Business Studies Unit 3

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  • Created by: Mae Ghali
  • Created on: 19-03-13 12:09

Marketing- Primary Market Research

Marketing invloves identifying and understanding customer needs and wants. This is usually done through Market Research.

Primary Market Research is data that you have collected yourself


  • specific to your service/product
  • Reliable
  • Up to Date


  • Time Consuming
  • Costs Money


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Marketing- Secondary Market Research

Secondary Market Research is information gathered that already exists and has been collected by someone else.


  • It's quicker than primary research
  • it doesnt cost money


  • data may not be up to date
  • less reliable than primary research
  • may be difficult to find data relevant to your business/product
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Boston Matrix

Boston Matrix

The Boston Matrix helps companies understand where their product portfolio is against competitors

The Dog has a low share in a declining market; only kept to complete a product line e.g. ipod shuffle

The Cash Cow has a high share in a low growth market; any increase in sales will be at the expense of a competitor, low marketing costs with relatively high profits e.g. ipod nano

The Rising Star has a high share of a growing market; high maintenance; marketing resources are focused on this product and fierce competition is likely e.g. ipad

Problem Child is a new product with a small share of a growing market it has high maintenance and needs high levels of investment to become established e.g. apple TV

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Effective Customer Service

Customer Service is when a customer recieves help and assistance from a member of staff until their needs are fulfilled and exceeded

Reasons for good customer service:

  • To gain repeat purchases
  • For a good reputation
  • Word of Mouth means more customer

Poor product service leads to:

  • Customers switching to competitors
  • Repeat purchases fall
  • Word of mouth means a fall in customers
  • Income gets reduced 
  • Might need to reduce staff
  • The business may have to close  
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Consumer Protection

There a 3 consumer protection laws: the Sales of Goods Act, Advertising Standards and the Trade Descriptions act.

The Sales of Goods Act gives consumers rights to compensation if a product they buy is not of merchantable quality, not as described or not fit for its purpose.

The Trade Descriptions Act makes businesses liable for prosecution and fines if products are sold in a misleading way.

The purpose:

  • To save money for consumers
  • Makes sure businesses meet a good quality (increases businesses costs)
  • Stops Exploitation
  • Health and Safety
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Just In Case Stock Control Part 1

One type of managing stock is Just In Case stock control- here is a graph(

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Just In Case Stock Control Part 2

  • Advantages  
  • Improves Cash Flow       
  • Decreases working capital required
  • More space for production
  • Less waste and damage
  • Links with supplier is improved
  • More control of supplier
  • Oppurtunity of computerisation
  • Worker Motivation
  • More flexible design of product


  • Great reliance on supplier
  • Order cost per unit may be high
  • may not be able to cope with sharp rise in demand or supply interuptions so needs good management
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Quality Control

Quality is how well a product is made or a service is executed to meet customers' needs.

Quality control is ensuring that a product/service meets the minimum standards, often through testing sample products once completed. This is traditional quality control and if the product does not meet the standrads wanted it is rejected.

Quality assurance is ensuring that quality is produced at every stage of production, often through making the worker responsible for quality. This is a more modern technique which allows the business to assure customers of high quality.

Businesses can earn Quality Certificates to show the company's commitment to quality these are some of these:

  • BSI- the British Standards Institution
  • IOS- the International Organisation for Standardisation which is the basic stanard for quality management systems
  • Kite Mark
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Competitiveness- Part 1

Productivity is how much each worker produces over time.

This is a Productivity and Efficiency Graph:


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Competitiveness- Part 2

How to raise Productivity:

  • Training
  • Better Equipment
  • Better work practices
  • Motivation

Ways to reduce costs:

  • Relocation- workers are cheaper
  • Better design- cheaper packaging
  • Cutting Overhead
  • Better Productivity
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Business Ethics

Business ethics are ideas about what is morally correct or not, applied in a business situation.

Business Ethics Affect:

  • Production- how much waste is produced
  • Suppliers- Fair Trade products
  • Workers- reducing the amount of accidents
  • Customers- Take responses and help the customer
  • Competititors- produce a good reputation to gain customers
  • The Product- dont use genetically modified food, clothes can be washed at low temperatures
  • The Environment- recycle waste, reduce the number of miles travelled by the supplier
  • Local Communites- support charities, have fair trade products
  • Possible Trade-offs - which one is more important money or ethics? (a trade-off is a decision between two things in which you have decide which is the better option)
  • Pressure groups- work with pressure groups 
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Motivation in work is the desire to complete a task

Types of Motivation:

  • Involvement in decisions
  • Interesting and relaxed atmosphere
  • Understanding the impact of their work
  • Promotions/Pay rises (rewards)
  • Making them feel valued
  • Variety of Jobs

Reasons to motivate staff:

  • Increased Productivity without more costs
  • Improved quality as staff take pride in their work
  • Workers are keen to stay working which saves money on recruitment
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Maslows Theory of Motivation/ Hierachy of Needs


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Communication- Part 1

Communication is when messages are passed between a sender and reciever, through a medium such as a letter or email.

Feedback is the response the a messaged by it's reciever to the sender.

Internal Communication is communication within the business organisation

External Communication is between the business and an outside individual or organisation such as a customer or the supplier.

There are 3 types of communication:

  • Written Communication- letters, Websites, email etc.
  • Visual Communication- Pictures, Graphs, Adverts etc.
  • Verbal Communication- Meetings, lectures, assemblies etc.
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Communication- Part 2

Horizantal Communication is between workers at the same level of the hierachy

Vertical Communication is between high and low status people e.g Mr Bovey and a student

Channels of communication are the path taken by a message

Formal channels of communication are recognised and approved of by the business and employee representatives

Informal communication (communication through the grape vine) is through channels that arent recognised by the business e.g. gossip

Impacts of bad communication:

  • Unhappy customers
  • Problems with suppliers
  • Misunderstandings among staff
  • Poorly motivated and frustated staff
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Remuneration- Part 1

Remueration is money paid for work or service. There are many types of pay.

Time Based Systems:

  • Usually for manual (blue collar) workers e.g. builder
  • Paid based on the number of hours they work x the hourly rate
  • Can earn overtime by working on a bank holiday or more than 8 hours a day


  • Usually for non-manual (white collar) workers e.g. teachers
  • Paid a salary agreed as a yearly figure but paid monthly (tax and other costs are deducted)
  • No overtime is paid- they are expected to work until the job is done

Results- based systems:

  • For both blue and white collar workers
  • Can be paid by piece rate (productivity), % of sales or get given a bonus for high perfomance or if a target is reached
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Remuneration- Part 2

Temporary Work is when you are hired for a short period of time which can be paid weekly or monthly. This is usually around christmas time.

Freelance work is when you are hired to perform a particular task e.g. a supply teacher is hired to teach a lesson. Freelance saves the company from paying tax and National Insurance Costs.

Fringe Benefits:

  • Payments 'in kind' over and above the wage or salary e.g. a company car
  • No money changes hands but theres often a tax benefit for providing these perks
  • Motivates staff to stay in the business

Methods of Payment depends on:

  • The type of job
  •  Tradition
  • Tax and Employment costs- Freelancing is cheaper
  • Motivation- which would make staff more productive?
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Break Even is the point when the business is niether making proft or a loss


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Product Lifecycle

The product lifecycle describes the stage a product goes through.

Product Lifecycle:

  • Development- coming uo the idea and building upon it
  • Introduction- researching, development and launching the product
  • Growth- when sales are increasing at its fastest rate
  • Maturity- sales are near their highest, but the rate of grwoth is slowing down.
  • Decline- final stage of the cycle when sales begin to fall.

Extension Strategies:

  • Redesign the product
  • Adding extra features
  • Change the packaging/ target audience
  • Provide a Unique Selling Point
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Product Lifecycle Graph


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Commoditities are raw materials. A commodity market is where buyersand sellers meet to agree prices, these prices change daily. Goods markets are more static.

Demands are the amount of consumers that are willing to pay at a particular

Supplys are the amount sellers are willing to offer for a sale at a given price

Shortage is when the demand for a good or service is greater than the supply. This usually increases the price.

Price Makers are companies that decide the price ofthe product (goods market).

Price Takers are prices set by the customer (commodity markets).

Effects of changes in price in a commodity market depend on:

  • How much raw materials are used
  • How large the increase in price is
  • Can the business pass on the costs to consumers?
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Research and Development

Things to consider (Research):

  • Market Research- the demand for the product
  • Employee idea- what alteration would the workers need to make for the product?
  • Scientific Research- what are the machines capable of?

Things to consider (Development):

  • Making in bulk- is it possible?
  • Test Market- whatare the consumers opinion on the product so far?

A design mix is the range of variables which contribute to successful design, function cost and appearance.

This allows a business to see where they can improve on their product as they can list the postitives and see which one is lacking.

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Design Mix


  • Will it fulfill its purpose?
  • Will it be reliable?
  • Will it be durable?
  • Is it good quality?


  • Includes the look, feel and smell of the product
  • Better looking products will sell better
  • Bright colours catch peoples eye


  • Is it simple to make?
  • Can it be made quickly and efficiently?
  • Is it cheapr to produce?
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Environmental Issues

A Supply Chain is the route taken by a product from when the raw materials are created through to the final customer. the process has short and long term environmental effects.

Short term effects:

  • Traffic congestion
  • Air pollution
  • Noise pollution
  • Water pollution
  • Land fill

Long Term effects:

  • Resource depletion
  • Pollution increases the impacts of global warming

Government Rules:

  • Businesses being good to the environment pay less tax
  • Increased tax on petrol
  • Landfill Tax
  • Business targets- if they arent met then penalty's are made
  • Restricts planning permission to stop factories being made
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Product Trial is when consumerss buy a good for the first time and asses whether or not to buy them again

Public Relations is the promotion of a positive image about a product or business through giving information about the product to the public, press or other businesses

Viral Marketing is getting individuals to spread a message about a product throguh their social networks like facebook or their group of friends

Penetration pricing is setting an initial low price to attract customers and is slowly raised

Trade buyers are buyers of goods which then sell those goods on to customers or toher buyers e.g supermarket chain

Wholesalers are businesses which buy in bulk from a manafacturer and then sell the stock on in smaller quantities or retailers

Retailers are businesses which specialise in selling goods in small quantities to the consumer

Customer Loyalty is the willingness of buyers to make repeated purchases of a product or from a business

Repeat purchase is when a customer buys a product more than once

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