Theme 1 AO1 Flashcards
What are the three parts of the design mix ?
Function, aesthetics, cost.
What is cost plus pricing strategy?
Where a mark-up is added to the cost of production.
What is price skimming?
Charging the highest price upon release and then dropping the price as the product matures.
What is penetration pricing?
Charge a low price initially but increase the price as the product gains in demand.
What is predatory pricing.
Setting prices low to eliminate competition. This is illegal.
What is competitive pricing?
Matching competitor’s prices.
What is psychological pricing?
Using strategies such as making a product 99p rather than £1 to convince consumers that the product is cheaper than it is.
In regard to the design mix, what does function mean?
Ergonomics, usability, safety, reliability.
In regard to the design mix, what does aesthetics mean?
How it looks, tastes, feels and how the senses react to the good or service.
In regard to the design mix, what does economic manufacture/cost mean?
How much it costs to produce and can it be produced efficiently.
What are three characteristics of a mass market?
Very high amount of customers, all products sold in the same way, more EOS to be exploited.
What are three characteristics of a niche market?
Products are targeted towards a small customer group, small firms can survive easily in niche markets as there is less competition, products focus on the needs of the consumers.
How does the market size affect a business?
The greater potential for the business to grow but there is likely to be more competition.
How does market share affect a business?
It affects the strategies a business will use dependant on their share of the market.
What is market mapping?
A map of a specific market that groups brands dependent on different categories of their products e.g. price or quality.
How does a business gain competitive advantage from a product or service?
Product design, product quality, promotion, customer service, ethical stance, EOS, delivery time
What is product differentiation?
When firms try to make their products unique to make them stand out.
What is the purpose of product differentiation?
To gain a competitive advantage in highly competitive markets where products are fairly similar.
How does a business add value to a product or service?
Bundling/package deals, customer service, packaging, customisation, frequent buyer offers via loyalty programmes.
What are the different types of leadership?
Autocratic, democratic, paternalistic, laissez-faire.
What is autocratic leadership?
Manager controls everything, group is dependant on the manager, usually results in demotivation and high levels of supervision.
What is paternalistic leadership?
Similar to autocratic leaders, they control everything, however they care about the welfare of their employees.
What is democratic leadership?
The leader encourages participation in decision making, when they have made a decision they will persuade others to change their opinion, they will also consult others before coming to a decision.
What is laissez-faire leadership?
The leader provides the employees with all the tools and backs off, it promotes freedom and decision making amongst employees, it is particularly useful for a team of highly skilled and experienced employees.
What is the market share calculation?
(sales of a business/ sales sales in the market) x 100.
What is an advantage of utilising a market map?
Seeing where the business is categorised compared to competition which can help identify things that could be changed.
What is are two disadvantages of market maps?
They only analyse two different features of each business on the same map and the information that is used may be expensive as it requires primary market research.
What are some methods of product differentiation?
Different prices, extended product range, brand development and recognition.
