Theme 2 Flashcards
What are the stages of the product life cycle ?
introduction, growth , maturity, extensional strategies/decline
What changes must be made to the marketing mix when globalising , and what are the reasons for this change ?
How may a company grow internally ?
- new products
Expensive, time : product portfolio (customer loyalty) - new markets
Risk, completion : more potential consumers
How may a company grow externally?
🔵Merge
Increased product portfolio (new business created)
🔵takeover
In general :
✅economies of scale, maximise profit margin
✅rapid increase in revenue and market share
✅can place products in more stores, reach a larger audience
❌expensive
❌management styles may clash
Pros and cons of PLCs
public limited company
✅limited liability
✅easy to raise sources of finance through share capital
❌susceptible to hostile takeovers
❌increased media attention
❌financial information less private
What are some internal sources of finance ?
- retained profit
Shareholders may frustrated by lack of dividends - selling assets
loss of asset and security,Sudden lump sum of money
What are some external source of finance?
- loan capital
Interest rates fluctuate, have to have reasonable financial security (limiting), may take time for loan to approve : immediate flow of money, - share capital
Less control over the business,future dividends cannot retain profit : immediate lump sum of money
Why do business aims and objectives change as a business evolves?
- market conditions (competition levels/ economic conditions )
- technology (competition, but lager audience , decreased costs)
- performance (profit / loss / breaking even)
- legislation (may increase things like income tax, or wage of employees, less profit, have to make more sales/ increase price)
- internal management reasons(ethically or maximising profits)
How might a business’s aims and objectives change as a business evolves?
🟡focus on survival or market growth
🟡entering or exiting new markets (growth plans, or focusing investment elsewhere
🟡growing or reducing the workforce (minimising costs)
🟡increasing /decreasing product range (increased product portfolio/ shutting down products that are no longer on demand)
*minimising costs in response to poor economic conditions
What is the impacts of globalisation?
🔵imports ( cheaper raw materials
🔵exports (entering new markets abroad, growth , wider tarter market and audience )
🔵changing business locations (entering / opening stores in more wealthy countries with a higher disposable income)
🔵multi national co operations
What are some barriers to international trade ?
🟣Tarif ( tax imposed, reducing overall profits , increase in costs , breaking even)
🟣trade bloc ( good as may be able to take advantages of cheaper Labor and lower tax rates from member counties, but may not be able to operate with countries outside of the trading bloc)
How do businesses compete internationally?
🟣using the internet and e- commerce ( using social media as promotion and staying in touch with customers from all around the world, customer loyalty, 24/7 sales, cheap )
🟣changing the mix to compete internationally (price :changes depending on currency,, tarrif, exchange rate fluctuate, average income of consumers, place: where the people there like to shop culturally , promotion: language difference, products: taste and cultural preferences, physical differences
What is the impact of ethical and environmental considerations on businesses?
🟠ethics and profit trade offs (risk of bad publicity in media, brand reputation, but then profit margin as well)
🟠environmental considerations, trade off between the environment, sustainability and profit
🟠pressure group activity on the marketing mix (
*being ethical provides competitive advantage and customers tryst business more
What might a business have to do when responding to a pressure group
Change elements of its’s marketing mix
Product: Change be key ingredients to be more ethically sourced raw materials
Price: increased price as a result of paying fair prices to supplies
Place: sourcing local products/ raw materials to reduce carbon footprint (less transport)
Promotion : including honest and complete information on packing,
What is the design mix?
🟣function
🟣aesthetics
🟣costs
What is the product life cycle ?
🟡initial introduction (low sales, promotional strategies, cash requirement )
🟡growth (increase in sales , demand /increasing price)
🟡maturity, trying to remain relevant , high sales and economies of scale )
🟡decline/discontinuation/ extension
What are some extension strategies?
🟣lowering prices
🟣increasing advertising
🟣 totally rebranding product
Why is it important for a business differentiate it’s products/ services ?
🟣USP, competing advantage
🟣may meet the needs of a particular target market, adding value, can a charge a higher price
What are some pricing strategies?
🟣high volume pricing strategy (economies of sale, can sell at lower price (lower profit margin)
🟣high margin pricing strategy ( low volumes but a high profit margin, adding value, making it ‘exclusive’
What influences pricing strategies ?
🟠technology (more cheaper production costs, able to promote better, bale to advertise luxury more)
🟠competition (may have to lower prices, if not so competing then higher prices )
🟠market segments (mass market, niche market )
🟠product life cycle (levels of popularity and demand)
What are some appropriate promotional strategies for different markets?
🟡advertising (emotive language and a range of media: expensive, not guarantee sales)
🟡sponsorship (better brand reputation )
🟡product trials
🟡special offers (reducing stock)
🟡branding (emotional connection, adding value or differentiating from competitors)
🟡publicity (better brand reputation, customers more likely to buy)
What are some medium for advertising
🟣digital (social media)
🟣television
🟣radio
🟣print (magazines or newspapers
Impacts to a business of using technology in promotion?
🔴targeted advertising (more likely to reach target market )
🔴virtual advertising/ social media (increased exposure of business, increased demand)
🔴apps (staying in contact with customers, brand loyalty, repeated purchases, more relevant
🔴E Mails and newsletters (relationship with consumers, directed straight to e commerce website )
What are some methods of distribution?
🟡retailers(face to face support, physically use the product, shopping experience, more likely to buy the product: physical premises overhead cost, reducing profit margin as retailers will markup price so needs to reasonable)
🟡e-tailers (no rent of a building, access international markets, easier to start up,: customers not confident when buying, delivery costs , needed extensive digital marketing to ensure sales)
Integrated marketing marketing mix?
Eg: product affecting price
Price in promotion (more luxury products)
Place helping to promote (eg in shopping mall or in a basement )
Place and product(eg is e commerce than can it be designed to be delivered properly)
How can a marketing mix build competitive advantage?
Competitive advantage= customers are more likely to buy products over competitors, as they are more attracted, difficult for rivals to replicate
Product: better than competition is design , quality and function
Promotional: memorable campaign, strong brand image
Price: cheaper
What is the purpose of business operations?
To produce services /goods
What are the different production processes?
🟡job
🟡batch
🟡flow
Job
(One unite per time)
Low level of automation
High profit margins, meets exactly the customer needs
Very flexible for consumer, good relationship between bus and customer
No economies of scale, no bulk buying
Requires employees that are highly skilled
Batch
Economies of scale, reduced cost
Flexible and can vary the product being produced
Down time between batches, rate of production falls
Unsure demand, could produce too much or too little
Flow
Every produce the same
Economies of scale, low cost of production, price competitively
Not much flexibility
Initial cost of machinery high, long time to pay back
What is the positive impact of technology on production?
🟢balancing costs (automated machinery, allowing to get economy of scale, lower cost for business, lower selling price )
🟢productivity (effective communication regarding stock, prevents shortages/ excess levels, prevents waste and maximises profitability)
🟢quality (increasing customer service via communication regarding stock, )
🟢flexibility (change quality of product for it to suit customer needs,
What are the negative impacts of technology on production?
Cost , risk
Training costs to use the machinery
Costs of maintenance and updates, keeping it up to date
What factors need to be considered when choosing suppliers?
🟢cost, determines variable costs and profit margin of the business, do they offer trade credit
🟢quality, satisfied customers
🟢reliability , if suppliers are reliable then can use JIT and do not have to spend as must money holding extrem stock
What is the impact of logistic and supply decisions?
🟡costs, reduce transportation and packaging costs, limit the amount of stock lost it damaged
🟡reputation , fast efficient service
🟡customer satisfaction, repeated purchases, brand reputation
What are the problems with excess stock
✅can meet customer demand easily
❌cost, warehouse
❌perishable or trendy things might need to be used up quickly
Describe the bar gate stock graph
Describe JIT stock control
✅reduces the need for business to hood expensive stock
✅reducing chances of stock being damaged and misplace
❌delay will impact business performance
❌have to forecast customer demand very accurately
❌need really good relationship with suppliers otherwise delays
What determines the quality of the product?
🟡the raw materials it is made out of
🟡price/ brand
How can quality of a product or service be assured?
🔵quality control: does at then end of a process, can include customer feedback, often there to help improve for the future
🔵quality assurance: checking at each stage or best material/employees at each stage , but can be more expensive , but competitive advantage due to quality
Compare quality insurance and control
What is the importance of quality
Quality determines the price of the product
Competitive advantage, brand reputation, customer satisfaction
Do not have to keep on repairing goods for customer which may be costly for the business
Describe the sales process
- Customer interest (branding, promoting, advertising & marketing), good sales people with good product knowledge-impress customers, adding value to product (hard/soft approach )
- Speed and efficiency of service, meeting customer needs, efficiency = user friendly website or small queues at tills
- Customer engagement, positive relationship with consumer
- Post sale services, makes customers think that expense is worth it
- Customer loyalty (repeat purchases, satisfied )
Why provide a good customer service ?
Helps differentiate a business from rivals, can provide a competitive advantage, customer loyalty and repeat purchases helps business retain customers, increase sales and maximise profits
financial information to a business pros and cons
✅understand business growth and make informed decisions about business in future
❌time delay, cannot tell future only indicate
❌differences in interpretation
❌non-financial aims and objectives
❌qualitative factors, business reputation, employee morale , (more long term indicators than short)
Describe a hierarchal structure
Lots of layers of management
Managers have a small span of control
✅opportunities for promotion for employees
✅clear accountability
❌communication longer through layers, decision making is very slow
❌higher cost as managements salaries are high
Describe a flat structure
Few layer of management, managers have a wide span of control
✅communication and decision making is quick
❌large workload for manager,not all employees can be supported as well
❌not good opportunities for promotion for the employees
✅save money on salaries (less management salaries)
Describe centralised structures
Describes need to be be approved by highest level of management
✅accountability of members and staff clear
✅vision of organisation is clear
❌employees and lower mangoes may not feel as empowered and motivated
❌more mistakes likely to be made, which cannot be fixed immediately
❌cannot respond quickly to change
Decentralised structures
✅senior managers can focus on the bigger picture or strategic concerns because managers at low levels can take power locally
✅local managers can be more creative
✅fewer mistakes
✅managers and employees fell more involved and motivated by power
❌highly trained employees and mangers, good communication required otherwise can confuse others
❌accountability is unclear
✅ quick decisions implemented
What is the importance of effective communication?
If communication not enough, then employees and managers are unaware in regards to what is happening with the rest of the business, this could lead to mistakes and inefficiency, could lead to financial difficulties and business failure
Too much communication leads to a lot of time being wasted processing the information , employee output will be slow or completely reduced (unable to actually do work , decreased productivity
What are some barriers to effective communication
Written : spelling, grammar, illegible handwriting
Verbal: language/accent nit understood,
General : cultural differences, structure of communication not clear
What are the different ways of working?
Part time(less hours) /Full time: must be treated the same way
Flexible hours: good for buz as they can fill in temporarily when others are sicker
What are the different contracts ?
Permanent contract: paid on going
Temporary contract: paid for a fixed amount of time
Freelance contract : freelancer is paid for the amount of work
What is the impact of technology on a way of working? (to employees and business)
✅improve efficiency as fewer barriers to communication , quicker business decision
What are the stages of recruitment?
🟠business clearing up the roles and responsibilities of position (director, senior manager, supervisor, operational staff)
🟠Develop the applications and processes (CV, job description (what roles are within the job), application form, person specification(grade/qualifications required)
What are the pros and cons of internal and external recruitment?
Why is training & development important ?
❌expensive
✅can work effectively with change and business , more productive levels
✅can improve employee skills, more product knowledge allowing them to do their roles more better, increasing business performance
✅employees feel more valued
What are some methods of training and development ?
🟢Informal(talking/observing others)
🟢formal (webinars, workshops, gaining qualifications
🟢self learning
🟢ongoing training (through the role even after induction)
🟢performance reviews/appraisals
What does target setting and performance reviews do ?
✅improves communication
✅improves motivation by setting goals for employees
✅employees a chance to improve
Why motivate employees?
More motivates , more happy employees, more likely to keep working for the business as they feel valued, higher retention rate for business, avoid the cost of having to recruit new employees
Better reputation of business , more people want to be employees, business gets a better variety in recruitment process, best person for job
Better communication,increased productivity , more efficent, better business performance
Less motivated (more stressed)employees take more time off, increases costs as will have to pay overtime to other employees to cover work, and paying sick and absent employees
How do businesses motivate employees
🟠financial methods (promotion, fringe benefits, bonuses, commission)
✅higher productivity and sales
❌might push for hard sales which may discourage a customer
❌higher costs
🟠non financial methods (job rotation, job enrichment- adding more responsibility , autonomy control over ways to complete work )
✅cheap
✅employees can gain additional skills, improving productivity
✅employees can have more contacts, improving communication
✅More involvement, more job satisfaction
What is the formula for total costs?
Total costs = fixed costs + variable costs
*if given variable cost per unit then
Variable cost = volume sold ✖️variable cost per unit
What is the formula for revenue ?
Revenue = price ✖️quantity
What is the break even point formula (in units)?
What is the break even formula (in costs) ?
What is the formula for the margin of safety?
(How many sales will give you profit )
How do you calculate the interest on loans ?
(A percentage )
How do you calculate the net cash flow?
How do you calculate the opening balance of a month ?
Just the closing period of the past month
How do you calcute the closing balance ?
What is gross profit?
- does not include additional business expenses
(Eg: taxes)
Calculate the gross profit margins
How do you calculate the net profit ?
How do you calculate net profit margin?
How do you calculate the average rate of return?
