business revision Flashcards
(20 cards)
Define ‘profit’.
Profit is the difference between revenue and total costs. It is the amount a business earns after all expenses have been paid.
Calculate the price Debbie charges for her designer dresses.
Price = Cost + Profit = $80 + $240 = $320
Identify four factors that influence the demand for Debbie’s designer dresses.
- Price of the dresses
- Consumer income levels
- Fashion trends
- Quality and uniqueness of design
Explain two methods of pricing Debbie might consider using for the new baby and young children’s clothing.
- Cost-plus pricing – She adds a fixed percentage to the production cost to ensure profit. This is simple to apply.
- Penetration pricing – Setting a low price at launch to attract customers and increase market share. Useful in competitive markets.
Do you think Debbie is right to develop these new products for her business? Justify your answer.
Yes, it could diversify her income and reduce reliance on one-off dresses. Mass production may lower costs and reach a broader market. However, she may face strong competition and lose the uniqueness of her brand. Careful market research is needed.
Define ‘price elastic’.
Price elastic means demand changes significantly with a small change in price.
Identify two stages of a product’s life cycle.
- Introduction
- Maturity
Outline one benefit and one limitation to Carmel of selling her jewellery at the local market.
Benefit: She gets direct feedback from customers.
Limitation: Limited customer reach compared to online platforms.
Explain one advantage and one disadvantage to Carmel of having her own website.
Advantage: Wider audience and more sales potential.
Disadvantage: High initial setup and maintenance costs.
Do you think it is a good idea for Carmel to price her products by adding a 50% mark-up on cost? Justify your answer.
It ensures consistent profit and is easy to apply. However, since demand is price elastic, high prices may reduce sales. She should consider competitor prices and customer willingness to pay before finalizing pricing.
Define ‘niche market’.
A niche market is a small, specialized segment of a larger market that targets specific customer needs.
Calculate the budget for promotional activities.
40% of $30,000 = $12,000
Identify four methods of promotion that Excel could use to promote its new safety footwear.
- Online advertising
- Trade shows
- Leaflets or brochures to businesses
- Discounts or special offers
Explain two benefits to Excel of carrying out market research into the safety footwear market.
- Understand customer needs – Helps design products that meet safety standards.
- Reduce risk – Identifies competition and potential demand before investing heavily.
Do you think that Excel Shoes should enter the safety footwear market? Justify your answer.
Yes, it’s a niche market with less competition, which may allow higher profit margins. Excel can diversify its product range. However, it may require new materials, certifications, and customer research. Success depends on demand and Excel’s ability to meet safety standards.
Define ‘e-commerce’.
E-commerce is buying and selling goods or services online through websites or apps.
Identify two methods RPC could use to price its products.
- Cost-plus pricing
- Competitive pricing
Outline how RPC could use the internet to promote its products.
RPC can use social media ads, email newsletters, and influencer marketing to reach wider audiences and increase brand awareness.
Explain two advantages to RPC of using wholesalers to distribute its products.
- Wider distribution – Wholesalers can reach more retail outlets.
- Lower costs – Reduces RPC’s need to manage inventory and shipping for many customers.
Do you think RPC is right to develop markets through e-commerce and social media networking? Justify your answer.
Yes, e-commerce allows direct access to global customers, increasing sales. Social media builds brand loyalty and attracts younger customers. However, it requires investment and strong online customer service. With quality products and a new website, it is a good move.
