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A Level Business Studies > Theme 1 > Flashcards

Theme 1 Flashcards

(50 cards)

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1
Q

Niche marketing

A

A smaller part of a large market, with products tailored to specific customer needs

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2
Q

Mass marketing

A

A large market of customers which is undifferentiated and that sells products and services to suit a large number of consumers.

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3
Q

Advantages of operating in a mass market:

A
  1. Able to purchase goods and materials in bulk (economies of scale)
  2. Dealing with higher volumes of sales which make it easier to afford larger advertising and marketing campaigns.
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4
Q

Disadvantages of operating in a mass market:

A
  1. Competition is likely to be fierce as businesses are attracted to potentially high sales levels
  2. Without a USP, it can be difficult to survive e.g. Bounty being the only chooclate bar filled with coconut
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5
Q

Advantages of operating in a Niche Market:

A
  1. Less competition
  2. Can charge at higher price
  3. Customers tend to be more loyal
  4. Product’s can be tailored to meet customer needs
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6
Q

Disadvantages of operating in a Niche Market:

A
  1. Fewer customers as it is a smaller part of the larger market
  2. Hard to persuade retailers to stock the products
  3. Vulnerable to market changes - all “eggs in one basket”
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7
Q

Dynamic markets

A

Markets which are constantly changing. The environment is dynamic, for example buyers may choose to buy less of one product and more of another. It can grow, change and decline very quickly

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8
Q

Reasons for dynamic markets constantly changing:

A
  1. Social trends
  2. Changes in technology
  3. Competitiveness
  4. Trends
  5. Consumer tastes
  6. Fashion
  7. Rising/Falling incomes
  8. Arrival of a superior product offered by competition
  9. External shocks
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9
Q

What are Risks in a business?

A

Factors that are not expected but can be quantified, such as the risk of your factory being flooded.

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10
Q

What is an Uncertainty in a business?

A

Is being unsure of the factors influencing sales and therefore being unable to predict what will happen to the business in terms of its profits or growth. A business might try to minimise uncertainty by using marker research to anticipate the likely its decisions will have on its position in the market.

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11
Q

Equation for ‘Market Share’

A

Sales of x / Total sales in whole market x100

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12
Q

Advantages of online retailing

A
  1. Websites don’t have a closing time so they don’t miss critical times when customers can shot
  2. Orders are automatic no need for workers - low overheads
  3. stocks can be easily withdrawn or updated
  4. Easy to set up
    • Felxible
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13
Q

Disadvantages of online retailing

A
  1. Issues with sending goods back may put customers off
  2. Issues with online security worries put off older customers and those not keen to share their bank details
  3. Problems with fraud, spam and viruses
  4. Owners need IT skills
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14
Q

Market Research

A

The gathering and analysis of research from customers - their attitudes, behaviour and wants - in relation to a product or service. This may help support the implementation of a marketing strategy

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15
Q

Marketing

A

The way a company interacts with current and potential customers. You can think of it as the communication arm of a business - gathering information from and sending out messages to customers.

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16
Q

Product orientation

A

Where a business focuses primarlily on creating and developing a high-quality good or service - but perhaps ignoring customer preferences and priorities.

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17
Q

Market Orientation

A

Where a business chooses to design a product or service to meet the requirements of customer preferences/desires. Market research is critical to the success of a market-orientated business as itallows the business to find out customer’s tastes and priorities.

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18
Q

Advantages of Market Orientation:

A
  1. Close fit with customer expectations
  2. Greater responsiveness to changes in customer needs
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19
Q

Disadvantages of Market Orientation:

A
  1. Regular changes in the appearance of function of a product (to meet changing tastes) may leave customers confused about what the brand really stands for
  2. Businesses may struggle to keep up with product-orientated businesses that invest heavily in new product features and advanced technologies.
  3. With customers who care mostly about cutting edge products, a marketing orientation may not work as well
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20
Q

Advantages of Production Orientation:

A

Allows the business to focus on product quality and innovation and spend most of its efforts and money on doing this.

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21
Q

Disadvantages of Production Orientation:

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A
  1. By putting customer priorities at the back of the list, the product might be admired but not sell very well. In high-tech markets with narrow life cycles, companies that bury themselves in product development may miss the window of opportunity to align with customer demand
22
Q

Primary research

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A

Data gathered first hanf that is specifically designed and obtained for a specific business. These can come in the form of focus groups, observation, face-to-face surveys and online surveys

23
Q

Secondary research

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A

involves using data collected by someone else that has not been designed specifically for the business requiring the information. This can come in the form of published market research reports, Google, ONS (official statistics), Media reports, Competitor materials.

24
Q

Qualitative data

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A

Research based on views and opinions.

25
Quantitative data
Research based on numerical data
26
Sample size
The amount of data collected by the business from customers or potential customers.
27
Bias
Where the findings do not give a true reflection of the views of the target audience on the product or service
28
Advantages of Primary Research:
1. Gathers up-to-date customer views about the product 2. Questions can be tailored to meet the individual needs of the business
29
Disadvantages of Primary Research:
1. Can be difficult to collect the data 2. Can be time-consuming 3. Can be expensive 4. May provide misleading results if the sample size is not large enough or not chosen with care 5. Questions may be worded so as to bias the answers in a particular direction
30
Market Segmentation
The process of dividing a market into smaller sections which contain customers with similar needs and wants
31
Examples of market segmentation factors:
1. Customers needs and wants 2. How customers buy 3. Location of customers 4. Knowledge & experience of customers
32
Market Positioning
The place a product occupies in customer minds relative to competing products
33
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
34
Methods of differentiation
1. Through reputation (hair salon, restaurant) 2. Through customer service or after sales service (Marks and Spencer) 3. Through value for money (ASDA, Lidl, Aldi, Primark) 4. Through product features (Cars, mobile phones)
35
Competitive advantage
An advantage over competitors gained by offering consumers greater value either by means of low price or by providing greater benefits and services that justifies high prices.
36
Positioning map
Is used to place products in a range of positions in the market based on two significant qualities that customers feel are important when looking for the best product in contrast with other products in the market.
37
Demand curve (for a good or a service)
The quantity that customers are willing and able to buy at a given price in a given period of time.
38
Demand
The willingness and/or ability of consumers to purchase goods at a given price
39
Causes of Changes in Demand:
1. PRICE - For more (normal goods), a fall in price should result in an increase in demand. 2. INCOMES - As incomes rise, demand should normally rise. However, for inferior goods, demand will fall as consumers choose better alternatives that are now affordable. 3. FASHIONS, TASTES & PREFERENCES - Demand for products that are fashionable or trendy will experience sharp fluctuations 4. ADVERTISING & BRAND - A key purpose of advertising and branding is to stimulate demand. 5. EXTERNAL SHOCKS - A sudden and often significant change in the external environment. E.g. a loss of consumer confidence in a product or brand. 6. SEASONAL FACTORS - For most products there will be seasonal peaks and troughs in production and / or sales. E.g. Demand for plants at garden centres is linked to the planting season.
40
BASIC LAW OF DEMAND
Demand varies inversely with price - lower prices make products more affordable for consumers.
41
Supply
The quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period.
42
What determines supply?
1. Price - As a price paid by customers increases on a product or service, normally, a business will want to supply more, in anticipation of higher profits. 2. Cost of production - If the costs of production increases e.g. due to a rise in the cost of raw materials or due to a rise in the minimum wage: * The business may decide to produce less * Prices may have to go up 3. Introduction of new technology - New technology means that more goods can be supplied: * Mechanisation and automation of production processes means supply can increase * Using new technology means that costs can be reduced and that means that they can offer lower prices to the customer to drive up demand. 4. Indirect taxes (e.g. VAT) - When the government increases tax on goods such as petrol then supply will decrease. VAT / Customs tax / Excise tax are all indirect taxes and when applied to goods it makes supplying them less attractive. This can lead to a decrease in supply. This is because the costs of supply increase so businesses will supply less to the market. 5. Government subsidies - This is a payment from the government to encourage more suppliers to enter the market and to supply more. With a subsidy there is an increase in supply because costs have been lowered thanks to the subsidy. Making supplying products easier. For example the Government pays subsidies to wind farm manufacturers to erect turbines offshore in the UK. This adds about £18 a year to a UK householder's energy bill 6. External shocks - External shocks may mean that the business may not want to supply at current levels, these shocks may be;  * Changes in oil price which can affect transport costs  * War, a business may not want to supply goods to a country which is at war  * Weather problems - particularly for crops
43
Market Equilibrium
When there is a balance between demand and supply in a market.
44
Market demand
The total quantity (volume) demanded for a product in a market by all customers.
45
Market Supply
The total quantity (volume) of a product supplied to a market by suppliers.
46
Price elasticity of demand (PED)
Measures the extent to which the quantity of a product demanded is affected by a change in price.
47
Elasticity
Measures the responsiveness of demand to a change in a relevant variable - such as price or income.
48
PED Formula:
% Change in Quantity Demanded ÷ % Change in Price Price elastic = Change in demand is more than the change in price. (More than 1) Price inelastic = Change in demand is less than the change in price. (Less than 1) Unitary price elasticity = change in demand is equal to change in price. (Exactly 1)
49
Income Elasticity of demand
Measures the relationship between A CHANGE IN QUANTITY DEMANDED FOR GOOD ‘X’ and A CHANGE IN REAL INCOME.
50
YED Formula:
% CHANGE IN QUANTITY DEMANDED ÷ % CHANGE IN REAL INCOME (NORMAL GOODS) (+) - IF INCOME GOES UP - DEMAND FOR THE GOOD GOES UP (INFERIOR GOODS) (-) - IF INCOME GOES DOWN - DEMAND FOR THE GOOD GOES UP

A Level Business Studies (7 decks)

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