Theme 1 Flashcards
(105 cards)
1
Q
Stakeholder definition
A
Someone who has an interest in a business
2
Q
Market definition
A
places we go to trade
3
Q
Mass market is…
A
a market that is aimed at the general population
eg. colgate toothpaste
4
Q
Niche market is….
A
a subset of the main market + addresses a specialist need
eg. sensodyne - specifically for people with sensitive teeth
5
Q
What is a market segment?
A
a subsection of a larger market in which consumers share similar needs and wants.
6
Q
Pros of a mass market:
A
- large scale production means economies of scale and lower average unit cost
- straightforward + everyone is equally targeted
- large volume of sales = high revenues
- high revenue - pumped into research and development
7
Q
Cons of a mass market:
A
- competition
- Homogeneous products need to be differentiated through marketing which is expensive
- high volume production is not flexible to demand changes
8
Q
Pros of a niche market:
A
- charge premium price
- easier to target customers
- small scale production can be flexible and follow trends
- less competition
9
Q
Cons of a niche market:
A
- very risky as demand may not be constant
- higher unit costs so no economic scale
10
Q
What is a dynamic market?
A
A market that is subject to rapid or continuous change to suit the customer wants and needs.
11
Q
Definition of risk:
A
When the potential outcomes of a decision are known.
12
Q
Definition of uncertainty:
A
None of the outcomes are known in advance.
13
Q
Whats some advantages of online retailing:
A
- saves time
- no closing time
- variety
- no travel costs
14
Q
Whats the disadvantages of online retailing:
A
- high competition
- problems of fraud
- less in shop employment
- sending time back takes effort and puts customers off.
15
Q
What are 4 ways dynamic markets change in order to keep up to trend?
A
- Market research
- Continuous improvement
- Invest - technology, people, products
- Flexible
16
Q
Using PESTLE explain some external influences of why markets change:
A
P - political - Britain’s departure from European union (Brexit) has led to significant change in process of importing and exporting.
E- economic - economic recession of 2008-09 led to major changes in UK grocery retailing, as price-conscious shoppers opted for Aldi and Lidl.
S - social - an increased desire for convenience has driven the rise in online retailing.
T - technological - ‘apps’ did not exist 15 years ago, prior to advent of smartphones, by 2020 they were capable of turning century-old markets on their head, such as the effects of Uber on taxi services or AirBnB on travel.
L- legal - growth in the market for vapes and e-cigarettes is being affected by the introduction of new laws relating to who can buy these items, how they can be advertised and where they can be consumed.
E - environmental -the car industry is facing major changes in order to try to minimise the damaging impact of exhaust fumes on the environment.
17
Q
Give two ways in how markets adapt to change?
A
- identifying subtle changes in what consumers are looking for in their products allows businesses to adapt their products to better suit these needs.
- Changing earlier than rivals offers a major source of competitive advantage, whether it be removing sugar from food products or adding features to mobile phone handsets.
18
Q
What pressures does increased levels of competition create for businesses?
A
- need to drive down costs
- need to maintain competitive competitive prices
- need to develop innovative products and services
- need to maintain high-quality products and services
19
Q
Whats the definition of market share?
A
the proportion (%) of a market that is taken by a business, product or brand.
20
Q
Whats the calculation equation for market share:
A
sales of x
_____________________________ x100
total sales in whole market
21
Q
Whats the definition of market size
A
measured by the volume of sales or value.
22
Q
Definition of product orientation:
A
the product is the most important factor when providing products for a market.
23
Q
Definition of market orientation:
A
the customer is the most important factor when providing products for the market, the business has a sensitivity to customer requirements.
24
Q
What are the benefits of researching the market:
A
- for decision making, reduces risk and cost of making poor decisions
- to develop a marketing plan based on data gathered about 4ps.
- to react + prepare for changes in the market
- to become market orientated.
25
What are the 4ps:
Place
Price
Product
Promotion
26
What is primary research:
- original data gathered by researcher
- the info does not yet exist - can not be found on internet
- they will use this data to make specific decisions about the business eg. new product/market
27
Name 7 primary research methods:
1. Questionnaires/surveys
2. Interviews
3. Observations
4. Loyalty cards
5. Focus groups
6. consumer panels
7. Test marketing
28
Key points about questionnaires and observations:
- can gather quantitative and qualitative methods
- used to measure customer satisfaction - gives business a clear idea of where to improve
29
Key points about interviews:
- carried out with either owner, customers or suppliers
30
Key points about observations:
- observation of buyer behaviour
31
Key points about loyalty cards:
- can be used to track consumer buyer behaviour and further micro market to customer specific offers
- offers - targeted to consumers most likely to take up promotions - makes marketing cost effective
32
Key points on focus groups:
- a product of target market demographic respondents are chosen to take part in product trial.
33
key points on consumer panels:
- group of experts selected to respond to questions about products/services.
- look at issues through eyes of consumer.
34
Key points on test marketing:
- business may invent, produce or buy in a new product
- all staff consider if wider public will buy them + make profit.
35
What are 7 secondary research methods:
1. Annual reports
2. Internal data
3. Government sources
4. News
5. Trade journals
6. Specialists organisations publications
7. EU and international sources
36
Key points on annual reports:
- useful for businesses to look at their previous annual reports or even those of their competitors
- will have info such as balance sheet and profit and loss statement
- gives businesses good idea about financial health so they can decide to risk or not
37
Key points on internal data:
- a business may have collected a wealth of data over a number of years of trading
- sale figures - useful for forecasting future sales
38
Key points on government sources:
- ONS - useful demographic information and data on the market or industry in that business
- info can be used to make decisions about expanding overseas
39
Key points on news:
- if a business is considering launching a new product or even looking for new markets for the old product - may turn to news media for help
40
Key points on trade journals:
- help small businesses stay in touch with trends in market
-reliable source of info
41
Key points on specialists organisations publications:
- Mintel has global team of trends analysts constantly assessing change in culture, economy and society.
42
key points on EU and international sources
- euro stat contains useful statistics on Europe.
- could be used by a business to expand into European markets
- helps visualise large bits of data
43
What are the limitations of market research
:
-reliability
- validity
-bias
research carried out may not give enough info
- data can be inaccurate and misleading
- data can be non-specific to organisation
- data needs to be reliable or it is not useful - was sample big enough to reflect people buying product
44
Why is ICT useful in market research?
- the use of computers can speed up both the gathering stage and the analysis stage of the process
- internet data gathering is very cost effective as it reaches all customers using the website requires no staff and customers can fill it in, in their own time
- data is more likely more reliable as it is not rushed.
45
Definition of market segmentation:
an identifiable group of individuals (or part of market) where consumers share on (or more) characteristics or need eg. demographic gender.
46
What is market mapping?
used to find a gap in the market it may be useful for a business to construct diagram of where competitors are on two axis (price + quality for eg)
47
What is competitive advantage?
- when a business achieves a profits that are above average for that industry - it has competitive advantage.
- its a way a business can make its products or services appear superior to competition to the target market
48
What are the ways competitive advantage is achieved by?
- cost advantage -skilled worked force to provide efficient low price items
- differentiation advantage - resources are used to create superior value for the customers.
49
What is product differentiation?
- where a product is different from the competition in some way
- consumers must be able to perceive this difference and may be willing to pay a premium price for the product.
50
What are the methods of reputation:
- through reputation - hair salon/restaurant
- through customer service or after sales service
- through value for money -aldi
-through product features - cars/mobile phones
51
What is added value?
- the difference between the price that is charged to the customer and the cost inputs required to create the product or service
- can be achieved through product itself or the way that consumers perceive the product
-when a business chooses to enhance the quality of a core product by providing extras to improve customer experience.
52
What are 3 ways of adding value:
1. design - developing new technology to make their product unique
2. production - achieving quality and efficiency - quality will ensure higher price can be charged (differentiation advantage) and efficiency helps cut costs of input (cost advantage)
3. Marketing - creating an image that makes the product more desirable - a brand (differentiation advantage)
53
What is market mapping:
A diagram used by business to help plan their future products by spotting the gaps in the market.
54
What is product differentiation:
When a product is different to its competitors in some way.
55
What is competitive advantage:
an advantage a business has over its competitors, allowing it to generate larger then average turnout for the industry.
56
Whats the definition of demand:
amount of people willing to but a product for a given price
57
Name some factors causing change in demand:
- changes in price of substitutes and complementary goods
- changes in consumer incomes
- fashions, tastes and preferences
- advertising and branding
- dempgraphics
- external shock - war/covid
- seasonality
58
what is a complementary good?
demand for one type of good will affect demand for another - purchase is somehow linked eg. car and petrol.
59
what are substitute goods?
impact of a change in price will cause consumers to switch products to an alternative good. If air fairs is too expensive consumer could switch ti train/car = substitute.
60
definition of supply:
measured in terms of the quantity of a good or service that a producer is willing and able to make available on the market, at a given price, over a given period of time.
61
What happens to the demand if price rises?
falls
62
What happens to the graph is there is changes in demand due to price?
there will be a movement along the demand curve
63
Where does the line on the graph shift to if...
- there is a increase in demand
- increase in supply
- decrease in demand
- decrease in supply
- shifts to right
- shifts to right
- shifts to left
- shifts to left
64
definition for price inelastic?
demand does not change with price (eg. petrol - even if price goes up or down we need same quantity) so even if price changes people still buy same amount
65
defintion for price elastic?
demand changes with price
66
what happens if it is perfectly inelastic?
demand doesn't change at all
(eg. insulin - diabetes)
67
What are some factors influencing PED?
- if it is a luxury good or necessity, it tends to be more inelastic
- substitutes - if there is no or few substitutes then prices are inelastic (eg taylor swift tickets)
- Incomes or consumers
68
Whats the formula for price elasticity of demand? PED
% change in quantity demand
--------------------------------------------
% change in price
69
what is an inferior good?
as incomes of consumers rise - demand falls ( as you get more money you start to buy better stuff)
70
what is a normal good?
as income rise- demand rises
71
what is the definition of YED?
this is a way to measure the responsiveness of demand to changes in consumer income
72
What does a negative YED value =
inferior good
73
what does a positive YED value =
normal good
74
How do you calculate YED?
Y= income
D= demand
% change D
-------------------
% change Y
75
what products are likely to be inferior?
products which have substitutes of a higher quality and higher price
76
what products are likely to be normal?
expensive and highly desirable products.
77
Definition of income elasticity of demand:
how much demand changes by when a consumer has a change in income.
78
definition of necessity:
not affected by income eg. your consumption of water will not rise if you earn more money - you may buy a more expensive brand of bottled water.
79
definition of luxury:
goods where a rise in consumption is larger than rise in income.
80
definition of design mix:
product design is meeting the design mix/ identified market needs eg. function, aesthetics, price.
81
what happens is a business get the design mix right
they will gain competitive advantage from their commpetitors.
82
what is corporate social responsibility and whats an example?
the responsibility to do whats best for others - ethical rights
eg. drinks cant put more than 13% sugar into drinks.
83
What is promotion?
describes the methods used by the business to communicate information and persuade consumers to purchase a product.
84
What are the methods of promotion?
- sponsorship
- public relations
- advertising
- direct marketing
- sales promotion
- personal selling
- digital communications
85
name 2 long term methods of promotion
- persuasive advertising
- public relations
86
name 2 short term methods of promotion
- buy one get one free
- seasonal price cutting promotions
87
What is branding?
A characteristic name or symbol that distinguishes one product from anothers suppliers
88
What are the 3 types of brands? (check spec/ page 32)
- Individual brand - single product brands
89
What are the benefits of having strong branding?
- added value
- ability to charge premium prices
- reduced price elasticity of demand
90
What are the two pricing strategies for NEW products and their definition:
- price skimming - when a company charges a high initial price and then gradually lowers the price to attract more customers.
- Penetration - used by businesses to attract customers to a new product or service by offering a lower price during its initial offering - helps a product/service penetrate the market and attract customers away from competitors.
91
What are the advantages and disadvantages of using price skimming?
+ high price generate rapid profits
+high price - help create desirable image for product
- image may suffer when price falls
- early buyers may be frustrated when price falls
92
What are the advantages and disadvantages of using penetration?
+ low price boosts sales volume - cutting production costs
- products image may be immediately cast as 'cheap'
- upmarket retailers may be unwilling to stock the product
93
What are the 4 pricing strategies for EXISTING products and their definition:
- cost-plus - the selling price of product is determined by adding a specific fixed percentage to the products unit cost.
- predatory - setting very low prices with the aim to eliminate competitors - goal to create monopoly (illegal)
- competitive - process of strategically selecting price points for your goods or services based on competitor pricing in your market, rather than basing prices solely on business costs or target profit margins.- customers judge on non-price methods.
- psychological - describes the business practice of setting prices lower than a whole number. The idea that the left most digit is that customers will read the slightly lowered price and treat as much lower
94
Name 4 factors that determine the most appropriate pricing strategy
1. PED - reducing price can lead to higher revenue if market is very price sensitive
2. level of production differentiation: highly differentiated products will have more control over pricing, potentially allowing them to use cost- plus pricing.
3. level of competition: the higher the level of competition the less scope a firm has for moving away from purely competitive strategy.
4. Number of USPs
95
What is a monopoly?
one firm dominates as industry - legally one at 25% of the market share.
96
What are oligopolies?
more than 1 firm (about 2 or 3) dominate market.
97
What is distribution?
the process of getting the right product or service to the customer in the right place
98
what are the names of the 5 distribution channels and add examples:
Traditional physical channel
Mars --> Wholesaler --> small independent convenience store --> consumer
Direct to retailer
kellogs --> sainsburys --> consumer
Be your own retailer
apple --> apple stores --> consumer
Direct online
dell --> dell website --> consumer
Online retailer
small producer of made-to-order gifts --> eBay --> consumer
99
look at 30/1/25 for distribution channels
100
What is marketing?
the management process of identifying anticipants and satisfying consumer demands for profit.
101
What are the 4 phases of the product life style, following the launch of a product
- introduction
- growth
- maturity
- decline
(sometimes an additional phase - development is added before product is launched)
102
explain how the sales are effected during the phases of the product life cycle:
- introduction- sales low and rise only slowly
- growth - sales begin to rise much more quickly
- maturity - growth in sales now slows and sales stabilise at their highest level
- decline - sales of the product begin to fall, until the product is phased out or an extension strategy is launched
103
Name 5 product extension strategies:
- advertising
- price reduction
- added value
- exploring new markets
- new packaging market share
104
what is an asset?
things you can attach value to and is useful for a long period of time.
105
27/2/25
