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Business Studies A-level > Unit 3.3 > Flashcards

Unit 3.3 Flashcards

1
Q

Confidence intervals

A

range of values, inside which we think our true value lies - sometimes called margin of terror
- e.g. true average usage of toothpaste may be 2-3 times per day

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2
Q

Price elasticity of demand

A

responsiveness of customers to a change in price - for most goods, if prices rise then demand will fall, however for essential goods etc such as food, an increase in price will see demand stay the same

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3
Q

Use of PED data

A

helps set prices as business’s want to charge a price which will produce the greatest profit margins - called equilibrium or market clearing price

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4
Q

Elastic products

A

PED value greater than 1

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5
Q

Inelastic products

A

PED value between 0 and -1

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6
Q

Factors influencing PED data

A
  • Brand strength
    -Necessity e.g. fuel or food
  • Habit - addictions etc
  • Availability of substitutes
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7
Q

Income elasticity of demand (YED)

A

Estimates how demand will change depending on changes to income

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8
Q

Income elasticity of demand (YED) - Normal (necessity) goods

A

demand increases when income increases - YED would be greater than 0

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9
Q

Income elasticity of demand (YED) - Inferior goods

A

demand decreases as income increases - YED less than 0 - generally cheap alternatives such as ‘Tesco’s own collection’

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10
Q

Types of price elasticity of demand - PED greater than 1

A

change in demand will be higher than the change in price - goods are price elastic

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11
Q

Types of price elasticity of demand - PED less than 1

A

change in demand will be lower than the change in price - goods are price inelastic

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12
Q

Types of price elasticity of demand - PED = 1

A

change in demand is the same as change in price - goods are unit elastic

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13
Q

Types of price elasticity of demand - PED = 0

A

change in price will not affect the demand for the product - goods are price inelastic

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14
Q

Perfectly elastic demand

A

when demand is perfectly, total revenue falls to zero

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15
Q

Perfectly inelastic demand

A

When demand is perfectly inelastic, total revenue moves in the same direction by the same proportion

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16
Q

Income elasticity of demand is usually strongly positive for…

A
  • fine wine and spirits
  • sports and leisure facilities
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17
Q

Income elasticity of demand is lower for…

A
  • mass transport - bus and rail etc
  • Takeaway pizza etc
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18
Q

Segmentation

A

the process of dividing the whole market into smaller parts - enables the business to target their products at the right customers

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19
Q

Value of segmentation

A
  • allows for the business to target consumers and thus maximise sales
  • 4P’s = price, place, product, promotion
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20
Q

Targeting

A

way of identifying a group of people with similar characteristics - can them aim advertising at them

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21
Q

Positioning

A

to promote and advertise a product or service in a specific market segment - will educate the consumers about the features and benefits of the product’s

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22
Q

Segmentation - by demographic

A

could be gender specific or based on race and religious beliefs etc

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23
Q

Segmentation - Geographic

A

makes it easier for businesses to target regional markets - can be different country’s or areas such as rural or urban

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24
Q

Segmentation - Income

A

according to annual salary - establishing a groups disposable income is important so that products can be targeted to groups that can actually afford them etc.

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25
Q

Segmentation - Behavioural

A

lifestyle of the buyer etc - can include hobbies and interest’s etc

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26
Q

Mass Market

A

market that is aimed at the general population e.g. regular toothpaste

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27
Q

Niche Market

A

subset of the Mass market - addresses specialist needs e.g. sensitive toothpaste

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28
Q

Mass market characteristics

A

sold to all consumers in the same way - products can be sold on a global scale with just a few language tweaks e.g. Disney films

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29
Q

Mass market brands

A

very important in mass marketing - instils loyalty in customers - branding helps the business stand out from competitors

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30
Q

Pros of a Niche market

A
  • can charge a premium price
  • easier to target customers
  • Less competition
31
Q

Cons of a Niche market

A
  • risky - demand may not be constant
  • High unit cost so no economies of scale
32
Q

Marketing 7P’s - Promotion

A

customer is found and persuaded to buy the product

33
Q

Marketing 7P’s - Product

A

Product/Service a consumer buy’s

34
Q

Marketing 7P’s - Price

A

How much a customer pays for a product

35
Q

Marketing 7P’s - Process

A

systems that deliver’s a product to a customer

36
Q

Marketing 7P’s - People

A

people who make contact with customers when delivering the product

37
Q

Marketing 7P’s - Place

A

how the product is distributed to the consumer

38
Q

Marketing 7P’s - Physical environment

A

element’s of the physical environment that the customer experiences

39
Q

Product life cycle - Stage 1

A

Development
- product is designed and market research analysed
- all capital invested into the product - risky

40
Q

Product life cycle - Stage 2

A

Introduction
- high cost’s in research and development
- sales are low as consumers are not aware of the product
- Advertising begins

41
Q

Product life cycle - Stage 3

A

Growth
-Product’s enjoy rapid growth in sales and profit’s
- demand = high
- businesses may invest heavily into advertising at this point

42
Q

Product life cycle - Stage 4

A

Maturity
- product begins to face intense competition as the market becomes saturated
- sales are high but profit begins to fall

43
Q

Product life cycle - Stage 5

A

Decline
- Products may be limited in production - profit and sales have fallen and the product may be withdrawn from sale
- may heavily discount to promote sales

44
Q

Product life cycle - Stage 6

A

Extension strategy
- Businesses can introduce measures to prolong the maturity phase of the product - this is when sales peak
Measures may include
- Updating packaging
- Investing into advertising
- adding new features
- price reduction

45
Q

Boston Matrix - Cash Cow

A

Low market growth AND High market share
- will sell very well and little advertising is needed

46
Q

Boston Matrix - Star Product

A

High market growth AND High market share
- this product has lot’s of potential

47
Q

Boston Matrix - Question mark or problem child

A

High market growth AND Low market share
- needs investment into marketing etc for this product to succeed

48
Q

Boston Matrix - Dog

A

Low market growth AND Low market share
- requires no investment as is in the decline phase of the product life cycle

49
Q

Pros of the Boston Matrix

A
  • Good starting point to review the portfolio
  • informs marketing strategy and decisions
50
Q

Coins of the Boston Matrix

A
  • Products may not fit into the graph
  • high market share doesn’t always lead to high profits
  • Very Simplistic
51
Q

Promotional mix - personal selling

A
  • sales person act’s on behalf of the organisation - well trained however expensive in terms of wages and training
52
Q

Promotional mix - Direct Marketing

A

Targeted through the mail/post - can be tailored to each customer

53
Q

Promotional mix - Advertising (ATL and BTL)

A

ATL = above the line advertising = advertising to mass audience e.g. Tv adverts etc#
Pros = reaches large audience
Cons - Very expensive

BTL = below the line advertising = advertising to niche markets e.g. billboards and leaflets

54
Q

Promotional mix - Sponsorships

A

Positive association of a product with a celebrity or sport - can be very expensive an it is difficult to tell the impact it has had in sales

55
Q

Branding

A

the picture a customer paint’s of a business after seeing their products and advertising

56
Q

Manufacturer / Corporate branding

A

aims to build communications and relationships between the business and the customers
Pros = Spreads awareness of the business across all of it’s brands (business’s can have many brands)
Cons = takes a long time to establish these relations

57
Q

Product branding

A

aims to show the customer the benefit’s of a product and what differentiates it from other products in the same market
Pros = Branded products can command higher prices
Cons = May require a high investment and branding may take years to build up

58
Q

Own brand products

A

made by a manufacturer on behalf of a supermarket
Pros = Boosts customer loyalty and fills gaps in the market
Cons = they can be poorer quality to the original which may damage sales

59
Q

4 stage distribution

A

Manufacturer - Wholesaler - retailer - Consumer

Pros = manufacturers don’t have to invest into marketing etc
Cons = higher prices for consumers

60
Q

3 stage distribution

A

Manufacturer- Retailer- Consumer

Pros = - easier for manufacturer to get products to the retailer
Cons = all responsibility regarding quality etc is on the retailer

61
Q

2 stage distribution

A

Manufacturer- Consumer

Pros - Manufacturer could charge higher prices
Cons - More responsibility on the manufacturers

62
Q

Influences on an integrated marketing mix - Position in the product life cycle

A

Developer focus on promotion during the introduction stage to attract more customers

63
Q

Influences on an integrated marketing mix - The Boston matrix

A

Cash - cow businesses can focus on raising prices to maximise profit whereas Question mark products etc need a focus on marketing and alternative pricing strategies

64
Q

Influences on an integrated marketing mix - Competition

A

Marketing activities change depending on the volume of competition within the market - highly competitive market = competitive marketing etc

65
Q

Influences on an integrated marketing mix - Positioning

A

Products positioning in a market determines marketing activities etc also - High end brands have different marketing to cheaper goods etc

66
Q

Advantages of being an E-Tailor

A
  • larger range of products than a store
  • can undercut competitors on price as they have less cost’s due to limited staff etc compared to a high street store - (Lower fixed costs)
    -Potential to grow rapidly and reach a global marketplace
67
Q

Disadvantages of being an E-Tailor

A
  • Hard to establish trust with customers
  • Only as strong as the distribution delivery time - if products arrive late then it might damage the reputation of the business
  • Website costs can be high
68
Q

Extended marketing mix - People

A

both inside and outside the business
Internal = recruiting right staff etc
External - Customers, suppliers etc

69
Q

Extended marketing mix - Process

A
  • Electronic processes = QR codes
  • Technological Processes = ease of checkout in the website etc
  • Direct processes = help customers choose the right product
  • Indirect processes = customer helpline or warranty etc
70
Q

Extended marketing mix - Physical evidence

A

What is experienced by the customer - includes the appearance of the shop as well as appearance of website and packaging

71
Q

Integrated marketing mix

A

provides seamless experience for the customer - attempts to coordinate and combine the 7P’s

72
Q

Digital marketing

A

using the internet to achieve marketing objectives

73
Q

E-Commerce

A

business transactions conducted via the internet - E -Tailor sells goods directly through the internet

Business Studies A-level (7 decks)

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