Theme 1 Flashcards
What is a market?
A market is where buyers and sellers come together to exchange goods or services.
Define mass market.
A large, broad market with products that appeal to a wide audience.
Provide an example of a mass market product.
Coca-Cola sells the same product worldwide with minimal changes.
What is a niche market?
A small, specialized market targeting a specific group.
Provide an example of a niche market product.
Vegan protein powders for athletes.
Define market size.
Total sales volume or value in a market over a time period.
What is market share?
A firm’s percentage of total sales in the market.
How is market share calculated?
Market Share = (Firm’s Sales / Total Market Sales) × 100
What is the purpose of market research?
To understand customer needs, reduce risk, and make informed decisions.
What is primary research?
Data collected first-hand (e.g., questionnaires, interviews).
What is secondary research?
Existing data (e.g., reports, internet, government stats).
What type of data is quantitative?
Numbers/statistics (e.g., ‘70% of people prefer X’).
What type of data is qualitative?
Opinions/motivations (e.g., customer interviews or focus groups).
Define random sampling method.
Equal chance for anyone to be chosen.
Define stratified sampling method.
Divided into sub-groups based on demographics.
Define quota sampling method.
Specific number from each segment is selected.
What is product orientation?
Focuses on product innovation before customer needs.
Provide an example of product orientation.
Apple with the first iPhone.
What is market orientation?
Focuses on identifying and satisfying customer needs.
Provide an example of market orientation.
McDonald’s changing menu to suit different countries.
What does STP stand for?
Segmentation, Targeting, and Positioning.
What is segmentation in marketing?
Dividing the market into groups (by age, gender, income, etc.).
What is targeting in marketing?
Selecting which segment to focus on.
What is positioning in marketing?
Creating a distinct image in consumers’ minds (via market maps).
Define demand.
The quantity consumers are willing to buy at a certain price.
Define supply.
The quantity producers are willing to sell at a certain price.
What is equilibrium price?
Where supply equals demand on a graph.
What does price elasticity of demand (PED) measure?
How demand changes with price.
How is PED calculated?
PED = % change in quantity demanded / % change in price.
What is an elastic demand?
Elastic (>1): Luxury items, many substitutes.
What is an inelastic demand?
Inelastic (<1): Necessities, fewer substitutes.
Provide an example of elastic demand.
A 10% price drop leads to 15% increase in demand → PED = -1.5 (elastic).
What does income elasticity of demand (YED) measure?
YED = % change in demand / % change in income.
What are normal goods?
Positive YED (demand rises with income).
What are inferior goods?
Negative YED (demand falls as income rises).
Provide an example of an inferior good.
Instant noodles.
Provide an example of a normal good.
Organic food.
What are the stages of the product life cycle?
Development → Introduction → Growth → Maturity → Decline.
What are extension strategies?
Rebranding, new uses, changing packaging or pricing.
What does the Boston Matrix assess?
Products by market growth & market share.
What are stars in the Boston Matrix?
High share, high growth.
What are cash cows in the Boston Matrix?
High share, low growth.
What are question marks in the Boston Matrix?
Low share, high growth.
What are dogs in the Boston Matrix?
Low share, low growth.
What does above-the-line promotion include?
Mass advertising (TV, radio).
What does below-the-line promotion include?
Direct methods (sales promo, sponsorship, PR).
Provide an example of a company using both above-the-line and below-the-line promotion.
Coca-Cola uses both TV ads and social media giveaways.
What is cost-plus pricing?
Price = Cost + markup.
What is skimming pricing strategy?
High price during launch to maximise profits.
What is penetration pricing strategy?
Low intro price to gain market share.
What is psychological pricing?
Setting prices just below a round number (e.g., £1.99 instead of £2).
What is predatory pricing?
Very low price to eliminate competition (illegal if proven intent).
What is dynamic pricing?
Changes based on demand (e.g., airlines).
What are the distribution methods?
Direct, Indirect, Multichannel.
What does direct distribution mean?
Manufacturer → Consumer.
What does indirect distribution mean?
Manufacturer → Retailer → Consumer.
Provide an example of a company using multichannel distribution.
Apple sells via own stores and retailers like Currys.
What is a flexible workforce?
Part-time, freelance, remote.
What is dismissal?
Fired for misconduct.
What is redundancy?
Job is no longer needed.
What does Taylor’s motivation theory emphasize?
Workers are motivated by money.
What does Mayo’s motivation theory emphasize?
Workers motivated by social needs.
What is Maslow’s hierarchy of needs?
A theory that prioritizes needs from basic to self-actualisation.
What are hygiene factors according to Herzberg?
If absent, demotivate (e.g., pay, working conditions).
What are motivators according to Herzberg?
Drive satisfaction (e.g., recognition, achievement).
What are financial motivation methods?
Bonuses, commission, profit-sharing.
What are non-financial motivation methods?
Job enrichment, empowerment, flexible hours.
What is an autocratic leadership style?
Leader makes decisions alone.
What is a democratic leadership style?
Group participation.
What is a paternalistic leadership style?
Leader acts in staff’s best interest.
What is a laissez-faire leadership style?
Minimal leadership input, team autonomy.
What are the roles of an entrepreneur?
Spot business opportunities, take calculated risks, organise resources, innovate.
What is the focus of business objectives related to survival?
Early-stage focus.
What does profit maximisation aim for?
Maximise difference between revenue and cost.
What does growth in business objectives refer to?
Increase sales, market share or expansion.
What are social objectives in business?
Environmental goals, charity.
Define sole trader.
One person owns, unlimited liability.
Define partnership.
Shared ownership, profits and losses.
What is a private limited company (Ltd)?
Limited liability, shares privately held.
What is a public limited company (Plc)?
Public company, shares on stock exchange.
What is a franchise?
License business model from franchisor (e.g., McDonald’s).
What is organic growth?
Internal expansion (e.g., new stores).
What is inorganic growth?
Mergers, acquisitions.
What is intrapreneurship?
Innovation from within the business (employee-driven ideas).
