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.
What is the difference between risk and uncertainty?
Risk is more stable as it can be measured, predicted, and managed.
What is qualitative data?
Non-statistical information about human behaviour.
What is quantitative data?
Statistical information about previous trends in behaviour.
What is secondary data?
Data gathered from sources that have already carried out the research.
What is primary data?
Data gathered by the business.
What are three methods of primary research?
Observations, questionnaires, focus groups.
What is market orientation?
Developing products based on gaps in the market and customer needs.
What is product orientation?
Developing products based on what can be produced and the process of production.
What is market research?
The collection and analysis of data to inform a business about its market.
What is market research used for?
Identify customer needs, Anticipate demand, Gain insight into behaviour.
What is market segmentation?
Splitting the market based on a certain characteristic e.g. demographics or behaviour.
What is a market?
An arrangement that allows buyers and sellers to communicate and exchange goods and services.
What is marketing?
The action of a business promoting its product or service.
What are marketing objectives?
Goals that a business wants to achieve during the year through a marketing plan.
What is brand loyalty?
When consumers consistently purchase goods from one brand rather than others. They will pay more for goods from that brand.
What is a market value?
The sum of all money spent by consumers in that market.
What is a market volume?
The quantity of products that are produced and sold in the market.
What is meant by online retailing?
When businesses sell their product or service online.
What are 4 benefits of online retailing?
Low fixed costs, Targets international markets, Open all of the time, unlimited number of consumers.
What is motivation?
The inner desire or willingness that drives a person to take action to complete a task.
How does higher motivation affect a business?
Higher productivity of workers, Higher reliability of workers, Less turnover rate
What is Taylor’s scientific motivation theory?
Study and understand the process > workers given instructions > train workers to become efficient > give rewards based on performance.
What are the benefits of using Taylor’s motivation theory?
Increased efficiency, standardised approaches, clear hierarchy, improved training.
What are the drawbacks of Taylor’s theory?
Does not apply to many roles, potential for exploitation, lack of worker satisfaction
What is Mayo’s human relations theory of motivation?
Improving productivity comes from improving relationships between different employees.
How will a business put Mayo’s theory into practice?
Encourage decision making, team building activities, feedback provision, training programmes, support provision.
What are the advantages of Mayo’s theory?
Improved job satisfaction, Increased productivity, Stronger teams, Employee empowerment.
What are the disadvantages of Mayo’s theory?
Time consuming, Lack of control for management, Possible resistance to change, Potential for conflict, Limited applicability.
What is Maslow’s hierarchy of needs motivation theory?
Maslow’s five tiers of human needs must be met for workers to reach their full potential.
Name Maslow’s fiver tiers of human needs.
Physiological, Safety, Love and belonging, Esteem, Self-actualisation.
What does Maslow mean by physiological needs?
A business must provide their workers with the necessities like comfort, clean water, rest breaks etc.
What does Maslow mean by safety needs?
Businesses should provide job security, benefits, safe conditions etc.
What does Maslow mean by love and belonging needs?
Businesses should encourage teamwork and generate a sense of community.
What does Maslow mean by esteem needs?
Businesses should recognise the accomplishments of employees and value individual contributions.
What does Maslow mean by Self-actualisation
Businesses can help employees achieve their dreams by offering opportunities.
What are 3 advantages of using Maslow’s theory?
High job satisfaction, Higher productivity, Less turnover rate.
What are 3 disadvantages of using Maslow’s theory?
The strategy must always change, Costly, Time-consuming.
What is Herzberg’s two factor motivation theory?
Employee motivation is affected by two factors: Hygiene and Motivators.
In regards to Herzberg’s theory, what is meant by hygiene factors?
Working conditions, Coworker relations, policies, Wages
In regards to Herzberg’s theory, what is meant by motivator factors?
Recognition, Responsibility, Personal growth, work itself.
How can a business use hygiene factors to decrease dissatisfaction?
Pay fair wages, Offer good working conditions, Offer security via contracts.
How can a business use motivator factors to increase satisfaction?
Provide challenging work, offer opportunities for growth, build a rewarding culture.
What is meant by a financial incentive?
Rewards or payments given to employees in return for their labour or improved performance.
What are the 5 types of financial incentives?
Piecework, Commission, Bonus, Profit share, Performance-related pay.
What is meant by piecework pay?
Employees are paid in relation to the number of units they produce.
What is meant by commission?
A percentage of sales revenue is paid to workers when they sell a unit.
What is meant by a bonus?
An additional payment is given to staff as a reward for achieving a specific goal.
What is meant by profit share?
A potion of the company’s profit is distributed amongst staff.
What is performance related pay?
Staff are paid based on their performance.
What motivational theory does performance related pay relate to?
Herzberg said that this incentive has proven to cause dissatisfaction.
What motivational theory does profit share relate to?
It is a motivator in Herzberg’s theory as it gives employees increased responsibility.
What motivational theory does bonus relate to?
It connects with esteem needs in Maslow’s theory. Herzberg said that if bonuses are the main form of payment, it negatively influences behaviour.
What motivational theory does commission relate to?
It is a hygiene factor is Herzberg’s theory and it is an esteem needs in Maslow’s theory.
What motivational theory does piecework relate to?
Taylor’s scientific management theory.
What is meant by flexible working?
When staff are equipped to do different roles or work in different employment patterns.
What is multi-skilling?
Training workers so they can fit multiple job roles.
What are two advantages of multi-skilling?
Reduces labour costs as less turnover, productivity increase as an increase in skill.
What are two disadvantages of multi-skilling?
May refugee high training costs, May not be appropriate for all job roles.
What is part-time working?
Employees work a couple days a week.
What is temporary working?
Employees only work when the business requires them.
What are 2 advantages of part-time/flexible working?
Flexible arrangements decrease staff turnover, staff may be more productive as they can work during their most productive hours.
What are two disadvantages of temp/part-time workers?
Challenges in communication, monitoring hours can be difficult.
