Theme 1: Investigating a small business Flashcards
define enterprise
business
define entrepreneur
the person who starts a business taking a calculated risk
define goods
a physical product that can be held (tangible), used and stored
define services
intangible actions
define dynamic
always fluctuating
define obsolete
no longer wanted/in use
define innovation
new ideas, creations and methods
why is the market dynamic?
- customer needs/demands change
- new features, tech
- things become obsolete
define added value
the difference between the cost of making (input) and the price you are selling it at (output)
define USP
Unique Spelling Point - a feature a business that has to stand out from the competition
how can a business add value? (3)
- focus on target audience
- design
- have USP
- branding
- convenience
- quality
how can a business benefit from adding value? (3)
- charging a higher price
- attracting more customers
- competing with competitors
what are some rewards for enterprise? (3)
- profits
- capital gains (made by selling part/full of the business)
- self-esteem
- independence
- satisfaction
what are some risks for starting a business? (3)
- no investment
- loose time
- loose passion
- financial instability
- debt
- business failure
define aim
states the overall purpose for the business (long terms goal)
define objectives
specific measurable targets to help meet the aims
what does SMART stand for?
Specific
Measurable
Attainable
Relevant
Time-based
what categories are there in customer needs?
- price
- quality
- choice
- convenience
how can a business meet customer needs?
- mass market
- personal relationships with customers
- niche market
define market research
gathering info about the market and customer needs in order to inform business decisions
why research the market?
- reduce the risk of failure
- find out customer needs
- predict and be prepared for market changes
what are types of market research?
- primary research
- secondary research
what are examples of primary research methods?
- Interviews
- Observation
- Questionnaire
what are examples of secondary research methods?
- internet
- businesses’ own sales records
- government stats
what is the research process?
- identify what needs to be found out
- choose research method
- data gathered and analysed
define sample
a small group of people within the population which is chosen to be surveyed
what are the 2 types of data?
qualitative and quantitative data
define qualitative data?
the opinions and attitudes of target audience
define qualitative data
data that can be expressed as stats and numbers
define market segmentation
dividing up the market or potentials customers into groups
what are some types of market segmentation?
- location
- demographics
- behaviour
- lifestyle
- income
name a benefit from market segmentation
increases brand loyalty and repeat custom
name a drawback from market segmentation
increased costs linked to research
what does market mapping show?
shows the position of products in terms of 2 qualities which are important to customers
what is the marketing mix?
factors that help businesses take into account customer needs when selling products
what are the 4Ps
Price
Product
Place
Promotion
when should a business charge a high price? (3)
- good brand loyalty
- lack of supply/high demand
- competition charges high prices
when should a business charge a low price? (3)
- lots of supply/low demand
- poor quality
- sell stock quickly
what are the 4 catgories a business can sell its product/services as in terms of price and quality?
Economy (L&L)
Skimming (Lq&Hp)
Market penetration (Lp&Hq)
Premium (H&H)
what is direct competition?
businesses that produce the same good/services as you
what is indirect competition?
businesses that produce alternatives to what you do
impacts of competition on the marketing mix?
- product will constantly develop
- price might be lowered
- promotion might increase
- place focused on customers as opposed to the business
impacts of NO competition on the marketing mix?
- product may be lower quality
- price high
- promotion no need
- place focused on business convenience as opposed to customers
what are advantages of e-commerce? (3)
- can sell 24/7
- expand to (inter)national
- easy data recording and analysis
what is a disadvantage of e-commerce?
can’t have personal contact with customer
what are some types of promotion? (3)
- tv adverts
- word of mouth
- product placement
- billboards
- personal selling
- direct mail
how is Place different to loction?
place is based on how the products get from producer to consumer and where they can access them (location is where the business is setup)
what are the main factors influencing a business’s location? (3)
proximity to:
- raw materials
- the market
- labour
- competition
costs to run
nature of business
define fixed costs
costs that do not vary directly with output
define variable costs
costs that vary directly with output
how to calculate the contribution per unit?
the price - VC per unit
what is the break even point?
the number of units its needed to sell to pay of all costs (no profit or loss)
how to calculate BE?
FC/contribution per unit
define revenue
the money made from sales of goods and services
how to calculate revenue?
FC/contribution per unit
what is the BE on a graph?
when the total revenue = total costs
define profit
the money you take after paying the costs
how to calculate profit?
unit contribution x N.O of sales over breakeven OR total revenue - total costs OR margin of safety x unit contribution
how to calculate total costs
(VC x N.O of sales) + FC
how to calculate BE
FC/contribution costs
what is the margin of safety?
the difference between the actual output and the BE output
what is cash inflow?
the money that moves into the business
what is cash outflow?
the money that moves out of the business
what is net cash flow
inflow - outflow
define USP
unique selling point - something that makes product stand out from its competitors
