Themes 1 and 4 Flashcards
1
Q
What are the benefits to a business for being in a mass market?
A
- Customer needs and wants are less specific
- Easier to reach economies of scale
- Option to use bulk buying method
2
Q
What are the disadvantages to a business for being in a mass market?
A
- Product may be successful in one area but unsuccessful in other regions.
- High break even output
- Low product prices as the product is generic and less specific to customer needs.
3
Q
what are the Benefits to a business being in a niche market?
A
- Less competition from other businesses and products can be tailored to customer needs
- Can charge higher price as more product is more tailored to customer.
- Customers tend to be more loyal.
4
Q
Disadvantages for a business for entering a niche market?
A
- Fewer potential customers, therefore may be difficult to get retailers to stock the products.
- Low potential for growth.
- Low potential for higher profits.
5
Q
What is a dynamic market
A
A dynamic market is a market that is in a rapidly changing business environment, e.g. samsung, nestle.
6
Q
What are the factors that contribute to change in dynamic markets?
A
- Changes in legislation
- Social changes
- Innovation
7
Q
What is the formula for market share?
A
Sales of the business/total sales in the market X100
8
Q
How does a successful business adapt in order to stay competitive?
A
- Carrying out market research to gain better knowledge on customer preferences
- Investments in new technology and products
- Continuous improvement. Wanting to get better.
9
Q
Advantages to a business for being in a market with high competition
A
- Incentive to innovate and get better
- Focus to improve inneficienties
- Competitive pricing
10
Q
Advantages to a customer for having their product in a highly competitive market.
A
- Lots of choice
- Good value for money
- Exciting new product development
11
Q
Disadvantages to customer for wanting a product in a low competitive market
A
- Limited choice
- High prices
- Poor service
12
Q
Benefits to a business for having low competition
A
- Can dominate the market
- Can afford inefficiencies
- Set high prices
- Little incentive to increase
13
Q
What is primary market research
A
Data collected first hand for a specific research purpose
14
Q
Examples of primary market research
A
- Focus groups
- Interviews
- Mystery shoppers
- Product testing and trial
15
Q
Advantages of primary market research
A
- Tends to be up-to-date
- Tailored to what the business wants to know
- Better if want to collect qualitative data
- More detailed insights- particularly into customer views.
16
Q
Disadvantages to primary market research
A
- Time consuming
- Costly to obtain
- Risks of survey bias- results may not show views of whole population.
17
Q
What is secondary research
A
Data that already exists and was collected by another business for a different purpose
18
Q
Advantages of secondary research
A
- Easily accessible and a good starting point
- Fast and less time consuming
- Better if want to collect quantitative data
19
Q
disadvantages to secondary research
A
- Some data free, detailed reports are expensive to purchase
- Might not be up to date
- Not specific to the business’s needs
20
Q
examples of secondary research
A
- Market research reports
- Government statistics and newspaper articles.
21
Q
Define Product orientated
A
Focus on product inefficiencies and the product itself
22
Q
Define market orientated
A
Focused on customer needs. Understanding what customers want and developing a product that meets their needs.
23
Q
What are the limitations to market research
A
- It is often biased
- A small sample limits the reliability of the research
- Casuality can be hard to identify
- Collecting it is very time consuming
24
Q
Uses of market research
A
- Cash-flow forecasting
- Product development
- Developing marketing
25
Market segmentation allows a business to...
- Differentiate itself from it's competitors
- Identify and satisfy needs of customer
- Build loyalty to brand and products
26
What are the factors that influence the price of a product
- Costs
- Competition
- Product life cycle, and what stage product is in
27
What is dynamic pricing
where the price fluctuates due to levels of demand, e.g. hotel rooms
28
What is price skimming
Business sets high price when product is first released due to high demand, then when demand decreases the price drops.
29
What is competitive pricing
Businesses sets price based on nearest competitor
30
What is psychological pricing
Where the business sets a price below next whole number, e.g. £9.99 instead of £10
31
What is predatory pricing
Where a business sets a low price in order to drive competitors out the market. The business may make a loss for a period of time until competitor falls.
32
What is cost plus pricing
A business bases a price on the unit cost then adds a % as a mark-up. this is effective as it considers the profit margin the business is willing to accept.
33
What is protectionism
Protectionism is when the government limits the amount of imports into the country to protect domestic businesses and home industries
34
What are the main kinds of protectionism
- Tariffs
- Import quotas
- Government Legislation
- Domestic + export subsidies
35
What is a tarrif
A tarriff is a tax that raises the price of an imported good.
36
what are import quotas
Quotas are volume limits on the level of imports allowed.
37
What are subsidies
A payment to encourage domestic production by lowering their costs
38
Key arguements in favour for protectionism
- Infant industry protection,(Help small industries grow as well as reaching EOS)
- Protection of strategic industries, (jobs, skills and capabilities)
- Protection against import dumping
39
Key arguements against protectionism
- High prices for consumers
- Retaliation from other countries
- Extra costs for exporters
40
What is a trading bloc
Trading blocs are partnerships between countries to allow nations to free trade.
41
Benefits of trading blocs
- Opportunities to expand into new markets
| - Allows businesses to to benefit from comparative advantages (CHEAPER HIGHER QUALITY)
42
Negatives of trading blocs
- Infant industries more vulnerable to large international competitors
- Inefficient producers may be protected = poor quality and high prices
43
External factors that affect global competitiveness
- Exchange rate fluctuations
| - Market demand
44
What is cost competitiveness
when a company projects itself from the cheapest manufacturer of a particular product or commodity in a competition
45
what is meant by differentiation
when a business tries to make its product unique and different from other competitors to entice customers to buy it.
46
What is skills shortages
this is where a business has less specialised workers leading to a decrease in producttivity of its workforce.
47
What is capacity utilisation
How much the business is producing at the moment compared to how much they can actually produce
48
formula for capacity utilisation
Exisiting output / Maximum possible output X100
49
Benefits of internal recruitment
- Cheaper than external recruitment
- Managers know their employees = less risk
- May require less training
- Promotion opportunities are good for staff motivation and retention.
50
Benefits of external recruitment
- May widen number of applicants
- Brings in new skills and ideas
- Helps increase the capacity within the business
51
Benefits of Private limited companies (LTD)
- Shareholders have limited liability
- Easier to raise capital through internal shareholders
- Owners may pay less tax if they operate as sole traders
52
Disadvantages to Private Limited Companies (LTD)
- Harder to set up than sole trader or partnerships
- Accounts published and publicly available
- Cannot raise large amounts of capital through selling shares publicly
53
Benefits of Public limited companies (PLC)
- Lots of money can be raised through stock market flotation
- Finance easier to raise through issuing shares
- Size makes it easier to reach economies of scale
54
Negatives of Public Limited Company (PLC)
- Accounts openly available to public
- Greater external pressures from media and pressure groups
- Board of directors is accountable to external shareholders.
