Theme 1 Flashcards
1.1.1 - What is the difference between a good and a serivice?
A good is a physical tanglible product (you can touch it)
A service is an experince that is intagible (can’t touch it)
1.1.1 - What is the difference between a consumer and a customer?
A customer purchases the product and the consumer uses the product
1.1.1 - For what three reasons do new business ideas come about?
Changes in technology
Changes in consumer needs
A product becoming obsolete
1.1.1 - What does it mean if a product is obsolete?
It is outdated and no longer in use
1.1.1 - What are payment platforms?
Enable businesses to take online payments from customers.
They are usually free for the customer to use, but take a small amount of commission from the seller and provide the customer with peace of mind.
1.1.1 - What is an entrepreneur?
Someone who creates a business, taking on financial risks with the aim of making a profit from the business.
1.1.1 - In what two ways do new business ideas come about?
Original ideas
Adapting existing concepts
1.1.2 - What are three risks that start-ups face?
Business failure
Lack of (financial) security
Finacial loss
1.1.2 - What is the difference between variable and fixed cost?
Variable costs are costs that depend on the amount of products you manufacture (e.g. Raw materials)
Fixed costs (overheads) are costs that remain no matter your production rate (e.g. Rent)
1.1.2 - How do you work out variable cost?
Cost per unit x sales volume
1.1.2 - What are financial rewards for a start-up?
Survival
Profit
Wealth
Income
Financial Security
1.1.2 - What are non-financial rewards for a start-up?
Personal Satisfaction
Challenge
Independence
Control
Helping Others
1.1.3 - What is a stakeholder?
Any person with interest in the business
1.1.3 - What are the thee purposes of business enterprise?
To meet customer needs
To add value
To provide goods and services
1.1.3 - How may a business add value?
Convenience
Quality
Branding
Design
USP
1.1.3 - What are the roles of an entrepreneur?
Organise resources
Make business desicions
Take risks
1.2.1 - What are the four main customer needs?
Choice: When buying products, customers like to have a choice because different customers have different tastes and needs.
Quality: Customers assess quality as a product’s suitability and their opinion will depend on expectations.
Price: Customers will be influenced by price, especially by low prices.
Convenience: Convenience refers to how easy it is for customers to purchase desired products.
1.2.1 - Why is it crucial for businesses to meet customer needs?
Generate sales:
Customers will continue to buy products
Repeat customers ensures that the business generates cash flow.
Business survival:
As the reputation of the business grows, more and more customers are likely to buy its products.
This should lead to increased profits making it likely that the business will continue to operate
1.2.2 - What are the reasons for market research?
To identify and understand customer needs
To identify gaps in the market
To reduce risk
To inform business decisions.
1.2.2 - What is primary research and how may businesses do this?
Market research carried out for the first time:
Survey/ Questionnaire
Observation
Interviews
Focus Group (small group of people discussing a product)
1.2.2 - What is secondary research and how may businesses carry this out?
Market research which is information that has already been gathered:
Internet
Government Statistics
Company Reports
Newspapers
Trade Associations
Books
1.2.2 - What is the difference between quantatative and qualitative data?
QuaLitavtive: Data is non-measurable opinions and judgements
QuaNtitavtive: Data is measurable numbers and statistics
1.2.2 - Why is social media crucial to market research?
Social media is a cheap way of understanding customers. It allows a business to:
Deepen their understanding of the market
Identify popular trends
Improve their products and marketing
Save time conducting market research
1.2.2 - Why is validity and reliability of research data important?
All your buriness desicions are based off it and so invalid and unreliable information will lead to a business making harmful mistakes that will limit their chance of profit and growth.
1.2.3 - What are market segments?
Part of a market that groups buyers with similar buying habits, such as:
Location
Demographic
Age
Income
Lifestyle
1.2.3 - What is a market map and what is it used for?
A market map is a four quadrant map based on two features of a product (e.g. high/low price and high/low quality) to allow a business to identify a gap in the market
1.2.4 - What features of competitors products may businesses monitor?
Price (Are their prices in a similar competitive range)
Product range
Quality (Are they delivering quality similar/ better)
Customer service
Location (Are they closer to their target market)
1.2.4 - What may a business conduct to analyse its competitors and how they should effect their desicions?
A SWOT analysis (Strengths, Weaknessess, Opportunites, Threats)
1.3.1 - What are financial objectives and some examples of this?
Targets expressed in money terms such as making a profit, earning income or building wealth:
Survival
Profit
Wealth
Income
Financial Security
Market Share
1.3.1 - What are non-financial (social) objectives and some examples of this?
Targets that are not expressed in money terms:
Personal Satisfaction
Challenge
Independence
Control
Helping Others
1.3.2 - What is the formula for profit?
Sales Revenue – Total Cost