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Business > Theme 1 > Flashcards

Theme 1 Flashcards

1
Q

Stakeholder definition

A

Someone who has an interest in a business

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2
Q

Market definition

A

places we go to trade

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3
Q

Mass market is…

A

a market that is aimed at the general population
eg. colgate toothpaste

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4
Q

Niche market is….

A

a subset of the main market + addresses a specialist need
eg. sensodyne - specifically for people with sensitive teeth

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5
Q

What is a market segment?

A

a subsection of a larger market in which consumers share similar needs and wants.

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6
Q

Pros of a mass market:

A
  • large scale production means economies of scale and lower average unit cost
  • straightforward + everyone is equally targeted
  • large volume of sales = high revenues
  • high revenue - pumped into research and development
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7
Q

Cons of a mass market:

A
  • competition
  • Homogeneous products need to be differentiated through marketing which is expensive
  • high volume production is not flexible to demand changes
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8
Q

Pros of a niche market:

A
  • charge premium price
  • easier to target customers
  • small scale production can be flexible and follow trends
  • less competition
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9
Q

Cons of a niche market:

A
  • very risky as demand may not be constant
  • higher unit costs so no economic scale
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10
Q

What is a dynamic market?

A

A market that is subject to rapid or continuous change to suit the customer wants and needs.

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11
Q

Definition of risk:

A

When the potential outcomes of a decision are known.

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12
Q

Definition of uncertainty:

A

None of the outcomes are known in advance.

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13
Q

Whats some advantages of online retailing:

A
  • saves time
  • no closing time
  • variety
  • no travel costs
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14
Q

Whats the disadvantages of online retailing:

A
  • high competition
  • problems of fraud
  • less in shop employment
  • sending time back takes effort and puts customers off.
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15
Q

What are 4 ways dynamic markets change in order to keep up to trend?

A
  1. Market research
  2. Continuous improvement
  3. Invest - technology, people, products
  4. Flexible
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16
Q

Whats the definition of market share?

A

the proportion (%) of a market that is taken by a business, product or brand.

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17
Q

Whats the calculation equation for market share:

A

sales of x
_____________________________ x100
total sales in whole market

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18
Q

Whats the definition of market size

A

measured by the volume of sales or value.

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19
Q

Definition of product orientation:

A

the product is the most important factor when providing products for a market.

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20
Q

Definition of market orientation:

A

the customer is the most important factor when providing products for the market, the business has a sensitivity to customer requirements.

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21
Q

What are the benefits of researching the market:

A
  • for decision making, reduces risk and cost of making poor decisions
  • to develop a marketing plan based on data gathered about 4ps.
  • to react + prepare for changes in the market
  • to become market orientated.
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22
Q

What are the 4ps:

A

Place
Price
Product
Promotion

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23
Q

What is primary research:

A
  • original data gathered by researcher
  • the info does not yet exist - can not be found on internet
  • they will use this data to make specific decisions about the business eg. new product/market
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24
Q

Name 7 primary research methods:

A
  1. Questionnaires/surveys
  2. Interviews
  3. Observations
  4. Loyalty cards
  5. Focus groups
  6. consumer panels
  7. Test marketing
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25
Q

Key points about questionnaires and observations:

A
  • can gather quantitative and qualitative methods
  • used to measure customer satisfaction - gives business a clear idea of where to improve
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26
Q

Key points about interviews:

A
  • carried out with either owner, customers or suppliers
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27
Q

Key points about observations:

A
  • observation of buyer behaviour
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28
Q

Key points about loyalty cards:

A
  • can be used to track consumer buyer behaviour and further micro market to customer specific offers
  • offers - targeted to consumers most likely to take up promotions - makes marketing cost effective
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29
Q

Key points on focus groups:

A
  • a product of target market demographic respondents are chosen to take part in product trial.
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30
Q

key points on consumer panels:

A
  • group of experts selected to respond to questions about products/services.
  • look at issues through eyes of consumer.
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31
Q

Key points on test marketing:

A
  • business may invent, produce or buy in a new product
  • all staff consider if wider public will buy them + make profit.
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32
Q

What are 7 secondary research methods:

A
  1. Annual reports
  2. Internal data
  3. Government sources
  4. News
  5. Trade journals
  6. Specialists organisations publications
  7. EU and international sources
33
Q

Key points on annual reports:

A
  • useful for businesses to look at their previous annual reports or even those of their competitors
  • will have info such as balance sheet and profit and loss statement
  • gives businesses good idea about financial health so they can decide to risk or not
34
Q

Key points on internal data:

A
  • a business may have collected a wealth of data over a number of years of trading
  • sale figures - useful for forecasting future sales
35
Q

Key points on government sources:

A
  • ONS - useful demographic information and data on the market or industry in that business
  • info can be used to make decisions about expanding overseas
36
Q

Key points on news:

A
  • if a business is considering launching a new product or even looking for new markets for the old product - may turn to news media for help
37
Q

Key points on trade journals:

A
  • help small businesses stay in touch with trends in market
    -reliable source of info
38
Q

Key points on specialists organisations publications:

A
  • Mintel has global team of trends analysts constantly assessing change in culture, economy and society.
39
Q

key points on EU and international sources

A
  • euro stat contains useful statistics on Europe.
  • could be used by a business to expand into European markets
  • helps visualise large bits of data
40
Q

What are the limitations of market research
:

A

-reliability
- validity
-bias

research carried out may not give enough info
- data can be inaccurate and misleading
- data can be non-specific to organisation
- data needs to be reliable or it is not useful - was sample big enough to reflect people buying product

41
Q

Why is ICT useful in market research?

A
  • the use of computers can speed up both the gathering stage and the analysis stage of the process
  • internet data gathering is very cost effective as it reaches all customers using the website requires no staff and customers can fill it in, in their own time
  • data is more likely more reliable as it is not rushed.
42
Q

Definition of market segmentation:

A

an identifiable group of individuals (or part of market) where consumers share on (or more) characteristics or need eg. demographic gender.

43
Q

What is market mapping?

A

used to find a gap in the market it may be useful for a business to construct diagram of where competitors are on two axis (price + quality for eg)

44
Q

What is competitive advantage?

A
  • when a business achieves a profits that are above average for that industry - it has competitive advantage.
  • its a way a business can make its products or services appear superior to competition to the target market
45
Q

What are the ways competitive advantage is achieved by?

A
  • cost advantage -skilled worked force to provide efficient low price items
  • differentiation advantage - resources are used to create superior value for the customers.
46
Q

What is product differentiation?

A
  • where a product is different from the competition in some way
  • consumers must be able to perceive this difference and may be willing to pay a premium price for the product.
47
Q

What are the methods of reputation:

A
  • through reputation - hair salon/restaurant
  • through customer service or after sales service
  • through value for money -aldi
    -through product features - cars/mobile phones
48
Q

What is added value?

A
  • the difference between the price that is charged to the customer and the cost inputs required to create the product or service
  • can be achieved through product itself or the way that consumers perceive the product
    -when a business chooses to enhance the quality of a core product by providing extras to improve customer experience.
49
Q

What are 3 ways of adding value:

A
  1. design - developing new technology to make their product unique
  2. production - achieving quality and efficiency - quality will ensure higher price can be charged (differentiation advantage) and efficiency helps cut costs of input (cost advantage)
  3. Marketing - creating an image that makes the product more desirable - a brand (differentiation advantage)
50
Q

What is market mapping:

A

A diagram used by business to help plan their future products by spotting the gaps in the market.

51
Q

What is product differentiation:

A

When a product is different to its competitors in some way.

52
Q

What is competitive advantage:

A

an advantage a business has over its competitors, allowing it to generate larger then average turnout for the industry.

53
Q

Whats the definition of demand:

A

amount of people willing to but a product for a given price

54
Q

Name some factors causing change in demand:

A
  • changes in price of substitutes and complementary goods
  • changes in consumer incomes
  • fashions, tastes and preferences
  • advertising and branding
  • dempgraphics
  • external shock - war/covid
  • seasonality
55
Q

what is a complementary good?

A

demand for one type of good will affect demand for another - purchase is somehow linked eg. car and petrol.

56
Q

what are substitute goods?

A

impact of a change in price will cause consumers to switch products to an alternative good. If air fairs is too expensive consumer could switch ti train/car = substitute.

57
Q

definition of supply:

A

measured in terms of the quantity of a good or service that a producer is willing and able to make available on the market, at a given price, over a given period of time.

58
Q

What happens to the demand if price rises?

A

falls

59
Q

What happens to the graph is there is changes in demand due to price?

A

there will be a movement along the demand curve

60
Q

Where does the line on the graph shift to if…
- there is a increase in demand
- increase in supply
- decrease in demand
- decrease in supply

A
  • shifts to right
  • shifts to right
  • shifts to left
  • shifts to left
61
Q

definition for price inelastic?

A

demand does not change with price (eg. petrol - even if price goes up or down we need same quantity) so even if price changes people still buy same amount

62
Q

defintion for price elastic?

A

demand changes with price

63
Q

what happens if it is perfectly inelastic?

A

demand doesn’t change at all
(eg. insulin - diabetes)

64
Q

What are some factors influencing PED?

A
  • if it is a luxury good or necessity, it tends to be more inelastic
  • substitutes - if there is no or few substitutes then prices are inelastic (eg taylor swift tickets)
  • Incomes or consumers
65
Q

Whats the formula for price elasticity of demand? PED

A

% change in price

66
Q

what is an inferior good?

A

as incomes of consumers rise - demand falls ( as you get more money you start to buy better stuff)

67
Q

what is a normal good?

A

as income rise- demand rises

68
Q

what is the definition of YED?

A

this is a way to measure the responsiveness of demand to changes in consumer income

69
Q

What does a negative YED value =

A

inferior good

70
Q

what does a positive YED value =

A

normal good

71
Q

How do you calculate YED?

A

Y= income
D= demand

% change Y

72
Q

what products are likely to be inferior?

A

products which have substitutes of a higher quality and higher price

73
Q

what products are likely to be normal?

A

expensive and highly desirable products.

74
Q

Definition of income elasticity of demand:

A

how much demand changes by when a consumer has a change in income.

75
Q

definition of necessity:

A

not affected by income eg. your consumption of water will not rise if you earn more money - you may buy a more expensive brand of bottled water.

76
Q

definition of luxury:

A

goods where a rise in consumption is larger than rise in income.

77
Q

definition of design mix:

A

product design is meeting the design mix/ identified market needs eg. function, aesthetics, price.

78
Q

what happens is a business get the design mix right

A

they will gain competitive advantage from their commpetitors.

79
Q

what is corporate social responsibility and whats an example?

A

the responsibility to do whats best for others - ethical rights

eg. drinks cant put more than 13% sugar into drinks.

Business (4 decks)

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