theme 1 Flashcards
what are customer needs?
price
quality
choice
convenience
what is the difference between primary market research and secondary market research and give examples and advantages and disadvantages?
primary research- data collected first hand for specific research purposes.
advantages: tailored to product, unique research.
disadvantages: could be badly designed, expensive, time taking
examples: survey questionnaires, observations, focus groups, test marketing
secondary research - information from an already existing business.
advantages: quicker to obtain, less expensive.
disadvantages: collected from another source therefore unreliable
examples: websites, reviews, books, sale figures, government stats
Difference between qualitative and quantitative
quantitative research is numeric and objective, seeking to answer questions like when or where. On the other hand, qualitative research is concerned with subjective phenomena that can’t be numerically measured
What is the purpose of market research?
- identify and understand customer needs
- identify gaps in the market
- reduce risk
- inform business decisions
what is market segmentation? give examples
process of dividing entire market up into different customer segments
location, demographic, lifestyles, income, age
Aims vs objective ?
aims- having a long term goal a business wants to achieve
objective- smaller (short-term) goals to help reach and achieve long term goals
variable vs fixed costs
variable costs- a change directly with the quantity produced and sold by a firm
fixed costs- costs which do not vary with the amount the business produces
revenue formula
revenue= quantity x price
breakeven meaning and formula
point at which revenue = total costs
breakeven= total fixed costs / (price- variable costs)
margin of safety
the amount by which sales fall before break even point is reached and business makes no profit
MOS= Actual sales - breakeven sales
What is trade credit?
advantages and disadvantages
items bought from suppliers on a buy now pay later basis
A= gives business more cash to use in the immediate future, does not incur interest charges
D= can only be used to by certain goods
insolvency vs liquidation vs bankruptcy
in= ability of a person or corporation to pay their bills, as and when they become due and payable
B= when a person is declared incapable of paying the dues and payable bills 
L= the process of winding up a corporation or incorporated entity
overdraft advantages and disadvantages
Overdrive allows a business to draw more money from the bank account then they have.
advantages are they are quick to arrange and only pay interest on amount
disadvantages are suitable for small amounts
Formulas:
Net Cash Flow
Closing Balance
Opening Balance
Net cash flow= inflows - outflows
Closing balance= opening balance + net cash flow
Opening balance= closing balance of the previous period
What is a cash flow statement?
Record of the cash inflows and outflows with a business
Private limited companies
vs
public limited companies
private shareholders have restricted ownership, only if agree and can share privately
public limited companies, anyone can share hold from about £50,000
Advantages and Disadvantages to Sole Traders
sole trader set up a business on his own
ADVANTAGES are that they are responsible for themselves, can become really rich, quick and easy to set up and financial information is kept private
DISADVANTAGES can be made bankrupt and I have to sell personal belongings.(Unlimited liability) They are not registered as a company and have their own on one person. It may be difficult to raise enough money to establish or grow the business and it’s difficult to run without an owner.
pressure
harder to retain employees
Partnership
Business earned by people who share the financial risk, two or more individuals
what are the advantages and disadvantages to partnerships?
ADVANTAGES: sleeping partners, sharing financial risks, easier to finance and financial info kept private, experience, good employees, bank trusts more to invest
DISADVANTAGES: if a partner leaves, others have to pay debt, no deed of partnership, decisions made by one can affect all, profits shared, disagreements, if partner leaves then business doesn’t exist
unlimited liability
limited liability
Limited liability is a form of legal protection for shareholders and owners that prevents individuals from being held personally responsible for their company’s debts or financial losses.
Unlimited Liability
each business owner is equally responsible for whatever debt accrued within a business if the company is unable to repay or defaults on its debt. An owner’s personal wealth can be seized to cover the balance owed.
What is a Franchise?
when one business gives another business permission to trade, using its name and product in return for a fee and share of it
Meaning + Advantages and disadvantages to a Franchisee
A franchisee is an entrepreneur who pays a fee to trade, using the name of products of an established business
Advantages: less risky, as a franchise is already labour and successful
support provided by the franchise training to the entrepreneur, and the employees
brand recognition
benefit from national advertising campaign
Disadvantages: need to pay a large initial fee, and an ongoing share of the profits.
Key decisions made by the franchisor which suppliers to use, setting prices, uniforms
Brand reputation may be damaged by other franchises.
Franchisor Advantages and disadvantages
A franchiser is an established business that gives permission to an entrepreneur to trade using its name products
Advantages: expansion can be faster because franchisees provide the labour and sales expansion is cheaper, because funding comes from franchisees
franchisees are responsible for their own success increasing motivation
Disadvantages: difficult to manage franchises, selecting one wrong, franchisee can damage the reputation of the whole business
four ps in marketing mix
price
promotion
place
product
private limited companies
ownership of shares restricted
limited liability
all shareholders must agree to sell shares
obliged to publish accounts each year
public limited companies
sell shares on stock exchange
limited liability
owner had little control over decisions
enough shares bought- can take over
accounts must be published
short term examples
trade credit
overdrafts
long term examples
personal savings
crowdfunding
share capital
venture capital
bank loan
retained profit
Financial aims for a start up
survival, profit, sales, market share, financial security
Non-financial aims
social objectives
personal satisfaction
challenge
independence
control
Types of e commerce
- buying and selling B2B
- reaching customers in all parts of the world (B2C)
- consumer to consumer (reuse items)
Different promotional methods
Tv Infulencers
Flyers
Discounts
Poster
Newspapers
Bill Boards
website ads
Ads on social media
Factors effecting promotional Methods
cost of advertising
nature of product or service
business size
budget
target audience
penetration pricing
starting low and slowly increasing the price once the business is established
skimming pricing
products sold at a high price before dropping down
