The fear that the money invested will be lost or that the business set up will sink

286
Q

Risk

A

The possibility of a business making less profit than anticipated

287
Q

Examples of Risk

A

Financial Risks
Lack of Security

288
Q

Uncertainty

A

When a business is unable to predict external shocks such as tsunamis, health scares, commodity price shocks and interest rates

289
Q

Business Objective

A

A goal that a business has set to achieve. Usually SMART targets

290
Q

Objectives of a business

A

Survival
Profit Maximisation
Sales Maximisation
Employee Welfare
Customer Satisfaction
Increasing Market Share

291
Q

Survival

A

Usually for start-ups. Survival is also usually making enough sales and attracting revenues to keep the business running for a long period of time

292
Q

Profit Maximisation

A

Where the business wants to make the most amount of profit possible with the resources at hand. Helps businesses recoup any costs from the R&D stage

293
Q

Shrinkflation

A

Where the manufacturer keeps the price the same but makes the product smaller

294
Q

Sales Maximisation

A

An objective by which a business wants to sell as much stock as possible/ have a good capacity utilisation

295
Q

Business Forms

A

Public Limited Company
Private Limited Company
Partnership
Sole Trader

296
Q

Limited Liability

A

Where the business has a separate legal identity for, the owner. The business is responsible for all the debts of the business. The owners assets are not used as collateral

297
Q

Unlimited Liability

A

Where the business and owner are legally tied. The owner is responsible for any issues the business gets into and their assets can be used as collateral

298
Q

Pros of sole trader

A

Easy to set up
Your own boss

299
Q

Cons of sole trader

A

Unlimited liability
No economies of scale

300
Q

Pros of partnerships

A

Partners have range of skills
Shared problems and decisions

301
Q

Opportunity Cost

A

can be measured as the next best alternative

302
Q

Trade-off

A

when the less of one thing is exchanged for more of another. There is a compromise

303
Q

Skills that need to be learnt when transitioning from an entrepreneur to leader

A

Learning to delegate
Trusting others
Listen to others
Be less reactive
Develop emotional intelligence

304
Q

Difficulties entrepreneurs may be face with when transitioning to leader

A

Stress
Sharing ownership and control

305
Q

Recruitment

A

Is the process of finding and hiring someone for a job role. This has a lot of stages

306
Q

Job specification

A

This is a document detailing the qualities and qualifications required for the job

307
Q

How can a business assess candidates

A

Interviews
Assessment days
In-tray exercises

308
Q

Internal recruitment

A

Is when a business recruits someone already in the business

309
Q

External recruitment

A

Is when the business hires someone outside the business

310
Q

Pros of internal recruitment

A

Candidates already know the business
Short and cheap process
Motivates workers to go for a promotion

311
Q

Cons of internal recruitment

A

Leaves a vacant for another department
Can cause resentment and discouragement among colleagues who aren’t selected

312
Q

Cons of internal recruitment

A

Leaves a vacancy in another department
Can cause resentment among colleagues who aren’t selected

313
Q

Pros of external recruitment

A

Brings in fresh ideas and expertise
Wide pool of expertise and applicants

314
Q

Cons of external recruitment

A

Long and expensive process
Will only have seen candidate at recruitment, business does not know what they are like

315
Q

The costs or recruitment and training for a business

A

Cost of advertising
Cost of a specialist recruitment agency
Shortlisting and assessment done by existing staff eg cost of time

316
Q

Induction training

A

This is where the new employees have a period of time where they are introduced to other members of staff, etiquette, the backgrounds and practices of the business

317
Q

On the job training

A

This is training which occurs on the business site

318
Q

On the job training

A

This is where training occurs on the business site

319
Q

Off the job training

A

This is training which happens outside the business eg a college

320
Q

Pros of on the job training

A

Easy to organise
Lower costs

321
Q

Cons of on the job training

A

Bad practices are passed on
No new ideas are brought to the business

322
Q

Pros of off the job training

A

Trainers are specialist
New ideas are brought into the business

323
Q

Cons of off the job training

A

Can be expensive
Training may not be specific to the day to day job

324
Q

Hierarchy

A

A series of levels each having different responsibilities for different people

325
Q

Chain of command

A

This is the path of communication and authority up and down the hierarchy

326
Q

Different structure of a business

A

Tall structure
Flat structure

327
Q

Tall structures

A

Tall structures tend to have long chain of commands and narrow span of control. Tall structures can negatively impact communication and message may be distorted going down the chain and can take a long time however there are more opportunities for promotion and increased motivation

328
Q

Flat structures

A

Have few levels of hierarchy and a wider span of control. This can be slow in communication as there are large amounts of people at each level

329
Q

Span of control

A

Is the number of people who a manager is responsible for

330
Q

Delayering

A

This is the removal of parts of hierarchy

331
Q

Centralisation

A

All decisions are made by senior managers at the top of the business

332
Q

Decentralisation

A

Where authority is more spread to the junior employees as well

333
Q

Pros of centralisation

A

Business leaders have lots of experience in decision making
Can make decisions quickly as they do not have to consult anybody

334
Q

Cons of centralisation

A

Excluding employees from decision making can be demotivating
Leaders are slow to notice consumer trends

335
Q

Pros of decentralisation

A

Motivates employees
Employees have expert knowledge in their department

336
Q

Cons of decentralisation

A

Employees may not have enough experience to make decisions

A-Level Business (4 decks)

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