Theme 1 Flashcards
Online retailing benefits
- lower costs = no physical store
- Orders come at any time
- Prices can be easily compared
Online retailing drawbacks
- More competition due to higher accessibility
- Some people want physical interaction
- Some feel uncomfortable giving their personal details
Direct competiton
Similar products to appeal to same group of customers
Indirect competition
Business sell different products but are competing for the same customers ie restaurants
Production Orientation
Focuses heavily design , quality or performance and ASSUME customers will like it
Market Orientation
Focuses on customer preferences and invests on market research and what customers are WILLING to buy
Quantitive research
Numerical statistics - facts and figure
ie multiple choice questionnaires
Qualitative research
Opinions - tends to be more informative
Primary Market research (new data)
- Questioners or surveys
- Test marketing
- Sampling
- Focus groups
Secondary Market research (using available data ) (3)
-Government publications
- Internet
- Market reports
+ Easy to gain access
- May be out of date
Demographic market segment
- Age
- Gender
- Class
Geographic market segment
- Dvided by region , country , world
ie range of cultures
Income market segment
Aimed at either low income groups or high income groups
Behavioural market segment
- Amount of use
- Lifestyle
- Interests and hobbies
Examples of competitive advantages (8)
- Low costs
- Innovative product
- Successful advertising
- Product differentiation
- High quality
- Good customer service
- Convince
- ADDED VALUE
Demand factors (8)
- Substitutes
- Complimenatry products
- Consumer income
- Seasoanl change
-External shocks
-Trends/ consumer preferences
-Demogrpahics - Advertising and branding
Supply factors (6)
- Production costs
- Indirect taxes
- Subsidies
- New technology
- Weather conditions
- External shocks
PED dependent factors
- Necessary products will be price INELASTIC
- Brand loyal customers will cause elasticity to decrease
- Internet and substitutes will increase elasticity
- High priced products tend to have high elasticity
- Regular bought product tends to have INELASTIC pricing
Marketing mix (4Ps)
Product
Price
Place
Promotion
Design Mix (3)
Aesthetics - look good and not too complicated
Function - fit for purpose and fulfil customer needs
Cost - cheap to produce but ensuring good quality
Social changes that influence the design mix
- Ethically sourced
- Sustainable materials
- Recyclable and reusable products
Types of promotion (4)
- Advertising = build brand image , target specific groups , social media is cheap version
- Sale promotions = raises awareness of business
- Personal selling through a salesperson
- Sponsership / PR = may be expensive and taken the wrong way OR can raise brand awareness and create good public image
Type of branding (3)
Corporate branding = How business is presented
Product branding = How individual product is presented (clear logo , name , statement) , product tends to have a higher price as customers trust the brand
Own brand branding = Supermarket brand product , cheap to produce and typically sold at low price but are known for lower quality
Benefits of strong branding
- Add value to product
- Make product less price elastic
- Seen as a higher quality product making it more desirable than the subsidies
- Can prevent new entrants
How to build a brand
- Give product a USP which helps differentiate the product
- Advertising will build customer awareness
- Sponsorship although costly it will be advertised to anyone attending or watching
- Strong social media presence - low cost and can target several groups
Price skimming
New product sold at HIGH STARTING price , then fall after a year or if there are cheaper alternatives
Penetration pricing
Launching a new product and setting at the lowest
possible price
-Suitable for price elastic products to gain market share
-Customers may be expecting price to remain low
Predatory pricing
Business lowers prices to undercut other business out of the market
- Effective on new entrants trying to become established
Competitive pricing
Prices are lower or match their competition
What social trends can affect Pricing strategies ? (2)
- Online retail = easier for customers to compare prices
Many subsidies available - Price comparison websites = save time and effort with comparison of products
Product life cycle
Development
Introduction
Growth
Maturity
Decline
Extension strategies to keep product growing (2)
- Product development
- Promotion change
Importance of a mixed product portfolio
- If one product is in the declining stage , then the business can still depend on other products to remain successful
Boston Matrix
High market share , High market growth = Star
High market share , Small market growth = Cash Cow
Small market share , High market growth = Question mark
Small market share , Small market growth = Dog
Limitation of Boston matrix
- Can’t exactly predict product turnout
- Profit of the product may be different to the suggested matrix
B2B marketing
Sale of one business products to another business
ie surgery gloves to hospitals
- More informative
- Not likely to be heavily advertised
- Customers are CAUTIOUS of cost over the quality
- Important to have a long-term relationship
- Must have effective customer service
- More specialised products
- High production volume
B2C marketing
Selling a product directly to a consumer
ie food in supermarkets
- Customer may feel an emotional component
- Customer focuses on quality not price
- Traditional advertising is used to target a mass audience
Customer loyalty importance
- Leads to repeated purchases
- Salespeople and after sale is vital to ensure good customer relations
- More expensive the brand the more the customer will bevalued
- Loyalty cards can bring retailer and customer together
Wage V Salary (defenition)
wage - paid based off the amount of work completed
salary - fixed amount paid monthly/weekly
Types of flexible workforce (7)
- Full time
- Part time
- Zero hour contract
- Work from home
- Shift work
- Flexible hours
- Outsourcing
Pros and Cons of INTERNAL recruitment
- Candidates are aware of the business
- Short and cheap hiring process
-Motivated workers to get a promotion - Leaves a empty job in another department
- Other workers not chosen might feel resentment
Pros and Cons of EXTERNAL recruitment
- New and fresh ides
- Brings experience from other organisations
- Large applicant number
-Long and expensive process
- Longer introduction process
- May behave differently to the way they’re presented
On-the-job training Pros and Cons
- Easy to organise
-Cheap
-Specific to job title - Trainers wont be productive
-Some bad habits may be passed on - Lack of new ideas
Off-the-job training Pros and Cons
-Specialist trainers
- New and fresh ideas
- No distractions
- Costly
- May not be specific to specific job listing
Hierarchical Structure
- Each level has authority over the level below it
- Clearly shows which employee is accountable to someone
- Shows clear devotions of sections
Tall structure
- Long command chain
- Bad communication and less efficient
- Descions take ages to be approved
- Lots of paperwork involved
- High opportunity for a promotion = Source of motivation
Flat Structure
-Less levels = more responsibility and freedom
- Message between one level make take time
- Managers have a wide span of control
Advantages and Disadvantages of Centralisation (Managers)
- Leaders have a lot of experience
- Mangers get a overview of business as a whole
- No bias toward workers
- Quick descions
- Demotivating to excluded employees
- Likely to react slowly which allows competitors to take action first
Advantages and Disadvantages of Decentralisation (Staff)
- Involvement will motivate employees make them feel valued
- Day to day decisions can be made quickly
- Can have expert knowledge on specific sector
- May not have enough experience
- May not version the whole business when finalising the descion
Matrix structure pros and cons
- Tends to be project based
- Clear reporting system
-Clear objectives - Conflict may lead between different segment managers within a project
Taylors Scinetific management
- MONEY
- more produced = more pay = motivation
- may lead to a fall in quality
Maslow hierarchy of needs
- Needs from lower down the pyramid must be met
- Needs are specific to each individual
Herzbergs Two factor Theory
Hygiene factors don’t motivate but ensure satisfaction
ie pay , supervision , relations
Motivation factors will focus on motivation
ie recognition , achievements
Mayo’s Human relations Theory
- Manager communications with employees must be prioritised to ensure employee feel valued
- Social needs must be met ie social clubs or free work gatherings
Non financial motivation methods (8)
- Job enlargement
- Job enrichment
- Job rotation
- Empowerment
- Consulations
- Delegation
- Team-working
- Flexible working
Financial motivation methods (4)
- Piecework = paid per unit produced
- Commission = Bonus on top of their salary
- Performance-related pay
- Bonus schemes
Leader vs Manager
Leaders share a vision with others an push people to complete it , often think long term to improve and innovate business
Managers make decisions affecting day-to-day , by setting department objectives to meet targets
Autocratic leadership
- Independently form decisions
- Requires heavy supervision
- Used on unskilled workers or projects with quick deadlines
Paternalistic leadership
- Leader consults workers before making decisions
- Leader gets involved and cares about employee well-being
- Used on unskilled workers or with quick deadlines
Democratic leadership
- Discuss issues with employees and encourages participation
- Leader delegates tasks and tries to keep motivation high
- Hard to implement in big group
Laissez-faire leadership
- Rare interference with employees
- Successful when implanted to a highly motivated workforce
Qualities of a Entrepreneur (3)
- Set and create a business = notice gaps in the market with market research and raise enough money for start up
- Run and develop a business = up to date on laws and regulations , set new objectives and aims , hire employees
- Innovate the business = New products , take risks , encourage innovation within employees
Barriers to overcome Entrepreneurship (4)
- Lack of money
- Lack of confidence
- Lack of training
- Lack the ability to identify growth and development opportunities
Entrepreneur characteristics (6)
- Initiative
- Hard-working’
- Creative
- Self confident
- Risk taking
- Resilient
Financial motives of setting up a business (2)
- Earn enough to support themselves
- Earn more than through employment
Non financial motives of setting up a business (6)
- Indepndece
- Flexibility
- Work from home
- Challenge might motivate them
- Make a difference toward a social problem
- Change in ethical issues
Moving from entrepreneur to a leader (3)
- Delegate responsibility to other members
- Develop emotional intelligence (manage emotions)
- Become less reactive (ask others for opinion before finalisation)
Business objectives (9)
- Aim and objectives
- Survival
- Maximising profits
- Sale maximisation
- Increased market share and revenue
- Cost effiency
- Improve employee welfare
- Increase customer satisfaction
- Social objectives
Sole trader
- Easy and quick
-Profits return to owner - Personal customer attention
- Risky = hard to establish in the market
- No EOS
Partnerships
- Easy to raise capital
- No information is released to the public
- Shared skills , decisions and problems
-Unlimited liability
- Disagreements may occur
Private Limited company (Ltd)
- Limited liability
- Can sell shares to raise capital
- Has legal status
- Can employ managers
- Accounts are public
- Expensive to set up
- Can’t sell shares on the stock market
