Theme 3 - 3.2.4 - Reasons For Staying Small Flashcards
Whats the definition for a small business ?
The usual definition of small and medium sized enterprises (SMEs) is any business with fewer than 250 employees - over 99% of all businesses are SMEs
Then you also have Micro-businesses which are businesses with 0-9 employees
96% of all businesses are micro-businesses think like your local kebab shop etc
Why do small businesses use the Differentiation strategy ?
Differentiation is when you make you product different from the rest - this can be non-price or price factors
- it creates value - highlights quality or durability of the products
- A differentiation strategy will focus on ways other than price to attract customers such as taste and style
- Brand loyalty - a differentiation strategy can gain customer loyalty and this is because the quality of the product would be better than the competition and therefore people would gain customer loyalty as they would go for your product because they just love fr e.g. the taste
- No perceived substitute - a differentiation strategy that focuses on quality and design m,any give the impression that there are no suitable substitutes in the market place so then the customer would buy from them as there is no other place like it
Why are USP’s important to small businesses ?
USP - unique selling point —> it means what makes this product different from other on the market
It is a way of promoting the features of the product or service of the business, quality, customer service etc —> a feature is the reliability of the product and the benefit to the customer is less breakdowns and repairs
For a small business - how important is the flexibility in responding to customers needs ?
- A small business can gain significant competitive advantage over larger companies if it responds quickly to customer needs - as then the customers will view the business as more reliable and more prestigious
It can do this by:
- Carrying out research into opinions, looking at customers websites - this is because the customer sees that the business cares about the product and impressing the customer
- Gaining feedback - forums, polls, user groups, online communities
- Track social media discussions about he products
- Collect data on customer transactions - if this one product is not getting bought then maybe it has to be re marketed etc
- Collaborate with customers to produce new products or services
How can customer service help with the survival of a small business ?
A business can differentiate themselves from their competitors by giving them excellent customer service
Consumers appreciate businesses giving them good customer service because they get more for their money
Efficient service, fast delivery and flexible payment terms will help to persuade customers to spend with them rather than a competitor
How can small businesses survive through E- commerce ?
Small businesses can sell successfully through third party websites such as EBay and Amazon
85% of UK consumers aged 18 or over already shop on the Internet
Therefore they can reach more clients and potential save their business because in just a shop maybe they weren’t hitting enough sales t get enough profits etc therefore doing e-commerce could help them reach more customers and gather more sales
