Theme 1 - Marketing & People Flashcards
What is the definition of a mass market
A product/ service that is targeted to everyone
What is a niche market
A subset of a market that produces products / services targeted to consumer needs and wants
What are dynamic markets
Markets that are changing overtime due to changing consumer needs
Give the three ways markets change
Size of markets
Nature of markets
New markets
Give two benefits of e-tailing for consumers
Convenience 24/7
Wide-range of choices
Benefits of e-tailing for e-tailers
Lower cost (no rent)
Can offer goods globally
What is demand
How many people are willing and able to purchase a hood at any given price
Name two factors leading to a change in demand
Price of substitutes
Price of compliments
What is supply
The quantity producers are willing and able to provide the market at any given price
Name two factors leading to change in supply
Cost of production
Indirect taxes
What is the equation for Price elasticity of demand
PED = % change in quantity demanded / % change in price
What is price elasticity if demand
How sensitive demand is to changes in prices (always a minus)
What is the equation for market share
Value of no. Of sales for one business / value of no. Of sales for all businesses X100
What are the four entrepreneurial roles of an entrepreneur
Idea/ innovating
Organising other factors of production
Decision making
Risk takers / calculated risk takers
Name 3 of the stages of setting up a business
Idea
Research
Planning
Financing
Location
Resources
Launch
Name two barriers to entrepreneurship
Fear of failure
Lack of confidence
Access to finance
What does SMART stand for
Specific
Measurable
Achievable
Realistic
Time-related
Give two examples of uncertainty
Political changes
Competition
Legislation changes
Give three business objectives
Survival
Sales maximisation
Profit maximisation
Improve cost efficiency
Increase market share
Customer satisfaction
What is currency in terms of market research
How up to date data is
What is validity in terms of market research
Assessing how valid info is by tracing it back to its original source or only using trusted sources
What is reliability in terms of market research
Consistency of a measure
Give two advantages of market research
+ reduces risk of bad decision& business failure
+ informs the business of customer needs & wants (to adapt/ make new product ideas)
Give two disadvantages of market research
- expensive
- time consuming
Give the 5 methods of primary market research
- Survey
- Observation
- Interview
- Test marketing
- Focus group
Give the 3 methods of secondary market research
- Government sources (e.g. ONS)
- Trade organisations
- Market Reports (e.g. Mintel - costs a lot)
What is a marketing strategy
A set of plans that aim to achieve a specific marketing objective
What is an outbound marketing strategy
Directing marketing at potential customers whether they expect it or not (e.g. direct emails, mail, telemarketing)
Give 3 disadvantages of outbound marketing strategies
- people can ignore them, field get them, object
- persistence can ruin reputation
- wasting resources
What is an inbound marketing strategy
A marketing strategy that attracts potential customers to websites when they ARE looking for suppliers/ solutions (e.g. blogging, social media, targeted emails)
Give 3 disadvantages of inbound marketing
- requires effort & resources to build up enough useful content that works
- recruitment of experienced inbound marketers
- tricky to stay up to date
What is a hybrid marketing strategy
A mix of both outbound & inbound methods
Give an advantage and disadvantage of hybrid marketing strategies
+ reduce costs & create sustainable business growth
- inbound takes a while to be effective
Give two reasons why a business should have a range of products
- Revenue streams
- Spreads risk (for unplanned changes)
What is the Boston Matrix ?
An analysis tool which enables businesses to identify where they are in terms of market growth & market share
(Used together with product life cycle in market planning process)
Briefly explain the star, question mark, cash cow and dog of the BM
If unsure, check notes
(You better not be unsure you slag )
What is an entrepreneurial characteristic
The personal skill/quality/trait of an entrepreneur (could be learnt)
What is an entrepreneurial motive
The purpose or what drives a person to start a business
Give three entrepreneurial characteristics
- Risk taker
- Resilient
- Hard working
Give 3 entrepreneurial motives
- Social reasons
- More control over working life
- Make a profit / increase income
What is a business aim definition
What a business wants to achieve in the long term
What is a business objective definition
The targets that need to be met in order to achieve an aim
Give 3 reasons why businesses write aims
- To help generate objectives to achieve aim
- Provides focus & motivation for the business
- Analyse whether or not this has been achieved & measure success of business
What is a business form
The legal structure a business takes
What are unincorporated businesses and give the 2 forms
Business & owner are one in eyes of law (unlimited liability)
1. Sole trader
2. Partnership
What are incorporated businesses and give the 2 forms
Business & owner are separate in the eyes of the law
1. Private limited company (Ltd)
2. Public limited company (PLC)
Give 2 advantages & disadvantages of a sole trader
+ easy to set up
+ 100% control
- unlimited liability
- difficult to raise capital ( risk)
Give 2 advantages & disadvantages of a partnership
+ share problems & decisions
+ easier to raise capital
- unlimited liability
- disagreements (deed of partnership is necessary)
Give 2 advantages & disadvantages of a private limited company (Ltd)
+ limited liability
+ capital raised by selling shares to F & F
- some business info has to be shared
- pay corporation tax on profits
Give 2 advantages & disadvantages of a Public limited company (PLC)
+ Huge amount of capital from sale of shares
+ PLCs can dominate market due to their size (create barrier to entry)
- must have at least £50 000 in share capital to go plc
- loss of control over business to strangers
What is a franchise
A franchise is where a person (franchisee) wants to be able to use an already established brand (franchisor) to profit off of
Give 2 advantages & disadvantages of a franchiser
+ rapid (international) growth without risking lots of £ & use of mergers/takeovers
+ receives royalty payments
- difficult to control
- huge risk in allowing use of reputation
Give 2 advantages & disadvantages of a franchisee
+ low risk investment as already established brand
+ franchisor provides training & advice
- expensive (£ not regained ?)
- cannot use own ideas without permission (limited freedom)
What is a social enterprise
An enterprise where their main aim is not to make a profit but rather achieves to help community (still profit making just isn’t their main aim)
Give an advantage & disadvantage of a social enterprise
+ rewarding (helping community)
- cannot grow easily
What is a lifestyle business
A entrepreneur’s main aim is to live how they want & still run a business that big enough to keep investors happy
What is a leader
Someone who inspires & motivates others in a particular direction or towards a vision (a role model)
Give 5 ways an entrepreneur moves to a leader
- The need for formality
- The need for shared ownership
- Greater responsibility to others
- The need for motivation & inspiration
- The need for strategy & vision
Give 2 difficulties of developing from an entrepreneur to a leader & how to overcome them
- Stress
- exercise/ balanced diet/ healthy sleep - Adapting the mindset
- maturity, experience & education
What is market orientation
The common need is the most important factor when providing products for the market, the business has a sensitivity to customers’ requirements
Give two advantages of being market orientated
+ designed to what consumers want = premium prices and more sales
+ flexible to changing social trends
Give two disadvantages of market orientation
- cost of market research
- constant changes in planning & production to meet needs of market
- future trends/fashions can be unpredictable
What is product orientation
When a business only focuses on the products or the production process when deciding what to make next
Give two advantages of product orientation
+ increased economies of scale
+ focused on quality = loyal customers
+ innovative/ creative ideas
Give two disadvantages of product orientation
- can’t / slower to respond to market changes
- can be copied & likely to be
- fashion & tastes aren’t considered
Give 2 tools of market orientation
• market research
• market testing
• customer focus
Give 2 tools of product orientation
• product research
• product focus
• product testing
What is asset led orientation
Where approach is both together (product & market orientation), using the business strengths (existing brand) and customer needs
Give one reason for growth in a market
Either:
Demographic changes
Economic growth
Innovation
Legislative changes
Give a niche marketing strategy
Word of mouth
Give a mass market marketing strategy
TV ads
What is market positioning
An effort to influence consumer perception of a brand/product relative to the perception of competitors
What is market mapping
The process of finding the variables which differentiate brands in a market and then plotting them on a map
(Axis can be premium ~> budget and high quality ~> quality)
Give two reasons market mapping is used
• To identify gaps in the market
•For a brand to look at repositioning (e.g. North Face)
•For a start up to identify what to produce
What is a competitive advantage
An advantage a business has over its competitors
What is Porters Generic Strategies
A tool a business can use to gain a competitive advantage, either through cost leadership or differentiation (don’t end up stuck in middle)
Give 2 ways a business can get cost leadership
• economies of scale
• outsourcing to cheaper location
• increasing efficiency
Give 2 ways a business can differentiate
•customer service
• convenience
• Quality
• choice
• Branding
What is the income elasticity of demand
How responsive the change in Quantity demanded is relative to a change in income
What is the calculation for YED
%change in QD / %change in Y
What does a positive YED value signify
The product is a Normal Good
What are the 2 things a normal good can be classified as
Necessities or luxuries
What does a negative YED value signify
The product is an inferior good
What is the difference between a luxury and necessity good
Both + YED values but
0-1 = necessity (demand not very responsive)
>1 = luxury (demand is responsive)
Give 2 ways YED is significant for businesses
Product planning
Production planning
What is ‘adding value’
Offering a variety of extra features that go beyond their customers expectations
What is the design mix
The three aspects of design that companies need to consider when developing a product
• Aesthetic
• Function
• Economic manufacture
(Businesses should also consider social trends)
What is a Brand
A name/ symbol that distinguishes one product from another
What are the 3 types of brand
Manufacturer brands
Own label brands
Generic brands (only contain name of product, e.g. Paracetamol)
What is promotion
The use of marketing tools to bring a product/service to the attention of potential buyers
What are the 4 levels in the AIDA model
Attention (top)
Interest
Desire
Action (bottom)
Give 2 examples of above the line advertising
TV ads
Billboards
Give 2 examples of below the line advertising
Leaflets/ flyers
Local newspaper
Give an advantage and disadvantage of above the line advertising
+ reached a large audience
- very expensive and can be skipped
Give an advantage and disadvantage of below the line advertising
+ more targeted/ segmented advertising
Give 3 forms of sales promotion
BOGOF
Samples / Giveaways
Special events
Money off coupons
Give one other marketing strategy
Public relations
Sponsorship
Direct marketing (email, postage)
Give two characteristics of a flat organisational structure
Wider span of control
More centralised
Quicker communication
Shorter chain of command
Less layers of management
Give an advantage of a flat organisational structure
+ communication is fast
+ decisions are easier to make
Give a disadvantage of a flat organisational structure
- less supervision of subordinates (trouble with maintaining quality)
- fewer promotional opps
- over worked staff
Give 2 characteristics of a tall organisational structure
More management layers
Slower communication
Longer chain of command
Narrower span of control
Give 2 advantages of a tall organisational structure
+ lots of promo opps
+ subordinates can be closely supervised and trained
Give 2 disadvantages of a tall organisational structure
- slow communication
- inflexible and expensive with managers
What is a matrix structure
Where team members from different departments and regions work together (cross functional teams working together on a project) at usually a high skill level
What is centralisation
Where key decision-making at the top of the business
What is decentralisation
Distributing decision-making and passing authority from head office down to branch store managers
Give an advantage and disadvantage of de layering
+ reduction in costs
- upset morale with redundancies
Give 2 reasons why employee motivation is important
•Increased productivity
•More reliable & loyal staff (staff retention)
Who are the 4 motivation theorists
- Taylor (financial)
- Mayo (human relations)
- Maslow (hierarchy of needs)
- Herzberg (two factor)
What is Taylor’s financial management theory
Fair days pay for a fair days work
Piece rates rewarded
What is Mayo human relations theory
Employees motivation increased with break times, working in teams & other non financial incentives
What is Maslow’s hierarchy of needs
A pyramid with needs at bottom and self actualisation at the top
(Simple and easy to understand)
What is Herzberg’s 2 factor theory
There’s motivators (extras) and Hygiene (can de motivate but not motivate)
Give 3 financial motivators
Piece work
Commission
Bonus or performance related pay
Bonus
Give 3 non financial motivators
Delegation
Job rotation
Consultation (part of decisions)
Team working
Jon enrichment or enlargement
Flexible working
What is leadership
A relationship through one person influenced the behaviour or actions of other people
What is management
To supervise, oversee and maintain control over a resource
Give 2 characteristics of a good leader
Inspiring
Dedicated
What are the 4 leadership styles
- Autocratic
- Democratic
- Paternalistic
- Laissez faire
Give an advantage and disadvantage of autocratic leadership style
+ effective for quick decisions
- very little innovation & demoralises
Give an advantage and disadvantage of democratic leadership style
+ increased morale & performance as employees feel valued
- longer decision-making time
Give an advantage and disadvantage of Paternalistic leadership style
+ high loyalty and low turnover rate
- over reliance on manager
Give an advantage and disadvantage of laissez faire leadership style
+ decisions made quickly
+ increased innovation & quality
- leader can appear uninterested and demoralise
What is unlimited liability
Debts of the business are debts of the owner
What is limited liability
Debts of the business are not debts of the owner
What are the 6 pricing strategies
- Cost plus
- Price skimming
- Psychological
- Predatory
- Competitive
- Penetration
What is cost plus pricing strategy
Cost of production plus business desired profit margin
What is price skimming pricing strategy
When a business sets a high initial price then gradually lower it
What is penetration pricing
When a business sets a low initial price then gradually increase the price
What is predatory pricing
When a business sets prices so low that it drives out competitors from the market
What is competitive pricing
A Business setting their prices based on competitors prices
What is psychological pricing
When a business takes into account the customer’s emotions, beliefs, and attitudes towards the product/service
Give 2 factors businesses should consider when choosing a pricing strategy
• no. Of USPs / amount differentiation
• PED
• competition
•brand strength
• stage in product life cycle
• costs & desired profit
How have social trends changed pricing strategies
• online sales
• price comparison websites
Resulting in businesses adapting to remain competitive
What are distribution channels
The various intermediaries through which goods/ services move from manufacturer to the end customer
What does 4 stage distribution contain
Producer
Wholesaler
Retailer
Consumer
What 3 stage distribution contain
Producer
Retailer
Consumer
What does 2 stage distribution contain
Producer
Consumer
Give 2 ways social trends have impacted distribution
Growth of e-commerce
Shift from product to services
What is the product life cycle
A diagram that describes the different stages a product goes through from its conception to decline
What the 5 stages in a product life cycle
Development
Introduction
Growth
Maturity
Decline
What are extension strategies
The techniques used by businesses go extend the life of a product behind its natural life cycle
What are the 2 types of extension strategies
• Product-related extension strategies (changing product)
• Promotion-related extension strategies (changing marketing & promo)
What is the Boston Matrix
A tool used by businesses to analyse their product portfolio & make strategic decisions about each product
What does the Boston Matrix include
Ranks products based on market share & market growth rate
• cash cow
• question mark
• star
• dog
Give 2 examples of methods used to build customer loyalty
Customer service
Loyalty cards
Saver schemes
Why is customer loyalty beneficial to a business
Repeat purchases, which means less marketing costs
Why is effective human resource management important
Ensures the right people, in the right roles, with the right support, and opps
= high productivity = higher profits and a positive work environment
Give 2 reasons why staff are an asset
• bring knowledge
• bring skills
• can increase innovation
• can enhance customer service
• can build a positive brand reputation
What are 2 costs of staff
• hiring & training
• salaries, wages
• redundancy payments
• managers to manage staff
What is flexible working
The development of a culture where workers are equipped to do different roles or where they work in a range of employment patterns
Give 2 ways of developing a flexible workforce
• multi skilling
• part time & temporary contracts
• flexible hours & home working
• outsourcing
What is multi skilling
The process of training workers to fulfil multiple job roles
Give an advantage and disadvantage of multi-skilling
+ businesses use workforce more efficiently, reduces costs & increased productivity
- investment in training & development
Give an advantage and disadvantage of part time & temporary working
+ improve productivity as staff work during productive hours
- communication and monitoring challenges
Give an advantage and disadvantage of outsourcing
+ access to specialised skills
- ethical concerns, depending on country outsourcing to human right standards
What is a dismissal
The termination of employment by an employer against the will of the employee (due to misconduct & poor performance )
What is a redundancy
When the employer ends the termination due to reducing the size of workforce and not needing that job role any longer
What is recruitment
The process of attracting and identifying job candidates who are suitable for a particular role
What is selection in terms of recruiting
The process of choosing the best candidate
Give one way a business can recruit
Job advertising
Job fairs
Social media
Referrals
What does selecting employees often involve
Reviewing CVs and conducting interviews or assessment tasks
How is a job role defined
Job description and specification
What are recruitment costs and give an example
The expenses incurred in the process of hiring
E.g. advertising, high labour turnover rates can increase these costs
What are training costs and give an example
The expenses incurred in the process of providing training to new or existing employees
E.g trainers, training materials, facilities, re training if not effective originally
What are selection costs and give an example
The expenses incurred in the process of selecting candidates for employment
E.g. background checks, visa costs, high turnover rates can increase these
What are the 3 types of training provided by a business
Induction training
On the job training
Off the job training
Give an advantage and disadvantage of induction training
+ reduces time taken for new employees to become productive
- time consuming & expensive to organise
- may not be effective
Give an advantage and disadvantage of on the job training
+ training more practical and relevant
- can be disruptive to work place as required trainer to devote time
Give an advantage and disadvantage of off the job training
+ learn new skills & knowledge to bring fresh ideas to work place
- employees may miss work & expensive
What is opportunity cost
The loss of the next best alternative when making a decision
What is a trade off
When having one thing means losing another thing
