Theme 1 Flashcards
1
Q
what do you need to do to market successfully?
A
understand customers needs
understand the dynamics of the market
develop successful products
promote the business
2
Q
what is a mass market and what do products in this market do?
A
– Target a large proportion of the market with a generic product.
– potential for high sales revenue.
– may compete with other businesses in the market.
– may use mass market techniques such as TV newspaper
– competitive pricing
3
Q
what is a niche market and what do products in this market do?
A
– Target is a small proportion of the market with a specialised product high profit margins
– you competitors but limited numbers of potential customers.
– businesses will have to compete on quality and customisation
4
Q
what is an individual market and what do businesses in this market need to do?
A
In some industries, technology has allowed businesses to profile individuals and customise their products so that they can target customers as individuals, such as online bespoke greeting cards
5
Q
what is a dynamic market?
A
A market that changes frequently and must adapt in order to remain competitive
6
Q
how can a business adapt in a dynamic market?
A
– Be flexible in the way they operate.
– carry out market research to have a better understanding of their customers.
– invest in new technology, people and products
– continuous improvement
7
Q
how do customers and businesses see competition levels in a market differently?
A
8
Q
what is the difference between primary and secondary market research?
A
Primary is collected firsthand and it’s more specific meaning it can also be up-to-date and reliable, secondary already exists and is collected by another organisation. It is easily accessible.
9
Q
what does product orientated mean in comparison to market orientated?
A
Product orientated means focused on production efficiencies and the product itself, market orientated means focused on consumer needs
10
Q
what are the limitations of market research?
A
– It is often biased.
– a small sample limits the reliability of the research.
– causality can be hard to identify.
– collecting it is very time-consuming
11
Q
what is market segmentation and why is it useful?
A
Market segmentation is splitting a market up into different categories.
This can be useful because:
– identify the needs of a specific group of customers
– reach its customers with relevant marking activities.
– build loyalty towards its brand and products
12
Q
what are market maps and why are they useful and not useful?
A
they are limited because they are just a prediction and different stakeholders may have different opinions of where the business should be positioned
13
Q
what is differentiation?
A
the process of making a product different to competitors
14
Q
what are some factors that give a business a competitive advantage?
A
innovation
relationship with suppliers
reputation
15
Q
how can a business add value?
A
16
Q
describe a demand curve
A
17
Q
describe a demand curve
A
18
Q
what factors increase or decrease demand?
A
19
Q
describe or draw a supply curve
A
20
Q
what factors increase or decrease supply?
A
21
Q
how do supply and demand interact?
A
22
Q
how are changes in supply and demand reflected on a graph?
A
23
Q
if a product is inelastic does this mean sales will fall or stay the same if price increases?
A
sales may fall slightly but not much
24
Q
what should you ignore when calculating PED?
A
the negative
25
how does PED have an impact on decision making?
when there is an inelastic product (one that can take a price increase without losing sales) price may be increased slightly to improve revenue because there will be a smaller percentage change in the quantity demanded than the percentage change in revenue per unit.
However when there is no elastic product (a product that cannot take a price increase without losing sales) a business will have to think very carefully about any changes it makes to pricing.
26
what factors influence PED?
27
what is price elasticity of demand
the responsiveness of demand to changes in price
28
what is income elasticity of demand
the responsiveness of demand for changes in real income
29
what type of demand would a family holiday have?
elastic - this is a necessity meaning when real incomes fall demand for this does too
30
what is income elastic demand in terms of YED?
this means that a percentage change in incomes would lead to a greater percentage change of quantity demanded
31
what is the scale for YED?
luxury = YED of more than 1.5
normal = YED of between 0.5-1.5
inferior = YED of less than 0.5
32
a business selling what type of product (elasticity wise) will be more affected by the cyclical nature of the economy?
businesses that sell goods with high income elasticity will be more effected. In a recession, command will fall significantly for products that have high income elasticity of demand.
33
what factors influence income elasticity of demand?
- wether the product is a necessity
- wether the product is a luxury
- the price relative to people’s incomes
34
what factors are included in the design mix?
35
what ways can a product be designed to meet social trends?
- waste minimisation
- re-use
- recycled
- ethically friendly
36
what are some benefits of adapting designs to changes in social trends?
reducing waste = reduced costs
trendy products sell faster and in higher quantities
social trends can be a USP
environmental trends may make a business be seen as more socially responsible
37
what is above the line promotion
any form of promotion that involves any form of advertising through the media:
– Television
– radio
– post/billboards
– Internet (website)
– direct marketing (emails, direct post)
– newspaper/magazines
– cinema
38
what is below the line promotion?
Play the line promotion includes all other forms of promotion that are not advertising.
– sales promotions (free gifts, coupons, loyalty cards and money off deals)
– public relations brackets press conference, press releases, sponsorship)
– merchandising and packaging
– direct selling/personal selling
– expeditions and trade fairs
39
what are some influences on promotion?
40
what is traditionally the focus of an advert?
– Inform customers
– persuade customers
– remind customers
– reassure customers
41
what is *branding*?
A brand is more than simply a a logo or a slogan. Although customers will remember an associate business with its logo, slogan and imagery, a brand also represents the characteristics and personality of a business.
42
what are the ways of building a brand?
– Exploiting a USP
– advertising
– sponsorship
– using social media – more and more businesses are switching their attention to forms of social media
43
what is the importance of branding?
44
what types of brand are there?
- manufacturers brands eg kellogs
- own brands eg sainsburys value range
- generic brands eg carrots
45
what is emotional branding?
a strategy where companies build strong emotional connections with their customers by appealing to their values, beliefs, and emotions.
46
how can businesses use social trends to maximise their branding?
– Social media: attracting followers to social media sites is a key focus of marketing spending for many businesses.
– viral marketing: the growth of social media and the sharing of images and videos is a huge opportunity for businesses to broad brand awareness.
– Emotional branding: businesses often associate their brands with things that consumers have strong emotional connections to for example sports teams or good causes
47
what influences price?
48
what is dynamic pricing?
a mid level price
applied to products where price can fluctuate with levels of demand, such as hotel rooms
49
what is price skimming?
a high price
used to capitalise on ‘first movers’ (people willing to pay a premium to be the first owner product). The initial price is high so that the profit in the market can be skimmed. Suitable for established brands were at his patient for a new product is high. Particularly effective in technology markets.
50
what is penetration pricing?
a low price
Applied to new product attempted to enter the market. Initial prices low in order to penetrate the market by undercutting investors, overtime price may increase a demand grow and reputation/popularity builds.
51
price skimming, dynamic pricing and penetration pricing represented on a price arrow
52
what is predatory pricing?
also known as destroyer pricing, this is where the business sets are low price in order to price competitors out of the market. The business may make a loss for a period of time until the competitor fails.
53
what is competitive pricing?
The business says prices based on the nearest competitor. This is used in very competitive markets and helps advise price wars.
54
what is psychological pricing?
The business bases the price below the next whole number to trick consumers and into thinking the price is lower. So £9.99 psychologically appears cheaper than £10.
55
what is cost plus pricing?
A business basis a price on the unit cost and then add a percentage as a markup.
This strategy is effective as it considers the profit margin the business is willing to accept.
56
how does pricing affect the product life cycle?
A business will also adjust its pricing strategy according to the stage of the product life cycle that it’s in. For example, penetration pricing may be appropriate launch whereas during decline a loss leader strategy may be more effective
57
what is value for money and why is it important?
Customers do about the costs of the business, they simply want value for money. Businesses must understand the value customers place on their product and not simply the cost of production.
A business could charge a higher price for its produce if it has a unique selling point or can offer innovation or something different.
58
how can prices be adapted to respond to trends?
59
what is distribution?
distribution refers to how the product gets to the customer. Many products use multichannel methods to reach the customer. The cares to make distribution easy quick and convenient for the customer in order to maximise sales this is linked to **logistics**.
60
what are the parties in the distribution network?
61
what are some channels of distribution?
62
what influences distribution?
63
what are some social trends in distribution?
there is a growth in direct ordering of products through the Internet, with many manufacturers using courier businesses to deliver their products directly to customers. There is also a big increase in service providers selling on demand services via website and smart phone apps. These brands include Uber, Deliveroo and Urban massage.
64
what is the value of digital marketing and e-commerce?
65
what are the benefits of online distribution for businesses?
– Do you not have to meet the costs of operating retail stores?
– lower start-up course make it easier for small businesses to launch.
– transactions can take place in a secure online environment
– businesses can take sales 24/7
– Businesses can offer goods to much wider market.
66
what are the benefits of online distribution for customers?
– Customers benefit from lower prices as retailers pass on lower costs.
– customer shop 24/7
– comparison between brands as much easier.
– there is usually a much wider choice.
– customers can see reviews of products and services before making an informed choice
67
what is the product life cycle?
68
what is the value of product portfolio analysis?
– Useful analysis tool for businesses with wide product range – useful for making decisions about where funds should be allocated.
– can be used to predict future sales and therefore plan productions/distribution.
– products and markets are complicated and do not necessarily follow up pattern
– does not provide clear solutions for a business.
69
what is the boston matrix?
70
how can the marketing mix be adapted for mass markets?
71
how can the marketing mix be adapted for niche markets?
72
how is marketing different for business to business sales in comparison to business to customer and what are some inbound and outbound strategies?
73
how can customer loyalty be developed?
74
when employers see staff as an asset what are they more likely to do?
– Provide good remuneration packages
– give a reasonable holiday and sick pay.
– invest in the working conditions
– provide workers with job security
– sea training as an important investment
75
when employers see staff as a cost what are they more likely to do?
– Pay work is the minimum
– provide the minimum legal 6/holiday pay
– provide basic working conditions.
– find ways to maximise output while minimising staff costs
– training as an unnecessary cost
– give little thought to employee motivation
76
what are some approaches to flexible working?
77
what are the advantages and disadvantages of flexible working?
- allows business to respond to short term changes in demand
- specialist jobs can be done by people who don’t have to be permanently employed
- easier to manage staffing costs
- employees don’t have to feel commited to the company if they don’t have a permanent contact
- communication can be problematic
- outsourced work may be of a lower quality
78
what’s the difference between dismissal and redundancy?
employees may be **dismissed** from work for failing to meet the required standards or through misconduct.
**Redundancy** applies where there is no work, not enough work or the position no longer applies. Sometimes employees will be offered voluntary redundancy where they will receive a payout.
79
how can employees be represented?
80
what are the two bargaining methods employees can use to determine wages, salaries, terms or working conditions?
1. **collective bargaining** is a negotiated process where trade unions and businesses discuss and agree on pay, working conditions and other conditions for the benefits of the trade union members. The principle of collective bargaining as it works have more power and influence when negotiating as one body.
2. **Individual bargaining** may be more appropriate and small businesses. Individuals negotiate their own pay conditions. This may mean that agreements differ from one worker to the next.
81
what is the recruitment and selection process?
82
what is internal recruitment and why is it good?
Internal recruitment is when a role is filled by promoting employees from within the organisation.
– Cheaper than external recruitment
– managers know their employees so there is less risk
– may require less training.
– promotion opportunities are good for staff motivation and retention
83
what is external recruitment and why is it good?
this involves bringing new employees in from outside the organisation. Potential employees may be found using job adverts, employment agencies, government training schemes or through headhunting.
– May attract a wider number of applicants
– brings in new skills and ideas
– helps increase the capacity within the business.
84
what is induction training?
Training a new employee so that they can do their job effectively
85
what are the benefits of on
vs off the job training?
86
when is training required?
– New employees join a company
– new technology/equipment is introduced.
– there is new health and safety legislation.
– there are new working practices
87
what are the costs of training?
training tends to be very costly for a business. Whether adopting on the job or off the job training, productivity will fall as employees will be away from the workplace or producing goods and services at a slower pace. Training is one of the expenses that business usually cuts 1st to save money. training employees can help to improve motivation as they feel as though the business is investing in their skills
88
what is a hierarchical structure?
89
what are some key factors in the design of an organisations structure?
– Authority
– delegation
– levels of hierarchy
– span of control
– decision-making process (centralisation versus decentralisation)
90
what does chain of command mean?
refers to the levels in the hierarchy. Organisations with many levels are referred to as tall.
91
what does span of control mean?
Refers to the number of employees and Manager is directly responsible for.
92
what does delegation mean?
The process of passing down authority through the organisation
93
what is centralisation and what are its benefits?
centralisation refers to a remaining process where the majority of decisions are led by senior managers.
– Works well with standardisation is required.
– appropriate for situations where managers have the knowledge and work as a low skilled
– suited to authoritarian leadership styles.
– more suitable in times of crisis
– effective at cost minimisation and achieving economies of scale
94
what is decentralisation and what are the benefits?
decentralisation refers to a decision-making process whereby the majority of decisions are dedicated to managers in charge of regions, functions and product categories.
– Effective our local teams are best place to make decisions to meet the customer needs.
– appropriate web business spread over wide geographic area and local trends/needs are important
– effective at reducing workload of senior managers and promoting autonomy and the skills of subordinates.
– allows for flexible working conditions and supports job enrichment
95
what are some financial methods of motivation?
96
what are some non financial methods of motivation?
97
what’s the difference between managers and leaders?
98
what are the advantages and disadvantages of different leadership styles?
99
what is an entrepreneur and what are there roles?
an entrepreneur is someone who sees business opportunities to make money and meet the wants and needs of society, they solve problems and create wealth in their economy. They are willing to take risks in setting up and growing their business.
100
what do entrepreneurs do?
101
where do business ideas come from?
- business experience
- personal experience (based on a hobby or interest)
- lifestyle choice (be your own boss)
- spotting a gap
- skills (interpersonal, artistic, technological)
102
what are the key stages to setting up a business?
103
what are the functions of an entrepreneur?
104
what are some barriers to success for running your own business?
105
what are the characteristics and skills of an entrepreneur?
106
what are the incentives for setting up your own business?
107
why do businesses set objectives?
– Provide quantifiable steps to achieve aims.
– clarify direction of the business
– measure success against target
– motivate employees to achieve
108
why do businesses set objectives?
– Provide quantifiable steps to achieve aims.
– clarify direction of the business
– measure success against target
– motivate employees to achieve
109
what are smart targets?
specific
measurable
achievable
realistic
time bound
110
what are some common financial and non-financial objectives?
111
what are some influences on business objectives?
– Size of the business
– the sector the businesses in
– the market
– ownership (plc must satisfy shareholders)
– owner
112
why is profit maximisation important?
profit is one of the main incentives of running a business the money created from running a business is reinvested into new projects.
Profit is also important because it’s secure a long time successful business profits can be reinvested health business grow and keep up with demand ever changing business environment.
113
what is a sole trader?
Sold traders are owned by self-employed individuals.
– easy to set up – no registration needed.
– requires a wide range of skills and flexibility.
– the owner can be their own boss but the hours are likely to be long.
– the owner keeps all the profits
– unlimited liability
114
what is a partnership?
partnerships are a business owned by two or more individuals.
– join ownership of running a business
– a contractor relationship will be set up through a deed of partnership
– common and prevention such as solicitors and vets.
– similar issues faced by sole traders but with great shared responsibility, risk and reward
115
what is a private limited company?
Private limited companies are owned by a maximum of 20 shareholders.
– must go through the process of incorporation.
– limited liability
– highest status on the soul trader
– will have wider access to capital
116
what is a public limited company?
A public limited company is a large publicly owned business.
– Can raise capital through selling shares to the public
– sizes measured by market capitalisation.
– has the ability to take over other businesses
– can lose control of the business
117
what is limited liability?
– The liability of the owners is detached from the company.
– shareholders can lose their investment in the event of financial difficulties, but their personal belongings are safe, unlike with unlimited liability where there is no distinction in law between the individual and the business
118
what is incorporation?
incorporation involves separation into two legal entities: the shareholders and the company.
The company will be registered with companies house and relevant legal documents produced, including a memorandum of association and articles of association.
119
what is a franchise and what are the pros and cons?
A franchise is a limited company that licenses the rights for individuals all groups to set up an identical operation in a new region.
Franchising allows a business to expire without the owners taking direct responsibility for each branch/Store/division.
– Effective way to grow the business
– franchiser gets set up fee and royalty payments.
– franchises receive a business in a box
– franchises are provided with training and support from the franchiser.
– risk of franchisee damaging brand if not run effectively
– expensive set up fees and little freedom to change the business format
– royalty payments – a share of sales go back to the franchiser
120
what are the pros and cons of being an ltd?
– Shareholders have limited liability.
– easier to raise capital through internal shareholders.
– owners may pay less tax than if they operate as a soul trader.
– Harder to set up than sole trader or partnership
– account published and publicly available
– cannot raise large amounts of capital through selling shares publicly
121
what are the advantages and disadvantages of being a PLC?
– Huge amounts of money can be made through stock market flotation
– finance easier to raise through issuing shares.
– size makes easier to gain economies of scale
– accounts open the available to the public.
– greater external pressures from the media and pressure groups.
– board of directors is accountable to external shareholders
122
what are some other forms of business other than a PLC, LTD or sole trader?
123
what are the steps you have to go through before you can be listed on the stock market?
124
what happens when share prices of a business rise?
– Managers may receive a bonus.
– the company finds easier to raise capital
– consumers with shares feel more confident to spend.
– the business may receive positive publicity
125
what happens when the share prices of a business fall?
– The company may become vulnerable to takeover.
– price fall is an indication of poor performance
– the company finds it harder to raise capital
– consumers with shares feel less confident to spend
126
what is an opportunity cost?
opportunity cost is the benefit lost from the next best alternative. Examples may include:
– the benefits lost from launching a new advertising campaign instead of investing in employee training.
– the benefits lost from developing a new product instead of increasing production of an existing successful one.
127
what is a non-monetary opportunity cost?
often opportunity costs cannot be calculated in financial terms. It is frequently not possible to calculate the monetary value of a decision if the choice has an impact on brand awareness, employee morale or goodwill.
128
what is a trade off?
A trade-off will often involve the loss or compromise of another option or factor.
– Improving productivity in a factory may lower the quality of the products being made.
When making decisions, a business will consider a trade-off it makes when taking strategic decisions.
– selling high volumes of local quality products versus selling low volumes of high-quality products
129
how many a business weigh up its options when making a decision?
130
what are some difficulties of becoming a leader?
