Unit 2 Business Studies

Front 1

Marketing

Back 1

The management process responsible for sales promotion and for identifying, anticipating and satisfying customer requirements profitability

Front 2

Marketing Objectives

Back 2

Are the goals that a business is trying to achieve through its marketing

Front 3

Examples Of Marketing Objectives

Back 3

- To increase sales

- To raise brand awareness

- To reduce prices

- To target a new market

- To reposition a product

Front 4

Marketing Objectives are Established By

Back 4

Internal Factors:

- Market research findings

- Forecasted sales

- Forecasted profits

External Factors:

- Customer behaviours

- The economy

- Changes in law

Front 5

Mass Marketing Strategy

Back 5

Designed to appeal to the whole market

Front 6

Niche Marketing Strategy

Back 6

Designed to appeal to a specialist, smaller segment of a market

Front 7

Benefits of Mass Marketing1

Back 7

- The number of consumers in these markets is huge

- The business can produce large quantities at a lower cost by exploiting economies of scale

Front 8

Drawbacks of Mass Marketing

Back 8

- There is often a lot of competition in these markets

- Businesses can often spend lots of money marketing their products in these markets

Front 9

Benefits of Niche Marketing

Back 9

- Businesses can often avoid competition in these markets

- It can be a lot easier to focus on the needs of their customers in these markets

Front 10

Drawbacks of Niche Marketing

Back 10

- The number of customers in these markets is small

- Businesses can only produce in smaller quantities at a unit higher cost by not being able to exploit economies of scale

Front 11

Marketing Mix

Back 11

Includes the important marketing decisions relating to product, price, promotion and place

Front 12

Product

Back 12

The design, functions and intended benefits that come from consuming a good or service

Front 13

Price

Back 13

The amount consumers must pay to purchase the product.

Front 14

Promotion

Back 14

Creating a favourable image for the product, or it may simply inform potential customers of its existance

Front 15

Place

Back 15

The way products are made available to potential customers

Front 16

Product Life Cycle

Back 16

Refers to the phases that most products go through between their first introduction to the market and their eventual decline in sales, which may lead to production ceasing

Front 17

4 Stages of Product Life Cycle

Back 17

- Introduction

- Growth

- Maturity

- Decline

Front 18

Introduction

Back 18

At this stage, spending on promotion will be high. the price charged by the business may vary. The number of outlets the product is sold at will be limited

Front 19

Growth

Back 19

At this stage spending on promotion will be high. The price charged by the business will become more competitive now. The number of outlets to buy the product should be increasing

Front 20

Maturity

Back 20

At this stage spending on promotion will be falling as the product is already established in the market. The price charged by the business will remain competitive. There will be a wide range of outlets to buy the product

Front 21

Decline

Back 21

At this stage spending on promotion will be low or non existent. The price charged by the business will be falling. there will be a lower number of outlets left to buy the product and the types of outlets will be beginning to change.

Front 22

Extension Strategy

Back 22

A way of increasing sales by relaunching the product with new image, or aiming at a different market segment and promoted in fresh ways.

Front 23

Types of Extension Strategies

Back 23

- Produce a new and improved version

- lower the price

- Find new markets abroad

- Develop the product range

- Target new segments

Front 24

Product Portfolio

Back 24

Is the full range of products sold by the business

Front 25

Boston Matrix

Back 25

An attempt to analyse the product portfolio of a business

Front 26

Stars

Back 26

Market leading products in growth markets

Front 27

Cash Cows

Back 27

Products in low growth markets that have high market shares

Front 28

Question Marks

Back 28

Products that have a low share of the market with high growth potential

Front 29

Dogs

Back 29

Products that have low market share in a market thats not growing

Front 30

Ethical Trading

Back 30

Doing the 'right' thing

Front 31

Sourcing of Sustainable Materials

Back 31

Not buying more natural resources that can be regenerated

Front 32

Price Elasticity of Demand

Back 32

Measures the change in quantity sold that results from a change in price.

Front 33

PED is Calculated By

Back 33

% change in quantity demanded

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% Change in price

Front 34

Income Elasticity of Demand

Back 34

Measures the responsiveness of demand for a product after a change in consumer incomes

Front 35

YED is Calculated By

Back 35

% change in quantity demanded

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% change in income

Front 36

Normal Goods

Back 36

When consumer incomes rise demand also increases for these goods, by a small proportion

Front 37

Luxury Goods

Back 37

When consumer incomes rise demand for these goods will rise by an even greater proportion

Front 38

Inferior Goods

Back 38

When consumers incomes rise, demand for these products falls

Front 39

Productivity (Labour)

Back 39

Usually defined as output per person but a higher definition is output per hour worked

Front 40

Labour Productivity is Calculated By

Back 40

Total output

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Number of workers

Front 41

Employing New Technology

Back 41

Lower cost of production

Front 42

Process Innovation

Back 42

Involves the use of new technologies in the production process and may play a big part in cutting costs

Front 43

Investing in More Capital Equipment

Back 43

- Man made goods

- Machinery/equipment

- Becoming more productive, lower costs

Front 44

Training Employees

Back 44

- Experience

- New skills

- More knowledge

- Fewer mistakes

All of these increase productivity

Front 45

Labour Intensive Production

Back 45

Uses relatively more labour, and works, and works well where wages are generally low

Front 46

Capital Intensive Production

Back 46

Uses a high proportion of capital equipment and relatively low proportion of labour. It can cut costs where wage costs are high

Front 47

Efficiency

Back 47

Using resources in the most economical way possible. This means keeping costs to a minimum; businesses strive to organise their activities so that there is no wasting time or capital equipment that they use.

Front 48

Ways of Raising Efficiency

Back 48

- Location production

- Quality and availability of labour

- Labour turnover

Front 49

Location of Production

Back 49

The least expensive place to go, cheapest location

Front 50

Labour Turnover

Back 50

Refers to the number of employees leaving the business each year, as a percentage of the average labour turnover

Front 51

Standard Products

Back 51

Designed to meet the needs of large numbers of customers, e.g toothpaste, shampoo

Front 52

Bespoke products

Back 52

Designed specifically to meet the needs of a customer, e.g tailored clothing

Front 53

The design mix

Back 53

integrates all aspects of development so that the product can satisfy all likely customers requirements. theses aspects are functional, aesthetic and economic manufacture

Front 54

Functional

Back 54

Refers to a product being fit for purpose

Front 55

Aesthetic

Back 55

Refers to perceived beauty, a sense that something is pleasing to the eye

Front 56

Economic manufacture

Back 56

Often involves producing at a minimum cost whilst retaining the qualities that buyers are looking for

Front 57

Capacity utilisation

Back 57

Measures actual output as a percentage of maximum potential output: per period of time

Front 58

Capacity utilisation calculation

Back 58

Current output

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Maximum possible output

Front 59

Drawbacks to operating at full capacity

Back 59

- Since some downtime is required for maintenance

- Staff moral will also suffer if they are constantly working flat out

Front 60

Benefits of operating at full capacity

Back 60

- Unit costs are as low as possible

Front 61

Implications of under-utilisation of capacity

Back 61

Average fixed costs will rise, this means higher costs and possibly higher prices leading to lower profits. so its in a businesses interest to increase capacity utilisation

Front 62

Inventory

Back 62

Means the amounts of raw materials and components, work in progress and finished products that a business holds

Front 63

Inventory control

Back 63

is the process by which the business ensures that stocks of input are adequate to meet production requirements, and that stocks of the finished product are readily available for customers

Front 64

Buffer stock

Back 64

These are kept to ensure the the business never completely runs out of either inputs and finished products

Front 65

Holding too much stock

Back 65

- Holding stock cost money, e.g storage costs

- increased risk of inventory loosing value due to not being wanted or needed, and wastage

Front 66

Holding too little stock

Back 66

- May lead to a loss of sales

- Could damage reputation of the business

- Longer lead times for consumers that remain