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Business A-level Edexcel > Unit 1- Marketing and People > Flashcards

Unit 1- Marketing and People Flashcards

1
Q

What is a niche market?

A

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants.

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2
Q

What is a mass market?

A

Where a business sells into the largest part of the market, where there are many similar products offered by competitors.

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3
Q

What are the key features of a mass market?

A
  • customers form the majority in the market
  • customer needs and wants are more general and “less specific”
  • associated with higher production output and capacity and potential for economies of scale
  • success usually associated with low-cost (highly efficient) operation or market leading
    brands
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4
Q

What are the advantages of operating in a niche market?

A
  • Less competition
  • Clear focus- target particular customers
  • Builds up specialist skill and knowledge
  • Can often charge a higher price
  • Profit margins often higher
  • Customers tend to be more loyal
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5
Q

What are the disadvantages of operating in a niche market?

A
  • Lack of economies of scale
  • Risk of over dependence on a single product or market
  • Likely to attract competition if successful
  • Vulnerable to market changes
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6
Q

What are the characteristics of a successful product in a mass market?

A
  • Long-lasting, wide appeal that spans age groups and gender
  • Wide appeal comes from the smoothness of the product or service; it has no rough edges or things to dislike
  • Usually successful mass market products will be the market leader, but will not charge too high a price
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7
Q

What are the characteristics of a successful product in a niche market?

A
  • Strong appeal to limited audience
  • Maybe a “marmite characteristic that some love and others hate”
  • Probably a higher unit cost than a mass unit product but is able to charge a price premium because of its distiction
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8
Q

What are the features of niche marketing?

A
  • High price
  • Find and exploit new underserved markets
  • Profits made from a small volume
  • Aiming at a small target market
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9
Q

What is market size?

A

the total number of likely buyers of your product or service within a given market.

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10
Q

What is market growth?

A

Market growth measures the rate of change of market size, which might be rising, falling or remaining stable.

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11
Q

What are the key points about market growth?

A
  • A key indicator for existing and potential market entrants; more businesses might be expected to try to enter fast-growing markets
  • Growth rate can be calculated using either value or volume (units sold)
  • It is usually expressed as a percentage change on the previous period
  • Growth is usually measured on an annual basis
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12
Q

What is market share?

A

Market share is the share of each business in the market at any point of time.

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13
Q

What are the key points about market share?

A
  • Expressed as a percentage
  • Explains how the overall market is split between the existing competitors
  • Tends to be calculated based on market value, but volume can be used
  • Good indicator of competitive advantage: market leaders (highest market share) usually have some kind of advantage
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14
Q

What is a dynamic market?

A

Markets that are constantly changing as consumer needs and wants change.

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15
Q

What are the advantages of online retailing to the business?

A
  • Retailers can market goods to consumers at home
  • Easier to gather personal information from consumers in order to target them
  • Overheads (e.g. sales staff, rent, etc.) can be avoided
  • Businesses can reach more retailers
  • Marketing costs will be lower
  • Open 24hrs
  • Greater flexibility (e.g. updated instantly and as frequently as necessary)
  • Can sell anywhere in the world
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16
Q

What are the disadvantages of online retailing to the business?

A
  • Lots of competition
  • Initial cost of setting of the website
  • Distribution may cause problems
  • Infrastructure costs; costs of physical space for order fulfillment, warehousing goods, etc.
  • Issues with online security worries may put off older generations
  • Need IT skills
  • Competitors can be aware of owner’s business models, prices, and activity
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17
Q

What are the advantages of online shopping for the consumer?

A
  • Available 24/7
  • Lower prices
  • More saving options e.g. discounts
  • Research capabilities
  • Increased choice
  • Convenience
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18
Q

What are the disadvantages of online shopping for the consumer?

A
  • Lack of touch and feel of merchandise
  • Lack of shopping experience
  • Returns can be sometimes a problem
  • Fraud
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19
Q

What causes change in a market?

A
  • Customer tastes and preferences
  • Impact of technology on what customers buy and how they buy
  • Impact on new market enterants
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20
Q

What is competition?

A

Competition occurs when two or more businesses act independently

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21
Q

What is direct competition?

A

When businesses produce similar products that appeal to the same group of consumers

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22
Q

What is indirect competition?

A

Occurs when different businesses make or sell products that are not in direct competition but compete for the same expenditure e.g. shop selling DVDs might be competing with a local cinema.

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23
Q

How will competition affect decision making?

A
  • Nature of ownership
  • Nature of the product/service
  • Product range
  • Pricing policy
  • Marketing methods
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24
Q

How can competition affect the market?

A
  • Battle for market share
    • a constant battle to gain or protect share
    • threat of new market entrants always there
  • Pricing
    • price wars are a regular feature of intense competition
    • stronger competitors often set the market place
  • Battle of competitive advantage
    • Product differentiation is a key part of competition
    • can advantages be sustained?
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25
Q

What is competitive advantage?

A
  • The ability of a business to add more value for its customers than its rivals and attain a position of relative advantage
  • A situation where a business has an advantage over its competitors by being able to offer better value, quality and/or service
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26
Q

What is risk?

A

Something that is planned for- probabilities of outcome are known or at least understood and considered.

e.g.
business investments

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27
Q

What is uncertainty?

A

The unpredictable and uncontrollable events that affect a business

e.g.
Sale success for a new product launch

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28
Q

What is market research?

A

Market research involves the gathering and analysis of research to help support the implementation of marketing strategies

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29
Q

What does market research provide insights for that help aid marketing strategy and decision making?

A
  • Dimensions of the market (size, structure, growth, trends, etc.)
  • Competitor strategies (market share, positioning, USPs)
  • Needs, wants, and expectations of customers (& how they are changing)
  • Market segment; existing and potential opportunities for new segments
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30
Q

What is product orientation?

A

When a business prioritises a products design quality or performance rather than meeting customer preferences to guide production and marketing decisions e.g iPhone

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31
Q

What is the advantage of product orientation?

A

Allows the business to focus on product quality and innovation and to invest in this

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32
Q

What is the disadvantage of product orientation?

A

By focusing on the product and putting customer preferences in second place the product, the product is admired but doesn’t necessarily sell

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33
Q

What is market orientation?

A

Where a business chooses to design a product or service to meet the requirements of customer preference/desires. Market research is critical to the success of a market-orientated business as it allows the business to find out about customer tastes and priorities.

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34
Q

What is the advantage of market orientation?

A
  • Close for with customer expectations

- Greater responsiveness to customer needs

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35
Q

What is the disadvantage of market orientation?

A
  • Regular changed in the appearance and function of a product
  • May leave customers confused about what the brand really stands for
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36
Q

Why is market orientation more likely to result in a successful, sustainable business?

A
  • Markets are much more dynamic
  • Customers are becoming much more demanding
  • Barriers to market entry getting lower
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37
Q

What is primary research?

A

Data collected first-hand for a specific research purpose

e.g.
Focus group
Surveys

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38
Q

What is secondary research?

A

Data that is already exists and which has been collected for a different purpose.

e.g.
Internet/ trade organizations
Government data

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39
Q

What are the advantages of primary research?

A
  • directly focused to research objectives
  • kept private (not publicly available)
  • more detailed insights (particularly into customer views)
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40
Q

What are the advantages of secondary research?

A
  • often free and easy to obtain
  • good source of market insights
  • quick to access and use
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41
Q

What are the disadvantages of primary research?

A
  • time consuming and costly to obtain
  • risk of survey bias
  • sampling may not be representative
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42
Q

What are the disadvantages of secondary research

A
  • can quickly become out of date
  • not tailored to business needs
  • specialist reports often quite expensive
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43
Q

What are the main methods of primary research?

A 
focus groups
observation
surveys
telephone interviews
test marketing
experiments
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44
Q

What are the main methods of secondary research?

A 
published market research reports
internal transactional data
google
official statistics (ONS)
trade associations
media reports
competitor materials
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45
Q

What is qualitative data?

A
  • research that is based on views and opinions, beliefs and intentions
  • answers research questions such as “why? “would?” or “how?”
  • aims to understand why customers behave in a certain way or how they may respond to a new product/service
  • focus groups and interviews are common methods used to collect qualitative data.
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46
Q

What is quantitative data?

A
  • numerical data and can be analysed statistically
  • addresses research questions such as “how many?” “how often?” “who?” “when?” and “where?”
  • based on larger samples and is more statistically valid
  • main methods of obtaining quantitative data are the various form of a survey
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47
Q

What are the benefits of qualitative research?

A
  • essential for important new product development and launches
  • focused on understanding customer needs, wants, expectations= very useful insights for a business
  • can highlight issues that need addressing
  • effective way of testing elements of the marketing mix
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48
Q

What are the drawbacks of qualitative research?

A
  • expensive to collect and analyse; requires specialist research skills
  • based around opinions; always a risk that sample is not representative
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49
Q

What are the benefits of quantitative research?

A
  • data relatively easy to analyse
  • numerical data provides insights into relevant trends
  • can be compared with data from other sources
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50
Q

What are the drawbacks of quantitative research?

A
  • focuses on data rather than explaining why things happen
  • doesnt explain the reasons behind numerical trends
  • may lack reliability if sample size and method is not valid
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51
Q

What does it mean to sample during market research?

A

sampling involves the gathering of data from a sample of respondents, the results of which should be representative of the population as a whole

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52
Q

What are the benefits of sampling?

A
  • even a relatively small sample size (if representative) can provide useful research insights
  • using sampling before making marketing decisions can reduce risk and costs
  • sampling is relatively flexible and relatively quick
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53
Q

What are the drawbacks of sampling?

A
  • biggest risk= sample is unrepresentative of population; leading to incorrect conclusions
  • risk of bias in research questions
  • less useful in market segments where customer tastes and preferences are changing frequently
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54
Q

What does effective market research do?

A
  • reduce risk
  • understand consumer behaviour
  • quantify potential consumer demand
  • understand how much consumers and how they operate
  • the key features of the business environment (SLEPT= economic, social, political, legal conditions, technology)
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55
Q

What are the limitations of market research?

A
  • if the sample size is too small , this means that there is more chance that the respondents who don’t reflect the overall views of the market are over-represented in the sample
  • sample bias: the way the respondents are selected may over represent certain types of people whose views may skew the overall findings away from the views of the total population being researched
  • other bias e.g. interview bias, question bias and respondent bias
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56
Q

Why is IT useful to support market research?

A
  • relatively easy to learn about consumer preferences and buying habitats by mining massive sets of quantitative data
  • complex algorithms can uncover patterns and correlations that enable more effective marketing
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57
Q

What are the 3 main ways IT can support market research?

A
  • company websites can gather data on vistors to the website which can provide some information about online shoppers/browsers interests
  • social media can offer information on consumer attitudes to a product/service, and even allow for an element of relationship building between the business and consumers
  • databases allow vast quantities of data relating to the consumers to be trawled into in order to identify patterns that can help to explain how consumers how consumers actually behave, with much of this data being generated by loyalty cards. Despite their name a major purpose of loyalty schemes is to gather data on customers’ buying habits
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58
Q

What is market segmentation?

A

involves dividing a market into groups that reflect different customer needs and wants

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59
Q

What different factors affect segmentation?

A

customer needs and wants
how customers buy
location of customers
knowledge and experience of customers

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60
Q

What are the benefits of market segmenting?

A
  • products and services can be designed to suit specific needs
  • meeting customer’s needs precisely allows a higher price to be charged
  • promotional activity is easier to target
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61
Q

What are common market segmentation groups?

A 
age
gender
income
hobbies/interests
location
ethnic origin/culture
lifestyle
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62
Q

What is market positioning?

A

market positioning is the deciding exactly what image you are trying to create for your product relative to its rivals.

decision 1: choose which customers to serve (segmentation and targeting)
decision 2: choose how to serve those customers (product differentiation and market positioning)

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63
Q

What dimensions can be used for the axes of a positioning map?

A 
low price/ high price
basic quality/ high quality
low volume/ high volume
necessity/ luxury
light/ heavy
simple/ complex
unhealthy/ healthy
low-tech/ high-tech
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64
Q

What is market mapping?

A
  • the process of creating a diagram that identifies all the products in the market using two key features.
  • it refers to evaluating business ideas and products/services by setting out the features of a market or product on a diagram.
  • it can be used to identify a gap in the market or to reposition a product.
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65
Q

What are the advantages of market positioning?

A
  • helps spot gaps in the market
  • useful for analysing competitors
  • encourages use of market research
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66
Q

What are the disadvantages of market positioning?

A
  • just because there is a “gap” doesnt mean there is a demand
  • not a guarantee of success
  • how reliable is the market research?
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67
Q

What is competitive advantage?

A

using differentiation/ USP to have an edge over the competition

products without a competitive advantage tend not to have a long term future

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68
Q

What can effective differentiation allow a business to do?

A

compete effectively
protect and build a brand = strengthen customer loyalty
add more value
create a USP

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69
Q

What is product differentiation?

A

product differentiation arises when customers percieve a distinct difference your product and the alternatives provided by competitors

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70
Q

What can competitive advantage include?

A 
price
adding value
innovation
reliability
quality
reputation/image
advertising/marketing
branding
convenience and customer service
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71
Q

What are the key requirements for effective product differentiation for a product?

A
  • capable of delievering what is important to customers
  • distinctive: compared with the competition
  • communicated and visible to customers
  • not easily copied by competitors
  • affordable by the target customers
  • profitable
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72
Q

What does adding value mean?

A

the difference between the price that is charged and the total cost of the inputs required to create the product/service. It might be achieved through improving the product/service itself or improving the way consumers perceive the product/service.

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73
Q

How can businesses add value?

A
  • build a brand
  • deliever excellent customer service add product features and benefits that customers want
  • operate efficiently
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74
Q

What is a business?

A

a business is an organisation that exists to provide goods and services on a commercial basis to customers

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75
Q

What are the two types of product that a business can provide?

A

goods: physical products
services: intangible (non-physical) products

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76
Q

What are the benefits of businesses to society?

A

businesses need society and society needs businesses and they both benefit due to:

  • creation of employment and development of human capital
  • drive innovation through research and development and new products
  • pay taxes on profits earned and collect taxes for government
  • create wealth by providing returns on investment
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77
Q

What is an entrepreneur?

A

a person who sets up a business or businesses, taking on financial risks in the hope of profit.

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78
Q

What are the barriers for a start up business?

A
  • support and finance
  • lack of viable business idea
  • gender: women still under-represented as entrepreneurs
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79
Q

What are effective sources of good business ideas?

A
  • business experience (of the entrepreneur)
  • personal experience (as a customer)
  • observations and research
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80
Q

What is a good business idea?

A
  • solves a problem
  • offer a better, cheaper alternative than existing products
  • are ideally simple and practical
  • can be delivered quickly
  • have a clear focus
  • anticipate trends and exploit growing markets
  • can be implemented profitably
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81
Q

What is intrapreneurship?

A

involves people within a business creating or discovering new business opportunities, which leads to the creation of new parts of the business or even new businesses

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82
Q

What are the potential benefits of intrapreneurship?

A
  • help drive innovation within a business

- help provide solutions to problems

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83
Q

What can a business do to encourage intrapreneurship?

A
  • give employees ownership of projects
  • make risk-taking and failure acceptable
  • train employees in innovation
  • give employees time outside the confines of their job description
  • encourage networking and collaborating
  • reward entrepreneurial thinking and activity
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84
Q

What are potential risks?

A
  • the probability that things will not go as well as planned
  • the chance that money invested in the business will be lost
  • the possibility that the entrepreneur will be personally liable for the debts a business incurs
  • risk of not getting another job or having to face the stigma of “failure”
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85
Q

What are the rewards for enterprise?

A
  • profits
  • capital gain
  • self esteem
  • personal develpment
  • sense of control
  • satisfaction from building something
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86
Q

What is enterprise?

A

“the skills and abilities to take risks and create profits”

“the creation of a business to meet the needs and wants of customers”

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87
Q

What are the characteristics of a successful entrepreneur?

A
  • passionate and visionary
  • energetic, driven, and resilient
  • self starting and decisive
  • calculated risk taker
  • focused
  • results orientated
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88
Q

What are the financial motives for starting a business?

A

profit maximisation

  • desire to earn substantial rewards
  • long-term profit maximisation consistent with building valuable business
  • initially, entrepreneur may need to accept losses as business is established

profit satisficing

  • a sufficient profit to enable satisfactory standard of living
  • the entrepreneur will take fewer risks
  • the trade-off is lower returns
  • ssociated with “lifestyle” businesses
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89
Q

What are the non-financial motives for starting a business?

A
  • more control over working life
  • need for flexible working
  • frustration with unfulfilled potential
  • escape an uninteresting job/career
  • pursue an interest or hobby
  • want to be the boss
  • satisfaction from building something
  • want rewards from effort
  • dislike establishment of hierarchy
  • change in personal circumstances e.g. redundancy
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90
Q

What are the drawbacks of being an entrepreneur?

A
  • occasional loneliness and isolation
  • higher responsiblity: can’t blame others when things go wrong
  • financial pressure
  • hard work
  • strain on family and social life
  • higher stress levels
  • needs to multitask
  • difficult to take a “sickie”
  • rollercoater of emotions
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91
Q

What are social enterprises?

A

the most common form of “not-for-profit” enterprises

“businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business/community, rather than being driven by the need to maximise profit for shareholders and owners”

an organisation that exists with a clear goal to help the community but runs the organisation like a business. All profits are reinvested back into the organisation.

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92
Q

What is the purpose of business objectives?

A
  • make a clear statement of what needs to be achieved
  • provide a focus for all business activity
  • aid and inform management decision-making
  • help set targets for individual and group achievement
  • provide a means of measuring performance
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93
Q

What are business objectives?

A
  • the specific intended outcomes of business strategy
  • the anticipated end results of a programme of activities
  • targets that the business adopts in order to achieve its primary aims
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94
Q

What is a smart target?

A

SPECIFIC-state exactly what is to be achieved
MEASURABLE- is it possible to determine whether (or how far) it has been achieved
ACHIEVABLE-realistic circumstances in which it is set and the resources available to the business
RELEVANT- how relevant is it to the people responsible for achieving them?
TIME BOUND- set within a time frame

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95
Q

What are misssion statements?

A

an action-based statement that declares the purpose of an organization and how they serve their customers.

is the overriding goal of the business and the reason for its existence

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96
Q

What is the relationship between corporate and functional objectives?

A

corporate objectives are what a business as a whole wants to achieve

functional objectives are set for the individual functions of a business and are designed to support (and be consistent with) corporate objectives

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97
Q

What is the role of an entrepreneur?

A
  • spot business opportunities
  • take (calculated) risks in order to gain possible future returns
  • act a catalyst for the creation and growth of a business enterprises
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98
Q

What makes an effective mission statement?

A
  • differentiates the business from its competitors
  • defines the markets/business in which the business wants to operate
  • is relevant to all major stakeholders; not just shareholders and managers
  • excites, inspires, motivates, and guides- particularly important for employees
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99
Q

Why are mission statements often criticised?

A
  • not always supported by actions of the business
  • often too vague and general or merely statements of the obvious
  • viewed as a public relations exercise
  • sometimes regarded cynically by employees
  • not supported wholeheartedly by senior management
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100
Q

What are corporate objectives set in terms of?

A
  • profit (value, margin)
  • return on investment
  • growth (revenues, profit)
  • market share
  • cash flow
  • business value (market capitalisation)
  • corporate image and reputation
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101
Q

What are typical themes of corporate objectives?

A 
survival
revenue (growth, sales maximisation, market share)
cost-efficiency or cost minimisation
profits and profitability
employee welfare
customer satisfaction
social
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102
Q

What is an unincorporated business?

A
  • owner is the business
  • owner has unlimited liability for business actions (including debts)
  • most unincorporated businesses operate as sole traders
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103
Q

What is an incorporated business?

A
  • there is a legal difference between the business and the owners
  • the company has a separate legal identity
  • owners have limited liability
  • most incorporated businesses operate as sole traders
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104
Q

What is unlimited liability?

A

the business owner or owners are personally responsible for all of the debts of the business, no matter what the value

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105
Q

What is limited liability?

A

the business owner or owners are only responsible for business debts up to the value of their financial investment in the business.

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106
Q

What are the advantages of operating as a sole trader?

A
  • quick and easy to set up
  • simple to run
  • minimal paper work
  • easy to close/shut down
  • your own boss
  • small capital investment means reduced start-up costs
  • freedom to make decisions
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107
Q

What are the disadvantages of operating as a sole trader?

A
  • unlimited liability
  • harder to raise finance
  • the business is the owner
  • can pay a higher tax rate than a company
  • long hours
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108
Q

What are the advantages of operating as a partnership?

A
  • quite simple
  • minimal paperwork once partnership agreement is set up
  • more expertise and effort
  • partners can provide specialist skills
  • greater potential to raise finance
  • Workload is shared
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109
Q

What are the disadvantages of operating as a partnership?

A
  • unlimited liability
  • Partners may not always agree on decisions for the business
  • Profit is shared between the partners
  • partners are bound to honour the decisions of others
  • complicated to sell/close
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110
Q

What are the main features of a limited company?

A
  • separate legal entities
  • a minimum of 2 and a maximum of 20 partners
  • owned by their shareholders and run by directors
  • shareholders own shares of the company, not the assets
  • the company owns the assets and pay the debts
  • shareholders are not liable for any debts owed
  • LTD; the shares are not traded publicly on the stock exchange
  • PLC; tends to have larger share capital invested and its shares may be publicly traded
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111
Q

What are the advantages of operating as a limited company?

A
  • limited liability
  • easier to raise finance
  • stable form of structure
  • profits are only shared between shareholders (dividends)
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112
Q

What are the disadvantages of operating as a limited company?

A
  • must be registered with the Registrar of Companies
  • high set-up costs
  • harder to motivate and control workers
  • public disclosure of company information
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113
Q

What are the main features of a public limited company?

A
  • a more specialist type of limited company
  • shares may be quoted and traded on a public stock market
  • public companies have substantially more shareholders
  • are subject to significantly greater regulation in terms of public disclosure of financial and other information
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114
Q

What are social enterprises/ not-for-profit?

A

A social enterprise is an organisation that exists with a clear goal to help the community but runs the organisation like a business. All profits are reinvested back into the organisation.

  • community development trusts
  • housing associations
  • sports club
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115
Q

What are franchises?

A

A franchise is a business that gives the right to another person or business to sell goods or services using its name. It does this by providing the person or other business with a licence.

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116
Q

What are the benefits for a franchisee?

A
  • still your own business
  • tested and developed format and brand
  • advice, support, training
  • easier to raise finance
  • no industry expertise required
  • buying power of franchisor
  • lower risk method of market entry and lower failure rate
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117
Q

What are the drawbacks for a franchisee?

A
  • not cheap; initial fees and royalties and commission
  • restrictions on actions
  • problems selling business on
  • long-term rewards for hard work come with doing it alone
  • what happens if franchisor fails?
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118
Q

What is opportunity cost?

A

the cost of a choice made in terms of the next best alternative foregone or sacrificed

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119
Q

What is a trade-off?

A

a sacrifice that must be made to get a certain product or experience

“a decision between 2 choices arising from scarcity of resource, where having more or 1 thing potentially results in having less of another”

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120
Q

What are the key benefits for a franchisor?

A
  • can accelerate the growth of a proven service business format
  • enables rapid geographical growth for a minimum investment
  • still have an option to open solus branches
  • can cream-off “above normal” profits
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121
Q

What is demand?

A

demand for a good or service is the quantity that customers are willing and able to buy at a given price in a given period of time

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122
Q

What causes change in demand?

A
  • price (fall in price= increase in demand)
  • demographics
  • incomes (as income rises so should demand)
  • fashion, tastes and preferences
  • advertising and branding
  • seasonal factors
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123
Q

How does a change in price effect income?

A
  • a fall in price increases the purchasing power of customers
  • this allows customers to buy more with a given budget
  • for normal goods, demand rises with an increase in incomes
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124
Q

How does a change in price effect substition?

A
  • a fall in price of good A makes it relatively cheaper compared to substitutes
  • some customers will switch to good A leading to higher demand
  • much depends on whether products are close substitutes
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125
Q

What happens to a complimentary good when there is a change in price?

A

When the price of a good that complements a good decreases, then the quantity demanded of one increases and the demand for the other increases.

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126
Q

What happens to a substitute good when there is a change in price?

A

When the price of a substitute good decreases, the quantity demanded for that good increases, but the demand for the good that it is being substituted for decreases.

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127
Q

What happens when there is an increase in income?

A

if income rises, customers will buy more of the product/service, shifting the demand curve to the right

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128
Q

What is supply?

A

supply is the quantity of a good that a producer is willing and able to supply onto the market at a given in a given time period

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129
Q

What can cause changes in market supply?

A
  • costs of production
  • external shocks
  • new technology
  • taxation and government subsidies
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130
Q

What is the relationship between supply and costs of production?

A

lower unit costs mean that a business can supply more at each price

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131
Q

What is the relationship between supply and external shocks?

A

significant and often unexpected changes in the external business environment usually impact on market supply

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132
Q

What is the relationship between supply and technology?

A

technological change encourages new entrants to a market and can also enable existing suppliers to become more efficient, thereby increasing their potential to supply

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133
Q

What is the relationship between supply and taxation?

A

indirect taxes

  • taxes on goods and services such as VAT
  • tax on clothes, components, electric cars, gas
  • if indirect tax goes down, businesses will want to supply more of the product; supply curve moves to the right
134
Q

What is a subsidy?

A

any form of government support offered to producers and (occasionally) consumers.

135
Q

What is market equilibrium?

A

The situation where supply and demand are balanced, making the price stable.

136
Q

What happens to the supply and demand curve when there is a rise in demand?

A

shift of the demand curve to the RIGHT- which leaves a shortage at current price, so that price will rise and the equilibrium quantity will increase

137
Q

What happens to the supply and demand curve when there is a fall rise in demand?

A

shift of the demand curve to the LEFT- which leaves a surplus at current price, so that price will fall and the equilibrium quantity will decrease

138
Q

What happens to the supply and demand curve when there is a rise in supply?

A

shift of the supply curve to the RIGHT- which leaves a surplus at current price, so that price will fall and the equilibrium quantity will increase

139
Q

What happens to the supply and demand curve when there is a fall in supply?

A

shift of the supply curve to the LEFT- which leaves a shortage at current price, so that price will rise and the equilibrium quantity will decrease

140
Q

What is price elasticity of demand?

A

PED measures the extent to which the quantity of a product demanded is affected by a change in price.

141
Q

What is elasticity?

A

the responsiveness of demand to a change in a relevant variable

142
Q

What does it mean when the PED is more than 1?

A

change in demand is more than the change in price

143
Q

What does it mean when the PED is less than 1?

A

change in demand is less than the change in price

144
Q

What does it mean when the PED is exactly = 1?

A

change in demand = change in price

145
Q

Why does PED matter (PRICE ELASTIC)?

A

if PED >1 then the change in price will cause a LARGER change in demand

  • overall revenues would increase with a price cut
  • overall revenues would fall with a price increase
146
Q

What happens when the PED <1 (PRICE INELASTIC)

A

if PED <1 then the change in price will cause a SMALLER change in demand

  • overall revenues would fall with a price cut
  • overall revenues would increase with a price increase
147
Q

What factors will influence what the PED is for a product?

A
  • brand strength; strong brand loyalty= INELASTIC
  • necessity; the more necessary a product= INELASTIC
  • habit; products that are demanded and consumed s a matter of habit= INELASTIC
  • availability of substitutes; demand for products that have lots of alternatives=ELASTIC
  • time; price changes tend to have less impact on demand in the short run
  • luxury goods; INELASTIC
148
Q

What is income elasticity (YED)?

A

income elasticity of demand measures the extent to which the quantity of a product demanded is affected by a change in income.

149
Q

How does YED affect most normal products?

A
  • a rise in in consumer income will result in a rise in demand
  • a fall in consumer income will result in a fall in demand
150
Q

How does income elasticity affect Luxury items?

A
  • income elasticity more than 1 and positive
  • as income grows, proportionally more is spent on luxuries

eg
expensive holidays
branded goods

151
Q

How does income elasticity affect necessity items?

A
  • income elasticity is less than 1, but more than 0 and positive
  • as income grows, proportionally less is spent on necessities

eg
own-label goods
staple groceries

152
Q

As income rises demand actually falls. Why does demand fall?

A
  • consumers switch to better alternatives

- substitute products become affordable

153
Q

What is the significance of price elasticity?

A
  • forecasting sales; by considering the likely impact of planned future price changes
  • deciding the best pricing strategy for increasing revenue
154
Q

What are the limitations of using elasticities?

A
  • it can be difficult to get reliable data on how demand changes in relation to price (although this is getting easier with the emergence of big data)
  • other factors affect demand (eg consumer tastes)
  • many markets subject to rapid technological change- make previous data less reliable
  • competitors will react; pricing decisions can’t be taken in isolation
155
Q

What factors influence YED?

A
  • is it a luxury? necessity? inferior good?
  • expectations of changes in income, such as loss of job, promotion, recession or economic growth
  • the degree of attractiveness to the consumer
  • how large a proportion of household income is spent on the item
156
Q

What is the significance of YED?

A
  • sales forecasting
  • financial planning eg budgets and financial plans
  • product portfolio management eg some business will make sure their portfolios contain products with a range of income elasticities
157
Q

What is the marketing mix?

A

a combination of elements used by a business to enable it to meet the needs and expectations of customers

4ps
price
place
promotion
product
158
Q

What is the design mix?

A

function
aesthetics
cost

159
Q

What is the meaning of function?

A
  • the way the product works
  • does it do what it needs to do?
  • is the product reliable?
160
Q

What is the meaning of cost?

A
  • does the design allow the product to be made and sold profitably?
  • how much value is added during the production process?
161
Q

What is meant by aesthetics?

A
  • how the product appeals to the customer in terms of how it looks, feels, etc.
  • based on the subjective judgement of customers
  • a popular way to differentiate a product
162
Q

What are the common features of products that successfully emphasise function?

A
  • more predictable and stable demand
  • longer product life cycles
  • lower promotional costs
  • build reputation for quality based on reliability
  • economic manufacture through economies of scale
163
Q

What are the common features of products that successfully emphasise aesthetics?

A
  • high added value
  • demand fuelled by customer aspiration
  • potentially shorter product life cycle
  • attracts imitation= need for design protection
  • need for greater promotional support
164
Q

How does the design mix change to reflect social trends?

A
  • Sustainability
  • concern over resource depletion
  • ethical supply chains/ethical sourcing
  • designing for waste minimisation
165
Q

What is a brand?

A

A product that is easily distinguished from other products so that it can be easily communicated and effectively marketed

166
Q

What is product design?

A

Product design is the means by which customer demand for new and varied products can be met. A good design contributes to a product’s usefulness as well as its look(s).

167
Q

What is branding?

A

The process involved in creating a unique name and image for a product in the customer’s mind, mainly through advertising campaigns with a consistent theme.

168
Q

What is a brand name?

A

A name, term, sign, symbol, design, or any part other feature that allows consumers to identify the goods/ services of a business and to differentiate them from competitors

169
Q

Benefits of effective branding

A
  1. It adds significant value
  2. Able to charge higher prices and demand is more price INELASTIC
  3. Builds customer loyalty and desire
  4. Reduce elasticity of demand
170
Q

What environmental issues do product designs need to consider to address sustainability?

A
  • use of raw materials, water, and other resources
  • energy use and its impact on climate change
  • waste and pollution produced by the business
  • the impact the business has on employees and the local, wider, and international community
171
Q

What are the different types of branding?

A
  1. Product brand
    - brands associated with certain products
    - FMCG (FAST MOVING CONSUMER BRANDS)
    - e.g. Persil, PotNoodle
  2. Service brand
    - either delivered online/ via app or face-to-face
    - e.g. Netflix, Uber
  3. Umbrella (FAMILY) brand
    - brands that are assigned to more than one product
    - makes different product lines identifiable by consumer grouping them under one brand name
    - e.g. Dove, Cadbury
  4. Corporate/ manufacturer and own-label brands
    - e.g. Nestle, Unilever, BBC
  5. Own-label brands
    - where retail outlets assign their corporate branding to a range of goods and services
    - e.g. Tesco Finest
  6. Global brands
    - easily recognised and operating worldwide
    - based on familiarity, stability, and availability
    - e.g. Ikea, McDonald’s
172
Q

What is rebranding?

A

is a marketing strategy in which a new name, term, symbol, design, or combination is created for an established brand with the intention of developing a new, differentiated identity in the minds of consumers, investors, and/or competitors.

173
Q

What are ways to build a brand?

A
  • different methods of promotion/advertising
  • create a USP
  • sponsorship
  • use of social media to build a relationship between the business and consume
174
Q

How does branding and promotion change to reflect social trends?

A

Viral marketing:

  • uses social media and online platforms to try to produce increases in brand awareness or to achieve other marketing objectives.
  • DEFINITION: any strategy that encourages people to pass on messages to others about a product or a business electronically

Social media:
- just like traditional media, are seen by many businesses as another place where they can display their promotional messages, through Instagram or other online pages.

Emotional branding:
- is the practice of building brands that appeal directly to a consumer’s emotional state, needs, and aspirations e.g. clothing, confectionary and toiletries

175
Q

What is promotion?

A

Techniques used to make products known to consumers. Promotion in marketing has 2 key tasks: to inform and persuade.

The main aim of promotion is to ensure that customers are aware of the existence and positioning of products.

176
Q

What is the promotional mix?

A

Describes the promotional methods that a business uses to pursue its marketing objectives

177
Q

What are the elements of the promotional mix?

A
  • Advertising
  • Sales promotion and merchandising
  • Personal Selling
  • Public Relations/ publicity/sponsorship
  • Direct marketing
178
Q

What are the key influences on what promotional elements are used and how?

A

Stage in the product’s life cycle
*position in the life cycle will require different promotional methods

Nature of the product
*what information do customers need before they buy?

Competition

  • what are rivals doing?
  • what promotional methods are traditionally effective in the market?

Marketing objectives and budget

  • what does promotion need to achieve?
  • how much will it cost?

Target market
*appropriate ways to reach the target market segmentation

179
Q

What are advertisings pros and cons?

A

+ wide coverage
+ control of message
+ repetition means that the message can be effective
+ effective for building brand awareness and loyalty

  • often expensive
  • can be impersonal
  • one way communication
  • lacks flexibility
  • limited ability to close a sale
180
Q

What are personal sellings pros and cons?

A 
\+high customer attention
\+message is customised
\+persuasive impact
\+potential for development of relationship
\+adaptable
\+opportunity to close the sale
  • high cost
  • labour intensive
  • expensive
  • can only reach a limited number of customers
181
Q

Sales promotion pros and cons

A

+effective at achieving a quick boost sales
+encourages customers to trial a product or switch brands

  • sales effect may only be short term
  • customers may come to expect or anticipate further promotions
  • may damage brand image
182
Q

PR pros and cons

A

PR includes: press releases, sponsorships, donations to charities/local communities

+audiences are more likely to trust messages coming from an objective source rather than paid-for advertising messages
+can be an economical way to reach a large audience in comparison to paid for advertising media placement
+can help raise your company’s authority, build relationships with key audiences, and ultimately take your business to the next level

  • no direct control you can’t exactly control how your business is portrayed by the media, when your message will appear, and where it will be placed
  • never guarantee your story will be published
183
Q

Sponsorship pros and cons

A

+Build relationships.
+ sponsoring events, charities or projects is that it builds awareness of your brand, exposing your business to a wider audience and giving them a positive association with your brand

  • the actions of any person/brand/event you sponsor will immediately be linked to you
  • there is no guaranteed return on investment
184
Q

Direct marketing pros and cons

A

+focused limited resources on targeted promotion
+can personalise the message
+relatively easy to measure response and success

  • response rates vary
  • a negative image of junk mail and email spam
  • databases expensive to maintain and keep accurate
185
Q

Merchandising pros and cons

A

+encourages customer loyalty
+attracts customers
+increase brand recognition

  • can be expensive
  • once is not enough
186
Q

What is price?

A
  • the money charged for a product or service
  • usually expressed in terms of £
  • the only element of the marketing mix that impacts directly on the value of sales
187
Q

What are the financial objectives?

A
  • maximise profit
  • achieve a target level of profit
  • maximise sales revenue
  • improve cash flow
188
Q

What are the marketing objectives?

A
  • maintain/improve market share
  • beat/prevent competition
  • increase sales
  • build a brand
189
Q

What are pricing methods?

A

the methods used to calculate the actual price set

Competitive Pricing
Cost-plus Pricing
Markup Pricing
Demand Pricing

190
Q

What are pricing tactics?

A
  • adopted in the short run to suit particular circumstances

- limited impact beyond the product itself

191
Q

What are pricing strategies?

A
  • adopted over the medium to long-term to achieve marketing objectives
  • have a significant impact on marketing strategy
192
Q

What are the main influences on pricing?

A
  • costs
  • elasticity of demand
  • product life cycle
  • market share
  • marketing objectives
  • positioning
  • competitors
193
Q

What is cost plus pricing?

A
  • basing your prices on costs
  • popular method of cost-based pricing is mark up - widely used in retailing

the method ensures some profit is made : PRICE CHARGED=UNIT COST+ (% MARK-UP)

194
Q

What is price skimming?

A
  • this involves setting a high price to maximise profit
  • aims to maximise profits per unit to achieve quick recovery of development costs
  • best used in the introduction or early growth stage
195
Q

What is penetration pricing?

A
  • involves offering a product at a low introductory price
  • aims to build sales of higher-priced related items (hook and bait)
  • price can be increased once target market share is reached
196
Q

What is psychological pricing?

A
  • Setting prices lower than a whole number- makes it seem cheaper than what it is
  • e.g £9.99
197
Q

What is loss leader?

A
  • where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services
  • encourages customers to buy other full price products from the business with the loss leader product
198
Q

What is dynamic pricing?

A

*when a businesses set flexible prices for products or services based on current market demands

199
Q

What is competitive pricing?

A

*when a business bases its prices on what competitors are doing

200
Q

What is predatory pricing?

A

*price cutting or offer of “free gifts/products” to force rivals out of business or prevent new competition

201
Q

What influences the most appropriate pricing strategy?

A
  • amount of differentiation/ number of USPs
  • price elasticity of demand
  • the level of competition in the business environment
  • strength of the brand
  • stage in the product life cycle
  • costs and the need to make a profit
202
Q

how does price change to reflect social trends?

A

Online sales

  • may be more sensitive online than on the high street because consumers find it easier to compare prices than those walking around different stores
  • pricing levels may be lower as running an online business generates lower fixed costs than bricks and mortar stores with prime locations
  • company’s with both online and in-store presence may have be a little more price competitive with their online business

Price comparison websites

  • sites such as comparethemarket.com appear to be encouraging firms to be price competitive so their products and services show up as best value on the website
  • some are simply sales outlets for producers and consumers should be assuming they are being told the best deals
203
Q

What is distribution?

A

distribution is the one of the four elements of the marketing mix. It involves the ways in which a product reaches the end consumers.

the ultimate aim of effective distribution is to make products available in the right place at the right time in the right quantities.

204
Q

What should businesses consider when thinking about distribution?

A
  • how can they ensure that their products reach existing and potential customers?
  • how and where do customers prefer to buy the product?
  • how important are factors such as as stock availablity, price and speed of delievery?
205
Q

`What are distribution channels?

A

it involves the movement of a product through stages from production to consumer

206
Q

What is the purpose of a distribution channel?

A
  • to provide a link between production and consumption
  • help gather market information
  • communicate promotional offers
  • find and communicate with prospective buyers
  • physical distribution- transporting and storing
  • financing- other parties finance the inventory
  • share risk-taking- other parties take some risk by handling inventories
207
Q

Who are the main players in distribution?

A

Producers
-organisations that take raw materials/components and process them into finished/ semi-finished goods

Wholesalers

  • buy large quantities of supplies from producers and sell them in smaller quantities to retailers
  • they are between producers, retailers, and customers

Retailers

  • an organisation that sells goods and services to the public
  • they are the end of the distribution channel
208
Q

What is a multi-channel?

A

it is when a firm chooses a combination of distribution channels

e.g. a combination of direct and traditional

+allows more target market segments to be reached
+enables higher revenues

  • can be complex to manage
  • the danger that pricing strategies become confused (for customers)
209
Q

What is a traditional distribution channel?

A

producer –> wholesaler –> retailer —> consumer

+reduces producer’s transport costs
+covers a larger geographic area
+good knowledge of the market- right producers supplied

  • reduces direct contact between retailer and manufacturer
  • the profit mark up applied by the “middleman” adds to the final retail price

e.g. groceries and confectionary

210
Q

What is a modern distribution channel?

A

producer–> retailer –> consumer

+good distribution links of large retailers
+large deliveries
+easier for producers to distribute their products

  • buying power of big retailers to influence price
  • poor customer service could limit sales
  • causes higher prices for the end consumer, as the intermediary must make a profit

e.g. electrical goods and cars

211
Q

What is a direct distribution channel?

A

producer –> consumer

Where a producer and consumer deal directly with each other without the involvement of an intermediary

+cuts out the middleman and reduces costs
+direct customer contact
+encourages other purchases

  • expensive to set up
  • need to build relationships
  • there are limited distribution channels (mainly through e-commerce or shops)

e.g. factory outlets and holiday companies that dont use travel agents

212
Q

What is indirect distribution?

A

Involves the use of intermediaries between the producer and consumer

213
Q

What decisions need to be made when choosing a distribution channel?

A
  • channel length: direct or indirect?
  • choice of intermediary
  • use just one or several channels?
  • how to move the goods through the channel?
  • control over the channel: who decides price, promotion, packaging?
214
Q

How do distribution and online shopping work?

A
  • direct distribution
  • websites offer a wide and varied range of products, with the chance to update the product
  • online distribution offers small firms the chance to reach a global audience in a way other channels simply could not offer
215
Q

What is a product?

A

Anything that is capable of satisfying customer needs and wants

216
Q

What is the product life cycle?

A

A theoretical model that describes the stages a product goes through over its life. This well-known method can be used to:

  • forecast future sales trends
  • help with market targeting and positioning
  • help analyse and manage the product portfolio
217
Q

What are the 5 stages of the product life cycle?

A
  • research and development
  • introduction
  • growth
  • maturity
  • decline
218
Q

What are the features of the development stage?

A
  • often complex and time-consuming
  • cost of development often rises as product approaches launch
  • may not be successful- high failure rate
  • test launch may reduce the risk of product failure
  • can be a long lead time before sales are achieved
219
Q

What are the features of the introduction stage?

A
  • new product launched on the market
  • likely to be a low levelof sales- penetration pricing may help build customer demand
  • low capacity utilisation and high unit costs
  • usually negative cash flow
  • distributors may be reluctant to take an unproven product
  • heavy promotion to make consumers aware of the product
220
Q

What are the features of the growth stage?

A
  • fast growing sales, helped by wider distribution
  • rise in capacity utilisation- should lower unit costs
  • product gains market acceptance
  • cash flow may become positive
  • the market grows, profits rise but attracts the entry of new competitors
221
Q

What are the features of the maturity stage?

A
  • slower sales growth as rivals enter the market = intense competition
  • high level of capacity utilisation
  • high profits for those with a high market share
  • cash flow should be strongly positive
  • weaker competitors start to leave the market
  • prices and profits fall
222
Q

What are the features of the decline stage?

A
  • falling sales
  • market saturation and/or competition
  • decline in profits and weaker cash flows
  • more competitors leave the market
  • decline in capacity utilisation- switch capacity to alternative products
223
Q

What is the purpose of an extension strategy?

A

to prevent a decline in the product’s sales in the medium-to-long term.

the two main variables for basing anew extension strategy are the product itself and promotion.

224
Q

What are some examples of extension strategies?

A
  • lowering the price
  • changing promotion (e.g. new promotional message)
  • changing the product- rebrand or product improvement
  • looking for alternative distribution channels
  • developing a new market segment
  • find new uses for the product
  • repositioning the product
225
Q

What are the limitations of the product life cycle?

A
  • it is a THEORETICAL model
  • the shape and duration of the cycle varies from product to product
  • it is difficult to recognise exactly where a product is in its life cycle
  • length cannnot be reliably predicted
  • decline is not unavoidable
226
Q

What is a product portfolio?

A

Product portfolio analysis assesses the position of each product or brand in a firm’s portfolio to help determine the right marketing strategy for each.

227
Q

What is the boston matrix?

A

It categorises the products into one of four different areas based on:

  • market share= does the product being sold have a high or low market share?
  • market growth= are the numbers of potential customers in the market growing or not
228
Q

What are the categories of the boston matrix?

A
  • stars (high growth, high market share)
  • cash cows (low growth, high market share)
  • question mark/problem child (high growth, low market share)
  • dogs (low growth, low market share)
229
Q

How valuable is the boston matrix?

A
  • it is a useful tool for analysing product portfolio decisions
  • but is only a snapshot of the current position
  • it has little or no predictive value
  • focus on market share and market growth ignores issues such as developing a sustainable competitive advantage
230
Q

What is the description of a star?

A

excellent products with high growth and high market share but need constant advertising

231
Q

What is the description of the question mark?

A

big investment to develop and advertise to start with but it has big sales potential for the future

high market growth and low market share

232
Q

What is the description of cash cow?

A

profits from cash cows help fund new products. sales made with little investment

low market growth and high market share

233
Q

What is the description of a dog?

A

sales are falling and it may be taking profit to keep the dog alive

low market growth and low market share

234
Q

What is the purpose of portfolio analysis?

A
  • building- investing in promotion and distribution to boost sales, often used with problem child (question mark)
  • holding- market spending to maintain sales, used with star products
  • milking- taking whatever profits you can without much more new investment, often used with cash cows
  • divesting- involves setting off the products, common with dogs
235
Q

What does the term marketing strategy mean?

A

a term used to describe the general approach to marketing used by a business.

strategy is about the future and relies on predicting the market and ensuring that the plan devised for marketing the business’s products suits the market conditions that will develop during the life of the strategy.

236
Q

What is a niche markets strategy?

A

niche marketing aims to market a product at a small group in a larger market. Using a niche marketing strategy makes a product easily differentiated in the market, so in the short term, it can avoid competition. However, as the market is comparatively small there is little room for competition, so any other business entering the market may reduce competition.

PRODUCT- likely to have significant differences from its rivals, the product will be designed to meet very specific needs of the customer group
PRICE- may be high
PROMOTION- more targeted
PLACE- distribution channels more selective

237
Q

What is a mass markets strategy?

A

this aims to market a product to a larger market. This means the product may not b differentiated as significantly as a niche market product in terms of features. Products are available to a wide audience, so this spreads the risk to the business. However, there will be a greater number of competitors offering products that are very similar, so the risk is that a business may be forced to compete more on price, thus reducing profits.

PRODUCT- many products, maybe many substitutes, the business will be aiming to create a usp
PRICE- often similar, usually there is a price leader and the other businesses follow
PROMOTION- often lots of heavy investment in this area
PLACE- often use multiple channels of distributi

238
Q

What is a business to consumer (B2C) strategy?

A

with business-to-consumer marketing, getting and keeping the right image for the product/service is vital. Of course, all aspects of the marketing mix contribute to creating the image, so continually revisiting the marketing mix to ensure that consumers are getting the overall product they want is vital. The goal of any business to consumer marketing strategy must be developing customer loyalty among an ever-growing base of customers

239
Q

What is a business to business (B2B) strategy?

A

any marketing strategy or content that is geared towards a business or organization.

240
Q

What is style of management where staff are treated as an asset?

A

Soft HRM

  • treats employees as the most important resource in the business and a source of competitive advantage
  • employees are treated as individuals and their needs are planned accordingly
241
Q

What is the style of management where staff are treated like a cost?

A

Hard HRM

  • treats employees as a resource of the business
  • strong link with corporate business planning- what resources do we need, how do we get them and how much will they cost?
242
Q

What is the main focus of soft HRM?

A

concentrate on the needs of employees- their roles, rewards, motivation etc

243
Q

What is the main focus of hard HRM?

A

-identify workforce needs of the business and recruit and manage accordingly (hire, move and fire)

244
Q

What are the key features of soft HRM?

A
  • strategic focus on longer term workforce planning
    -strong and regular two-way communication
    competitive pay structure, with suitable performance-related rewards
    -employees are empowered and encouraged to seek delegation and take responsibility
    -appraisal systems focused on identifying and addressing training and other employee development needs
    -flatter organisational structure
    -suits democratic leadership style
245
Q

What are the key features of hard HRM?

A
  • short term changes in employee numbers (recruitment, redundancy)
  • minimal communication, from the top down
  • pay- enough to recruit and retain enough staff (e.g. minimum wage)
  • little empowerment or delegation
  • appraisal systems focused on making judgements about staff
  • taller organisational structures
  • suits autocratic leadership style
246
Q

What is the best approach to management? Hard or Soft HRM?

A

Soft

  • seen as an approach that rewards employee performance and motivates staff more effectively
  • however, be too “soft” and when all the employee benefits are added up, the cost of the workforce may leave a business at a competitive disadvantage

Hard

  • might result in a more cost-effective workforce where decision making is quicker and focused on senior managers
  • but a genuinely “hard” approach might expect to suffer from absenteeism and staff turnover and less successful recruitment
247
Q

What are wages?

A

a fixed payment to employees based on hours worked.

  • paid by the hour with a pay packet normally received at the end of each week
  • often paid to lower-skilled workers or to temporary staff
  • any additional hour worked normally paid a higher rate on an overtime basis
248
Q

What are salaries?

A

a fixed annual sum paid monthly to employees

  • often set on an annual basis but payment is made at end of each month
  • normally paid to managers or those higher up in a company
  • a set number of hours is not normally agreed but employment contract requires enough hours worked to get job done
249
Q

What is flexible working?

A

working arrangements where there are a variety of options offered to employees in terms of working time, location, and pattern of working

250
Q

What does flexible working include?

A 
multi-skilling
part-time
temporary
flexible hours
home working
outsourcing
251
Q

What is multiskilling?

A

where staff are allowed to carry out a variety of tasks rather than specialise

multi-skilling enables greater use of job rotation
common in service industries e.g. retail, hotels
puts a greater requirement on training

252
Q

What is a part time or temporary contract?

A

A part-time worker will work less than 35 hours per week.

part time hours allow people to fit work in alongside other commitments. This can help bring people into the workplace who may offer excellentskills and experience but are unable to commit to full time work.

temporary are employed on short-term contracts, meaning that if the employer no longer needs them, the contract is not renewed.

253
Q

What are flexible hours?

A

is where staff vary the hours they work to meet both the needs of the business and to some extent their own needs. The business can match staff working hours to periods of demand from customers. This is the staffing basis of companies such as the taxi firm Uber.

254
Q

What is home working?

A

involves the employee carrying out all or part of their job at home without the need to attend the business’ premises. The business can reduce the cost of providing space for employees to work.

however, staff may be less productive as the business is not able to supervise the work effectively

255
Q

What is outsourcing?

A

involves delegating one or more business processes to an external provider, who then owns, manages and administers the selected processes to an agreed standard.

it has become increasingly common for more complex businesses that want to focus on their core activities. It is also common to find smaller businesses outsourcing administrative functions until they have reached a size that justifies having specialist skills on the payroll.

256
Q

What is a zero hour contract?

A

where the business does not guarantee any work to the employee until they can see that the demand is there to need them. The business can match demand from customers with the employees to meet that demand very precisely. However, employees become demotivated as they may feel under valued, particularly if they do not get regular hours.

257
Q

What are the advantages of flexible working for businesses?

A
  • savings on costs- can make substantial savings on overheads if it doesnt have to provide office and other accommodation for fo many employees or if staff can work from home
  • helps with recruitment and staff retention- flexible working results in better satisfaction and higher staff morale
  • reflects the changing profile of the UK workforce- more women in the labour market and an ageing population= a result in increasingly common for staff to have caring responsibilities outside work
  • takes advantage of developments in technology- simple and cost effective for employees to be able to access their employers online and other networked systems, and to communicate digitally with colleagues
  • an increasing need for businesses to offer extended opening hours
  • increasingly, the law allows certain groups of employees the legal right to request flexible working
258
Q

What are the disadvantages of flexible working?

A
  • additional ministrative work and “red tape” involved in setting up and running flexible working
  • potential loss of customers if key employees reduce their working hours
  • lower employee productivity (potentially)
  • inability to substitute for certain skills if certain employees are absent
  • managers finding it difficult to manage or adminster the flexibility
259
Q

What is the difference between dismissal and redundancy?

A

dismissal (aka. firing or sacking)= is the termination of employment by an employer against the will of the employee

redundancy= employees are made redundant when a business needs to reduce the size of itsworkforce or even close. Redundancy can be voluntary

260
Q

Why might dismissal happen?

A
  • break of contract or other unacceptable behaviour or performance
261
Q

Why might redundancy happen?

A

employee loses job because job is no longer required by the business

262
Q

What is an individual approach to employer/employee relations?

A
  • when a single worker negotiates their working conditions and pay with management.

issues can include:

  • pay
  • holidays
  • bonuses
  • any introduction of new working practises and other changes in the workplace

it can reduce conflicts between the two parties as they discuss the issue directly and understand each other’s position on the employment contract. However, the business is often in the dominant postion to dictate the terms of the negotiations

263
Q

What is a collective approach to employer/employee relations?

A
  • employees and workforce representatives; for example, this could be through a trade union e.g. UNISON. Trade unions act to protect and improve the economic and working conditions for their members
  • occurs when an employer deals with one or a few worker representatives for the whole workforce when discussing problems, or negotiating pay rises or changes to working conditions
264
Q

What is employee representation?

A

It arises when employees are part of a formal structure for involving them in the decision-making process of a business.

265
Q

What employment law in the UK requires employers to involve employees?

A
  • proposed redundancy programmes
  • when employees are transferred from one employer to another
  • changes to pension arrangements
  • proposed changes to working time arrangement
266
Q

How does a formal system of employee representation help?

A
  • make employees’ views known to management
  • strengthen both management’s and employee’s understanding of workplace issues and other matters affecting the business
  • create an atmosphere of mutal trust between employees and management and therefore improve workplace retentions
267
Q

What are the advantages and disadvantages of employee representation?

A

+ increased empowerment and motivation of the workforce
+ employees become more committed to the objectives and strategy of the business
+ better decision- making because employee experience and insights taken into account
+ lower risk of industrial disputes

  • time-consuming
  • conflicts between employer and employee interests may be a block to essential charge
  • managers may feel their authority is being undermined
268
Q

What are the advantages of a well-motivated and engaged workforce?

A
  • better productivity
  • better quality
  • lower levels of absenteeism
  • lower levels of staff turnover
  • lower training and recruitment costs
  • reliable and loyal staff
269
Q

What is the role of trade unions?

A
  • protect and improve the real incomes of their members
  • provide or improve job security
  • protect workers against unfair dismissal and other issues relating to employment legislation
  • lobby for better work conditions
  • offer a range of other work-related services including support for people claiming compensation for injuries sustained in a job
270
Q

What is recruitment and selection?

A

the process of finding and hiring the best qualified candidate for a job opening, in a timely and cost-effective manner

271
Q

What is the recruitment process?

A

application
interview
asssessment days
in-tray activities

272
Q

What are the reasons to recruit employees?

A

business expansion due to…

  • increasing sales of existing products
  • developing new products
  • entering new markets

existing employees leaving…

  • to work with competitors or other local employers
  • retirement,sick leave, maternity leave
  • business need new skills
  • business is relocating- and not at all of existing workforce want to move to new location
273
Q

What are the costs of recruiting, selecting and training?

A
  • lost output from replacing an employee

- logistical cost of running a recruitment and selection process

274
Q

What is a job description?

A

a detailed explanation of roles and responsibilities of post advertised
most applicants will ask for this before applying for a job
refers to post available rather than person

275
Q

What is a job specification/person specification?

A

drawn up by the business
sets out qualifications, skills, experience and personal attributes a successful candidate should possess
vital tool in assessing suitability of job applicants
refers to person rather than post

276
Q

What are methods of selection?

A

INTERVIEWS

  • common method
  • face to face or telephone
  • offer a chance to hold a conversation, allowing follow-up questions

TESTING AND PROFILING

  • attempting to bring objectivity to the selection process, aptitude tests can uncover skill levels in certain tasks
  • profiling helps identify the personality type of candidates

ASSESSMENT CENTRES

  • invited to attend an assessment centre where a range of selection methods can be combined to better assess abilities and performance
  • role plays, group tasks, and interviews
277
Q

What does a job description contain?

A 
job title
reporting responsibilities
subordinates
main purpose
main tasks
employment conditions
278
Q

What are methods of recruitment?

A

internal recruitment
-promotion, reorganisation

external recruitment

  • job centres
  • advertisements
  • recruiting agencies
  • headhunting
  • personal recommendation
279
Q

What are the benefits of training?

A
  • better productivity
  • higher quality
  • more flexibility through better skills
  • less supervision required
  • improved motivation
  • better recruitment and employee retention
  • easier to implement change in the business
280
Q

What are the drawbacks of training?

A
  • training uses up valuable resources; opportunity cost
  • means employees are unavailable to the business at that time
  • once trained employees often leave for better jobs
  • some managers avoid training because it lessens their control
  • benefits may not be noticed for quite a while
281
Q

Why does training motivate a workforce?

A

asssuming training is effective…

  • employees feel more loyal to firm
  • shows that business is taking an interest in its workers
  • provide employees with greater promotional opportunities
  • enables employees to achieve more at work
282
Q

What are the benefits of internal recruitment?

A
  • cheaper and quicker
  • people already familiar with business and how it operates
  • provides opportunities for promotion
283
Q

What are the drawbacks of internal recruitment?

A

-business already knows strengths and weaknesses
-limits number of potential candidates
-no new ideas
may cause resentment amongst candidates not appointed
-creates another vacancy which needs to be filled

284
Q

What are the benefits of external recruitment?

A
  • outside people bring new ideas
  • larger pool of workers from which to find best candidate
  • people have a wider range of experience
285
Q

What are the drawbacks of external recruitment?

A
  • longer process
  • more expensive due to advertisements and interviews
  • selection may not be effective enough to reveal best candidate
286
Q

What is on the job training?

A

where an employee learns/develops skills whilst doing the job

287
Q

What are the common methods of on the job training?

A
  • demonstration/instruction; showing trainee how to do the job
  • coaching
  • job rotation; trainee given several jobs in succession, to gain experience of a wide range of activities
  • projects; employees join a project team; gives exposure to other parts of the business
288
Q

What are the benefits of on the job training?

A
  • generally most cost effective
  • employees are actually productive
  • opportunity to learn whilst doing training alongside real employees
289
Q

What are the drawbacks of on the job training?

A
  • quality depends on ability of trainer and tie available
  • bad habits might be passed on
  • learning environment may not be useful
  • potential disruption to production
290
Q

What are the benefits of off the job training?

A
  • wider range of skills/qualifications can be obtained
  • can learn from outside specialists/experts
  • employees can be more confident when starting job
291
Q

What are the drawbacks of off the job training?

A
  • more expensive
  • lost working time and potential output from employee
  • new employees may still need some induction training
  • employees now have new skills/qualifications and may leave for better jobs
292
Q

What is off the job training?

A

training that takes place away from the workplace.

  • day or part-time attendance at college
  • professional development courses or conferences
  • online training/distance learning
293
Q

What is induction training?

A

introducing employees to job, their new colleagues, premises and to values, and aims of the business.

294
Q

What is the typical induction training programme?

A
  • learning about new new duties of job
  • meeting new colleagues
  • seeing layout of premises
  • learning values and aims of business
  • learning about internal workings and policies of the business
295
Q

What is the purpose of induction training?

A
  • familiarise new recruits with the layout, health and safety, and security systems within a firm
  • make staff as fully productive as soon as possible
296
Q

What is hierarchy?

A

-This is a system in a business where employees
are ranked due to their status and authority
-Traditionally those at the top of the hierarchy
are more important than those at the bottom
-Employees during their career will seek to move
up the hierarchy to improve their salary and
working conditions

297
Q

Why is the organisational structure important?

A
  • authority and responsibility; who is responsible for who?
  • individual job roles and titles
  • the people to whom others are accountable
  • the formal routes through which communication flows in the business
298
Q

What is span of control?

A

-it’s the number of people that a manager is
responsible for.
-where there are narrow spans of control there will be a tall hierarchy and jobs will be very
specialised.
-a wide span of control will mean a flat hierarchy and employees will be given more responsibility
and larger roles.

299
Q

What is chain of command?

A

-In a hierarchy this is the flow of tasks, information
and delegation down from manager to
subordinates.
-Those at the top have more power and authority
-They can delegate tasks to those subordinate to
them in the hierarchy (below them)
-Complaints and status reports flow up the chain,
orders flow down the chain. Both need to be
handled at the lowest level possible.

300
Q

What are the advantages of a narrow span of control?

A
  • Allows for closer supervision of employees
  • Managers workload will be more manageable
  • Helps more effective communication
301
Q

What are the disadvantages of a narrow span of control?

A
  • Demotivated workers if they feel ‘micromanaged’
  • Demotivated workers since unlikely to be given any decision making power
  • More layers in the hierarchy may be required
302
Q

What are the advantages of a wide span of control?

A
  • More opportunities for promotion

- Better horizontal communication due to narrow span of control

303
Q

What are the disadvantages of a wide span of control?

A
  • Takes longer for communication to pass through the layers

- Less delegation may reduce motivation

304
Q

What is delegation?

A

Delegation is the transfer of authority down the chain of command.

Managers use their authority and power to assign tasks to subordinates lower down the chain of command.

305
Q

What are the advantages of a delegation?

A
  • Eases workload of managers
  • Managers freed up to think more strategically
  • Motivating to workers who get to make decisions
  • Workers may make better decisions as they are closer to customers
306
Q

What are the disadvantages of a delegation?

A
  • Managers may lose control over decisions and the business may lose direction
  • Some workers may not want the ability to make -decisions
  • Some workers may lack the skills, knowledge or experience to make effective decisions
307
Q

What is authority?

A

Authority is the power of an employee to instruct subordinates, make decisions and control the use of resources

308
Q

What is a centralised structure?

A

Centralisation is when the responsibility for decision making is maintained, by a limited number of senior managers, at the top of the hierarchy.

309
Q

What are the advantages of a centralised structure?

A
  • Quicker decision making
  • Easier to remain focused on pursuing objectives
  • Manager maintain control
310
Q

What are the disadvantages of a centralised structure?

A
  • More bureaucratic
  • Local or junior managers are likely to much closer to customer needs
  • Lack of authority down the hierarchy may reduce manager motivation
  • Customer service misses flexibility and speed of local decision-making
311
Q

What is a decentralised structure?

A

Decentralisation is when the responsibility for decision making is delegated to a number of middle managers throughout the hierarchy

312
Q

What are the advantages of a decentralised structure?

A

Improved worker motivation which could reduce labour turnover
Allows senior managers to think more strategically
Develops skills of junior employees
Junior employees understand customer needs more

313
Q

What are the disadvantages of a decentralised structure?

A
  • Maybe a loss of focus/direction if junior employees make decisions
  • Loss of control by senior managers
314
Q

What influences delegation, centralisation, and decentralisation?

A
  • Attitudes and priorities of leaders and their preferred leadership styles
  • Organisational design
  • The skills and attitudes of the workforce
  • The nature of the decisions to be made
  • Legal form
  • Business objectives
  • Response to changes in technology
  • Degree of confidence and stability in the economic environment
315
Q

What are the advantages of a flat structure?

A
  • Vertical communication is improved

- Staff given greater responsibility due to more delegation

316
Q

What are the disadvantages of a flat structure?

A
  • Horizontal communication less effective due to wide span of control
  • Fewer opportunities for promotion
317
Q

What is a matrix structure?

A

A matrix structure is one where teams are put together from different functional areas to work on specific projects

Advantages

  • Communication across functional areas
  • Range of view points considered
  • Functions support and understand each other
  • Motivational

Disadvantages

  • Potential loss of control
  • Dependent upon effective delegation
  • Teams may take time to work together effectively
  • Can cause conflict – which line manager takes priority (the functional or project one)?
318
Q

What are the advantages of a tall structure?

A
  • More opportunities for promotion

- Better horizontal communication due to narrow span of control

319
Q

What are the disadvantages of a tall structure?

A
  • Takes longer for communication to pass through the layers

- Less delegation may reduce motivation

320
Q

Why change the structure?

A
  • Pace of the market
  • Level of competition in the market
  • Changing needs of customers
  • Pace of external (PESTLE) change
  • Cost saving (i.e. job losses)
  • growth of business
  • employee motivation needs boosting
  • customer service or/and quality improvements
321
Q

What are the challenges of changing the structure?

A
  • manager and employee resistance
  • disruption and de-motivation-costs
  • negative impact on customer service/quality
322
Q

What is delayering?

A

removing layers of management from the hierarchy of the organisation

323
Q

What are the benefits of delayering?

A
  • lower management costs
  • faster decision making
  • shorter communication paths
  • stimulating employee innovation
324
Q

What are the drawbacks of delayering?

A
  • wider span of control; too wide?

- potential loss of management expertise

325
Q

Who is Taylor and what is his scientific management of motivation?

A

He believed in a “fair day’s pay for a fair day’s work”

  • He also believed that employee would do the minimum amount of work if not supervised
  • He carried out time and motion studies

The implications of Taylor’s theory for managing behaviour at work were:
-The main form of motivation is high wages, higher
wages equalled higher output
-A manager’s job is to tell employees what to do
-A worker’s job is to do what they are told and get paid accordingly

326
Q

Who is Mayo and what is his human relations theory?

A

He changed the working conditions such as break times and duration of the ladies who worked in the relay assembly room at the factory

-Found that just by being studied; the employee’s
levels of motivation increased
-Working in teams was more important than money
-Non-financial motivators were the most important
-Boring and repetitive work can be a demotivator

327
Q

What did Mayo conclude with his theory?

A
  • better communication between managers and workers
  • greater management involvement in employees working lives
  • working in groups or teams
328
Q

Who is Maslow and what was his hierarchy of needs theory?

A

-there are five levels of human needs which employees need to have fulfilled at work

(in order from bottom to top)

  • physiological needs; food, water, shelter
  • safety needs; secure job, safe working conditions
  • social needs; facilities like staff rooms, canteens and social areas, teamwork
  • esteem needs; responsibility and promotion,positive feedback
  • self actualisation; giving staff opportunity to develop and have a say
329
Q

What are the advantages of a well-motivated and engaged workforce?

A
  • better productivity
  • better quality
  • lower level of absenteesim
  • lower levels of labour turnover (employees leaving)
  • lower training and recruitment costs
  • reliable and loyal staff
330
Q

What are financial methods of motivation?

A
  • salaries and wages
  • piece rate
  • commission
  • performance related pay
  • profit sharing
  • share ownership
331
Q

What are non financial methods of motivation?

A
  • delegation
  • consultation
  • empowerment
  • team working
  • flexible working
  • job enrichment
  • job rotation
  • job enlargement

Business A-level Edexcel (14 decks)

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