Unit 3- Decision Making to Improve Marketing Performance Flashcards
(154 cards)
1
Q
what else are departmental objectives known as?
A
Departmental objectives are known as functional objectives
2
Q
what are some examples of objectives that the marketing department may have?
A
- increasing sales volume/ sales growth
- increasing sales value
- increasing market size
- market growth
3
Q
what is sales volume?
A
increasing the volume of goods sold.
4
Q
what is sales value?
A
increasing the revenue generated through the sale of goods and services.
5
Q
why would a business have an objective to increase market size?
A
The marketing department may have objectives involving market size, market growth and sales growth which refer to increasing the size of the market so that a business can try and increase its sales.
6
Q
why would a business have an objective to increase market share?
A
The marketing department may have objectives involving market share which involves a business increasing its market share to attract customers from competitors.
7
Q
why would a business have an objective involving brand loyalty?
A
The marketing department may have objectives involving brand loyalty which includes retaining customers and ensuring repeat customers.
8
Q
why and how would Tesco be able to increase its market share?
A
As discount retailers gain popularity, Tesco may set market share objectives to try and increase its customer base by accessing Lidl or Aldi’s current market share.
9
Q
what are some calculations that show the success of a business?
A
- market growth
- sales growth
- market share
10
Q
what is meant by market growth?
A
Market growth describes when an industry grows in terms of either volume or value.
11
Q
what is meant by market share?
A
Market share refers to the proportion of a market that a business controls in order to satisfy customer needs.
12
Q
how do you calculate market share?
A
(sales of one product) / divided by total market sales of that product) * 100.
13
Q
what is meant by sales growth?
A
Sales growth occurs when a business increases its sales in terms of volume or value.
14
Q
The coffee industry is worth £800 million in the UK. Starbucks’ sales are worth £250 million. What is Starbucks’ market share?
A
- Calculate the proportion of total sales 250 ÷ 800 = 0.3125 - Turn calculation into a percentage (market share) 0.3125 × 100 = 31.25%
15
Q
why is this possible?
In 2018, Amazon had a 49% market share of e-Commerce in the USA, but only had a 5% market share of total commerce.
A
market share depends on who you define ‘the market’.
- online retail
- total retail
16
Q
what is meant by market research?
A
Market research is the process of collecting and processing information about the market that a business operates in.
17
Q
what does market research gather information on?
A
- demand
- competition
- target market
18
Q
how can market research into demand help a business?
A
- Market research into customers’ demands is important for business success.
- Insights into customers’ wants and needs can help a business to improve the product, spot market opportunities and stay competitive.
- Insights into overall demand trends can help a business to spot opportunities for growth and potential threats from new products/technology.
19
Q
how can market research into competition help a business?
A
- Market research into competitors can help a business understand the major threats in the market and then prepare the business to deal with these threats.
- Market research for established fashion labels like H&M would identify the threats that come from online platforms like ASOS or Boohoo.
20
Q
how can market research into target market help a business?
A
Market research into a business’ target market will give the business insights into their customers’ wants and needs and how they are changing over time.
21
Q
what is meant by qualitative research?
A
- Qualitative research generally collects information about opinions and views rather than things that can be quantified.
- For example, research into whether customers think the customer service at Waitrose is good is qualitative research.
22
Q
what is meant by quantitative research?
A
- Quantitative research collects factual information on things that can be quantified and recorded easily.
- For example, research into the number of cans of Coca Cola sold in the UK last year is quantitative research.
23
Q
Having predominantly created toys for boys, Lego decided to conduct market research lasting four years to understand more about girls as a target audience. Give ONE benefit of conducting market research.
1 mark
A
- Understand customer needs
- Make better marketing mix decisions
- Avoid financial/ timely mistakes
- Reduce risk
- Identify gaps in the market
24
Q
Many businesses have changed their decision on the ‘place’ element with an estimated 50 high street stores closing per day in early 2021. Define what is meant by the term ‘place’ with an example strategy.
A
Place describes the distribution channel used by the business. For example, retailers or e-commerce.
25
The cost of a product is often a key factor when deciding to purchase a product. Part of McDonald’s success is due to its Saver Menu and low prices. Identify and explain ONE pricing strategy.
4 marks
+Price skimming – entering the market with a high price which reduces over time
+Price penetration – entering the market with a low price
+Competitive pricing – pricing products similar to competitors
+Loss leader – below cost pricing to encourage customers to shop and buy other products
+Cost-plus – adding a percentage to the cost of the product to create a selling price
26
For £25 per month, Pret’s Coffee Subscription scheme gives customers up to five drinks per day. Explain ONE benefit to Pret from this scheme.
2 marks
- One benefit is increased sales as customers are likely to purchase other items, such as sandwiches or snacks, when they get a drink.
- One benefit is regular income as the loyalty scheme has a monthly payment.
27
how is market mapping carried out?
Competitors products are mapped against different variables based on the features that they offer.
For example, products could be mapped based on their price and quality.
28
what is the benefit of market mapping?
Once businesses have segmented the market, they can use market mapping to identify a gap in the market by looking at what competitors offer.
29
what is a benefit of sampling?
Sampling reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody.
30
what is a disadvantage of sampling?
Sampling may not accurately reflect the full target market if the sample is not chosen properly.
31
how can technology be used to analyse market research data?
Technology can be used to analyse market research data by completing calculations and creating graphs and charts which can be used by managers and leaders.
32
what sample of the population would a business use when trying to perform market research for hearing aids?
it can perform sampling on a cross-section of the elderly population.
33
what does price elasticity of demand (PED) mean?
Price elasticity of demand (PED) measures the responsiveness of quantity demanded to a change in price.
34
what is the formula for PED?
PED = (% change in quantity demanded)÷ (% change in price)
35
is the PED usually positive or negative?
The price elasticity of demand coefficient (number) is usually negative
36
why is PED usually negative?
an increase in price will result in a decrease in quantity demanded and a decrease in price will result in an increase in quantity demanded
37
what does a larger PED mean?
The larger the price elasticity of demand coefficient (number) the greater the responsiveness of quantity demanded to a change in price.
38
what does a PED of less than 1 mean?
If the price elasticity of demand is less than 1 (whether positive or negative) then this is described as price inelastic. This means that a change in price will lead to a change in quantity demanded which is less than the change in price.
39
what does a PED of greater than 1 mean?
If the price elasticity of demand is greater than 1 (whether positive or negative) then this is described as price elastic. This means that a change in price will lead to a change in quantity demanded which is greater than the change in price.
40
give an example of a product or service that is price inelastic?
the price elasticity demand for petrol is relatively inelastic as a change in price may not affect the quantity demanded of fuel as customers still need to purchase this product as it may be a necessity
41
what can businesses use PED data for?
+Marketing managers can use price elasticity of demand and income elasticity of demand to forecast and predict the impact of changes in price and income on the quantity of the business’ goods demanded by consumers.
-Using elasticity of demand allows marketing managers to act, such as advertising, to target customers if they think quantity demanded is likely to decrease.
42
what is the coefficient of a product with a perfectly inelastic demand?
0
43
what is meant by income elasticity of demand (YED) ?
Income elasticity of demand (YED) measures the responsiveness of quantity demanded to a change in consumer income.
44
how can businesses use YED?
Businesses can use income elasticity of demand to understand how the quantity demanded by customers will change in response to income.
45
what is the formula for YED?
YED = (% change in quantity demanded) ÷ (% change in income)
46
what does a larger YED suggest?
The larger the income elasticity of demand coefficient (number) the greater the responsiveness of quantity demanded to a change in income.
47
what does a positive coefficient for YED suggest?
If the coefficient is positive, an increase in income will increase demand and a fall in income will decrease demand.
48
what does a negative coefficient for YED suggest?
If the coefficient is negative, an increase in income will decrease demand and a fall in income will increase demand.
49
what does it mean for the income elasticity of demand to be less than 1?
If the income elasticity of demand is less than 1 then this is described as inelastic. This means that a change in income will lead to a change in quantity demanded which is less than the change in income.
50
what does it mean for the income elasticity of demand to be greater than 1?
If the income elasticity of demand is greater than 1 then this is described as elastic. This means that a change in income will lead to a change in quantity demanded which is greater than the change in income.
51
is the YED for premium cars elastic or inelastic and what does this mean?
the income elasticity demand for premium cars is relatively elastic as consumers may decide they cannot purchase a new vehicle if their income reduced, so quantity demanded is likely to change by more than the change in income
52
What can we learn about the income elasticity of Nestle Instant Coffee if a 2% increase in income leads the quantity demanded to fall by 4%?
-what does the minus show?
The income elasticity of demand is -4% ÷ 2% = -2.
The minus shows that an increase in one variable will decrease the other variable.
53
An income elasticity of demand of -2 shows that the elasticity is BLANK which means that any change in income will result in a BLANK change in quantity demanded.
1 . elastic
| 2 . greater
54
As income has risen, consumers are likely to have switched from instant coffee, which is an BLANK product, to bean-to-cup coffee, which is a BLANK good.
1 . inferior
| 2 . normal
55
what is meant by market segmentation?
Market segmentation is the process of dividing potential customers into different groups based on characteristics like age, gender, income and much more.
56
why do businesses use market segmentation?
- choosing market mix
- choosing promotion
- market mapping
57
how can market segmentation help with choosing the marketing mix?
-When choosing the product, geographic, promotional and price segmentation can help a business to understand its customers’ needs and wants.
For example, Next provides clothing aimed at infants and toddlers using its Next Kids range.
58
how can market segmentation help with choosing promotion? give examples
- Advertising in a newspaper probably is not the best way to target teenage girls, but a teenage magazine like Bliss might be.
- Segmenting a market can give businesses ideas about how best to promote their products.
59
how can market segmentation help with market mapping?
Market mapping is a process to identify a gap in the market by looking at what competitors offer.
60
what are the different variables that customers can be segmented into?
- income
- gender
- location
- age
61
why would a business segment a market based on income?
| -give examples
- Certain products (luxury products) need to be aimed at people who earn a certain amount of money.
- For example, high-end kitchens (priced at £20,000) are more likely to be effective advertising in magazines like Ideal Home or the Sunday Times because these magazines tend to have readerships with high incomes.
62
why would a business segment a market based on gender?
| -give examples
- Some products are aimed primarily at either males or females.
- Boohoo.com is an online fashion retailer that primarily targets females. Advertising to lots of males may not be the most effective strategy.
63
why would a business segment a market based on location?
| -give examples
- Customers’ wants and needs often change based upon where they live or where they are born.
- There are many supermarkets focusing on Polish food on some high streets in the UK.
- It makes more sense for these supermarkets to locate where there are lots of Polish families living.
64
why would a business segment a market based on age?
| -give examples
- Products can be aimed at a specific age range.
| - A business is unlikely to advertise mobility scooters to people under 40.
65
what are the characteristics of mass markets?
- The mass market tries to make products and/or services for all consumers.
- The mass market will be larger and the types of products will be more generalised.
- McDonalds, Burger King, Subway
66
what are the characteristics of niche markets?
- The niche market appeals to a much smaller segment.
- The niche market will be smaller than the mass market.
- The niche market provides products and/or services which focus on a specialist want or need.
healthy food- Leon
67
what are the benefits of mass markets?
- Having more customers.
- Benefitting from economies of scale (due to higher output levels).
- Can build a strong market presence.
68
what are the disadvantages of mass markets?
- Higher levels of competition.
| - Lower profit margins
69
what are the pros of niche markets?
- Less competition.
- Specific market.
- Can develop specific expertise.
- Higher profit margins.
- Customer loyalty.
70
what are the cons of niche markets?
- No economies of scale.
| - Vulnerability because they have an undiverse product portfolio.
71
what is meant by the marketing mix?
The marketing mix is the combination of factors (the '7Ps') which affect a customer’s purchasing decision. Customers may buy a product if they find each of the marketing mix factors satisfactory.
72
what are the 7Ps?
- people
- process
- physical environment/ evidence
- product
- place
- price
- promotion
73
what is meant by the 'people' in the 7Ps?
People is one of the 7 Ps and includes customer-facing staff, such as customer service assistants, and the employees involved in a transaction when a customer purchases a product or service.
74
what is meant by the 'process' in the 7Ps?
Process is one of the 7 Ps and includes the systems in place to support the transaction which the customer must deal with to complete the transaction successfully.
75
what is meant by the 'physical environment/ evidence' in the 7Ps?
The physical environment or physical evidence is one of the 7 Ps and includes physical premises, the design, and layout of premises and the condition and placement of products within a store.
76
why might a business need to change the marketing mix?
As market conditions and customer tastes and preferences change, a business may update its marketing mix.
77
what are some factors influencing the marketing mix?
- the type of product being sold
- availability and speed
- product information
- luxury product?
78
how does the availability and speed of a product influence the marketing mix?
Convenience items, such as basic groceries, need to be accessed quickly by customers so businesses may focus on marketing mix factors related to speed and availability.
79
how does the product information of a product influence the marketing mix?
Shopping items, such as computer tablets and clothes, may be considered for purchase by customers for a longer period so a business may focus on the customer service ‘people’ factor so that customers can access product information easily.
80
how does whether the product is a luxury product influence the marketing mix?
Specialty products, such as cars and jewellery are luxury purchases for customers. Consumers who buy luxury goods may expect sophisticated stores and customer service processes to support the transaction. Businesses operating in luxury or specialty goods is likely to focus on processes & physical evidence, whilst making sure the other Ps are consistent with their brand.
81
what is meant by the product life cycle?
The product life cycle is the series of stages that a product goes through over its lifetime. Not all products last forever. They start somewhere and most products and services experience a fall in sales after a certain period of time.
82
what is meant by the research and development stage in the product life cycle?
- Research and development is the stage before a product has actually been made.
- Businesses will invest in researching a certain area of the market and if they discover a business opportunity, they may then take the time and resources to develop a product or service that fits a gap in the market.
83
what is an example of type of company that invest largely in research and development?
A pharmaceutical company may invest into researching a certain disease to see if there is a drug that might help cure it.
84
what is meant by the introduction stage in the product life cycle and what happens in this stage?
- The introduction is the stage where a business introduces or launches the new product (or service) to the market.
- Marketing and advertising are important in this stage of the product life cycle because a business needs to find a way to let consumers know what the product is and that the product exists.
85
what is meant by the growth stage in the product life cycle?
- Successful products often undergo a period of growth as more and more customers discover and buy the product.
- In the early days, just after introduction, the rate of growth tends to increase.
86
what is meant by the maturity stage in the product life cycle?
- at this stage, the number of new customers buying the product has slowed down and the market for the product can be considered mature.
- But sales of the product are still rising, just less quickly than before (they are rising at a decreasing rate).
+People grow a lot less between the ages of 13 and 18 when compared to age 1 and 6.
87
what is meant by the saturation stage in the product life cycle?
- At this stage, the sales of the product have reached its peak and no longer increase but remain steady.
- Essentially all consumers who want the product or service have bought or acquired it.
88
what is meant by the decline stage in the product life cycle?
Changes in fashion, consumer tastes/preferences, technological advances and new competition offering similar products can all mean that the demand for a product begins to fall.
89
draw the Boston Matrix
double check with the word document
90
what are some factors influencing decisions on the marketing mix?
- the business' marketing objectives
- the target market
- the presence and size of competitors
- the type of product
91
draw a diagram of a product life cycle
double check the word document
92
what are the 4 key factors that influence the business' pricing decisions?
- which are internal?
- which are external?
- costs= internal
- product life cycle= internal
- nature of product= external
- degree of competition= external
93
why does cost influence a businesses pricing decision?
- Costs influence a business' pricing decisions because businesses usually aim to make a profit.
- A business' price and costs determine how much profit the business will make. Businesses cannot afford to set a price lower than their costs forever.
94
why does product life cycle influence a businesses pricing decision?
- A product's position in the product life cycle helps to determine if a business will charge a high or low price for the product.
- When a new product is launched, businesses may charge higher prices to take advantage of exclusivity.
95
why does that nature of product influence a businesses pricing decision?
+The nature of a product affects pricing in 2 key ways:
- Whether a good is a luxury good or not, will affect how much a business charges.
- Whether the product is hard to differentiate from competitors affects how much a business can charge. If it is similar (homogenous), then businesses usually price at a similar level to competitors.
>For example, in the crude oil market, oil is the same no matter who produces it. This means that there is a uniform price (same price for all businesses and customers) in the market.
96
why does the degree of competition influence a businesses pricing decision?
- The degree of competition affects the pricing decision of businesses because the more competition a business faces, the more options customers have.
- When customers have lots of options for similar products, businesses must compete to attract customers using a lower price.
97
what is meant by price skimming?
Price skimming is a pricing method where a business sets a relatively high initial price and then gradually lowers it over time.
This is often used before a business faces competition in the market.
Once competition arrives, there will be downward pressure on the price to fall.
98
how does price skimming maximise revenue?
Price skimming is used to try and maximise revenue.
Consumers who buy early on are willing to pay a higher price but the business can still attract other customers who can pay a lower price later on in the product’s lifecycle.
99
how does price skimming allow a business to cover fixed costs (research and development)?
Price skimming can help to recover the costs of research and development, which can be expensive for technology products.
100
what is a disadvantage of price skimming?
+Slower unit sales growth
- A disadvantage of price skimming is that it can slow down the growth of a product and this can give competitors more time to launch a competing product or service.
- A business does not maximise the number of sales at the start so competitors can get more of a chance to enter the market.
101
what are some benefits of price skimming?
- cover high fixed costs
| - maximise revenue
102
what is meant by price penetration?
Price penetration is where a business tries to increase market share by offering a low initial price.
103
which pricing method is similar to price penetration?
Loss leaders work in a similar way to price penetration.
104
why would a business use a price penetration pricing method?
- increase in market share
- When these goods or services enter the market, a business can attract customers from established competitors.
- apple
105
what is a disadvantage for a business using a price penetration pricing method?
+Lower short-term profits
- In the short term, price penetration can lead to lower average profits than would be earned with a higher price.
- However, market share may be more important for the long-term profitability of a business.
106
what is meant by a loss leader?
Loss leaders are products or services that are sold by a business at a price where the business makes a loss (average revenue < average cost).
107
why would a business use a loss leader pricing method?
Loss leaders can attract new customers or sell to existing customers, in the hope that they make extra (incidental) purchases.
-dollar shave club
108
what are some characteristics of a loss leader pricing method?
- average revenue< average cost
- used to attract customers in the hope that they make extra purchases
- products sold at a price where the business makes a loss
109
what is meant by competitive pricing?
- Competitive pricing is when a business sets its prices for its products and services based on what other businesses in the market are charging.
- Competitive pricing is used when the products in a market are similar.
- petrol
110
what is meant by cost- plus pricing?
- Cost-plus pricing is a pricing strategy where a business charges the customer based on what it costs to produce the product or service.
- They work out exactly what it costs to produce the product (or service) on average and then add a “mark-up” (extra amount) on top of this cost to make sure that the business makes a gross profit.
111
what is meant by the 'mark up' in cost plus pricing?
an addition to the cost of production to make sure the business makes a profit on each unit sold
112
what are some features of competitive pricing?
- used when the products in a market are similar
| - price of product set based on prices of similar products in the market
113
what is the long locket pocket strategy?
Palich et al (2000) published a research paper describing the 'Long Pocket Strategy'. Their research concluded that the business with the most money in the bank normally wins a price war between businesses.
114
what is meant by promotional methods?
Promotional methods are the different methods that businesses use to inform consumers about their products & services in order to persuade consumers to buy them.
115
what some examples of promotional methods?
- sponsorship
- advertising
- public relations
- sales promotion
- product placement
- social media
116
why is advertising sometimes called 'above the line' promotion?
-what is the aim?
it involves a business paying to have their product or service promoted in a public space. It aims to make consumers aware of a product and to get them to buy the product or service.
117
what are some types of advertising platform?
- Advertising can happen through various platforms, such as Newspapers, Magazines, Television, Internet, Billboards or Social Media.
- The platform that a business uses depends on the target market of the product or service.
118
why is it important for a business to choose a (correct) a advertising platform?
to make sure that they reach the right target market
and have the maximum impact.
+For example, social media or a TV programme may be a better way to reach young people than a broadsheet newspaper like The Times.
119
what is the aim of public relations?
- PR involves managing the spread of information about the business.
- The aim of PR is to make sure this information is as positive as possible and reaches the largest possible audience.
120
what are some examples of PR?
- An example of PR is the use of newspaper editorials, where people in a business manage the business’ relationships with different newspapers, sending them articles to publish about the business.
- Businesses do not pay the newspaper for this coverage like they would for advertising.
121
how do business' use competition in sales promotiom?
-Businesses are increasingly using competitions on social media.
+For example, “like and share this post for a chance to win a free meal for two at Nandos.”
122
what are some examples of sales promotion?
- competitions
- free gifts
- discount coupons
- point of sales displays
- value for money offers (BOFOF)
- samples
123
what are some factors influencing the promotional mix?
- competitor actions
- the nature of the market
- finance available
- target market
- the nature of the product or service
124
how does competitors actions influence the promotional mix?
The promotional mix of competitors might influence a business because they may want to reach consumers using the same channel as rivals.
125
how does the nature of the market influence the promotional mix?
+As a market matures, the rate of growth changes.
- If a market is growing slowly, advertising may be less important.
- If a market is growing fast, then businesses will be battling for market share and are willing to spend more on advertising as it will affect sales by a larger amount.
126
how does the availability of finance influence the promotional mix?
- Some businesses will have much more finance (money) available to spend on promotions.
- Some promotional methods (e.g. TV advertising) are more expensive than others.
- Smaller businesses with less finance are less likely to be able to afford TV advertising.
127
how does the target market influence the promotional mix?
- A business' target market for a product (or service) will affect the promotional method that they use because different types of people use different platforms more often.
- A business wants to promote its product to its potential customers.
- A business that produces women’s underwear will not usually want to promote their product to middle-aged men.
128
how does the nature of the product or service influence the promotional mix?
-give an example
- The type of product (or service) will influence which promotional method needs to be used.
- A technical product like a laptop may want to give consumers more information about their product, whilst a simple product like orange juice (Tropicana juice for example) may not need to give info.
- A fashion label like Hugo Boss does not have much information to communicate. How their products look is more important.
129
what are the 4 main main reasons why businesses use promomtion?
- to inform/ remind customers about the product
- to persuade customers to buy the product
- to create or increase sales
- to create or change the image of a product (or service)
130
why do businesses need to inform/ remind customers about the product?
- A business cannot sell a product (or service) if no consumers know about it.
- Businesses must be able to inform their target market about their product (or service) and remind people, at the right time, in the hope that they will buy it.
- Reminding customers at the right time is key. There is not much point in promoting Christmas baubles on the 26th December.
131
why do businesses need to persuade customers to buy the product?
- Promotions are often used to advertise the benefits of using a product and to explain why you should buy it.
- These are attempts to persuade the customer that this is the best product for them.
132
why do businesses need to create or increase sales?
- Informing consumers that are not aware of a business’ products can ‘create’ new sales.
- By constantly reminding existing customers about a product (or service) and its benefits, businesses can increase the sales from each customer.
- This is more likely to happen during the periods before short “sales windows” like Easter and Christmas.
133
why do businesses need to create or change the image of a product (or service)?
- A promotion can have a large impact on how customers see a product. If a celebrity uses the product, a business can give the product a fun, luxury or innovative image.
- UnderArmour sponsored golfers like Jordan Spieth to create a youthful and cool image after they launched their golf and sporting wear ranges.
- A promotion can help to change customers’ perception of a product.
134
what are distribution channels?
The different ways that a business can distribute their product
135
what are some potential distribution channels for businesses?
- Manufacturer-wholesalers-retailers-customers.
- Manufacturer-retailers-customers.
- Direct to consumer.
136
what are the benefits of using wholesalers to sell your products?
- Wholesalers sell products in bulk to a network of retailers and then retailers sell the products to customers.
- large network of buyers
137
what is a disadvantage of using wholesalers to sell your products?
- less interaction with customers> could lead to worse customer service
- profit sharing> This may make the business less competitive on price.
138
what are retailers?
- A retailer is any shop that sells directly to the customer in small quantities.
- Tesco and the corner shop at the end of the road are both examples of retailers.
139
what are benefits of using manufacturer- RETAILER- customer as a distribution channel?
- higher margins or lower prices
| - control over shops (retailers)
140
what are disadvantage of using manufacturer- RETAILER- customer as a distribution channel?
- hard to contact retailers
| - higher logistics costs
141
how does using retailers in a distribution channel lead to higher margins or lower prices?
Bypassing wholesalers makes it likely that customers will pay lower prices because the business is “cutting out a middle man”.
142
how does using retailers in a distribution channel lead to control over shops (retailers)?
-Going directly to retailers means that a producer or manufacturer can have complete control over which shops customers can buy their products from.
+A luxury brand may not want their products stocked in Tesco or TK Maxx as it may lead consumers to perceive their brand as lower quality.
143
what is the disadvantage of it being hard to contact retaiers?
- It can be hard for a business, especially new start-ups, to get retailers to stock their products.
- This means that it can be harder for a business to reach as many people and it could take longer to sell a business' products.
144
how does using retailers in the distribution channel lead to higher logistics costs?
Selling to retailers directly may increase a business’ delivery and logistics costs if they have to deliver all the products to a retailer themselves.
145
what is the benefit of being able to sell directly to consumers?
-This is the cheapest channel for the consumer and it is often done by businesses using their own website.
-nobody else takes a cut=
+Selling direct to consumer lets a business charge the lowest price possible to the consumer because there are no intermediaries (organisations in the middle) who take a cut of the profit.
+Alternatively, the business can charge the same price and have a higher margin.
146
what is a disadvantage of selling directly to consumers?
-hard to reach customers
+It can be hard to reach as many customers as quickly because a business will have to invest time and money into setting up new stores or their own website.
147
what is the benefit of using e-commerce and m-commerce?
- It is becoming easier to reach more consumers directly with the use of e-commerce and m-commerce.
- This means that lots of businesses don't need to set up physical stores.
148
what is the differnece between wholesalers and retailers?
wholesalers= Sell products in bulk to a network of shops that sell the products to customers.
retailers= Any shop that sells directly to the customer in small quantities.
149
what is the difference between e-commerce and m-commerce?
- E-commerce describes the purchases that take place electronically on the internet.
- M-commerce is buying goods online using a mobile phone.
150
what are the benefits of e-commerce and m-commerce?
- reach more customers
- sell direct to consumer (B2C)
- cheaper to set up a business
151
why is the e/m commerce being able to reach more customers a benefit?
+Businesses can now easily sell their products to customers all over the world without setting up a physical store there.
- A business’ products can reach international markets without setting up stores or overseas subsidiaries.
- Small businesses in particular rarely have the finance (money) needed to set up shops internationally. Before e-commerce, expanding was harder for small businesses.
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why is e/m commerce being able to sell direct to consumer (B2C) a benefit?
- Because businesses are selling directly to the consumer, no middlemen take a cut, and so the business can offer a lower price to the customer.
- The business has lower average costs and usually lower prices.
- This should help a business to remain competitive.
153
why is e/m commerce making cheaper to set up a business a benefit?
- It is cheaper to set up a business that uses e-commerce.
- Businesses don’t have to invest lots of money in opening stores and hiring people to work in-store.
+Amazon was started by Jeff Bezos. He initially sold books from his garage and the only investment that he had to make was on a website and some books, rather than leasing (renting) a store. Amazon is now worth over $700bn.
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what are some drawbacks of e/m commerce?
- increased competition = Because e-commerce allows a business to easily reach wider markets, UK businesses face more competition. Foreign businesses can compete in the UK more easily. + Increased competition can have a negative effect on profits.
- selling online can create problems = Some goods are hard to judge from a computer or mobile phone. Consumers may want to see a product in person before buying it.
- investment needed = Businesses must invest in specialists who can build websites. + Large businesses who sell a large volume of products may have to invest in warehouses and fulfilment centres.
