Business revision, 1.3.4 (p.g 49)

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What is a distribution network?
It shows the journey that a product takes to get from producer to consumer.
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What should all distribution networks do? (6)
Encourage repeat purchases, Safe delivery, Maximise the number of potential customers for a product, Quick delivery, Provide market info to producers/retailers, Positive relations between producer and consumer.
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What is a distribution channel?
The flow of organisations that connect a product from producer to consumer.
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What are the 2 groups in distribution?
Short channel and long channel.
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What does short channel distribution mean?
This involves two organisations, the producer and the consumer.
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What is long channel distribution?
This involves the producer, consumer and several intermediaries along the way. Intermediaries could be people such as wholesalers and distributers to retailers and value adding resellers.
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What are the main factors businesses should consider when choosing the right distribution network? (4)
Product, Market, Legal restrictions, Customer expectation
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Why is the product important?
If the product is new to the market it may need to be introduced to customers by practical demonstrations and therefore it would not be right to sell it through retail outlets.
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Why is the market important?
Niche products tend to be available through specialist retailers whereas mass market products such as veg will be found in a large number of outlets because the demand is more.
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What is the product life cycle?
The basic life story of a product or service.
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What are the 4 stages?
Introduction, Growth, Maturity, Decline.
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Describe what each of these mean:
Introduction - The product/service has just been launched. Growth - The product is becoming established. Maturity - The product is coming towards its peak and sales have begun to level out. Decline - Sales are falling due to decrease in market share
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What are the main problems with the product life cycle?
Difficult to establish what stage the product is in due to market change, Life cycle works best only when markets are stable, some products die straight after introduction, cannot show future sales, decline may be long which can be confused w/ maturi
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What is benchmarking?
Comparing a business's achievements with those of the industry standard. Comparing your own business with rivals and their success.
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What is an extension strategy?
This is when a product/service is falling into decline and the business will use an extension strategy to breathe new life into it.
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What do product extension strategies involve?
They involve techniques such as developing new features and finding new uses for a product. e.g Apple did this through the App Store.
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What do promotion extension strategies involve?
Involve finding new users for a product or changing the price of the product or redesigning its packaging.
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What can the Boston Matrix be used for?
Used as a way to analyse where there are opportunities for growth.
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What are the 4 categories in the Boston Matrix?
Star, Cash Cow, Question Mark, Dog
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Which category is high in market share but low in market growth?
Cash cow
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Which category is high in market share and high in market growth?
Star
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What is low in both market share and growth?
Dog
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What is 'question mark' in terms of market share and growth?
Low in market share and high in market growth.
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What can the Boston Matrix do for businesses?
Allows companies to draw attention to where the cash flow is and where the potential for investment lies. Also shows how a company's finance should be used in order to manage growth and performance over time.
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What businesses/products fall under star?
They make a lot of sales and experience intense growth. However, they cannot support themselves alone and so the company needs to make large investments to keep its market share.
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What businesses/products fall under question marks?
aka problem children. These sit in a growing market but have low market share. Usually, they're unprofitable with a negative cash flow.
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What businesses/products fall under cash cows?
These businesses are in low growth markets, such as mature markets, but 'cash cows' usually have a high market share. This brings in positive cash flows and high profitability.
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What businesses/products fall under dogs?
They experience a low market share in low-growth markets. Dogs may create negative cash flow as they often operate in declining markets that have no future.
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What are the problems with the Boston Matrix?
Industry data on a market is not always freely available, Some markets are more difficult to define than others, High market share does not always mean profit, Dogs are able to return profit, Cash cows might be a firms main source of profit.
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What is mass marketing?
Businesses use this type of marketing to target a wide range of potential customers.
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What products are usually advertised in mass marketing?
General consumer goods, Consumer durables, Entertainment outlets, Video game consoles, Mobile phones
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What are the advantages of mass marketing?
Potential for high number of sales due to large audience, Global marketing allows economies of scale for the company, Potential to create a huge brand with worldwide recognition.
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What are the disadvantages of mass marketing?
Expensive, Time consuming to implement and analyse, Requires constant investment, Risk of irritating customer.
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What is niche marketing?
This is when businesses target small sections of the market as a way of filling a gap that is currently not being served by a business.
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What products are usually advertised through niche marketing?
High end sports cars, Luxury chocolate, Boutique clothing.
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What are the advantages of niche marketing?
Targets specific customers, Less expensive than mass marketing.
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What are the disadvantages of niche marketing?
Can attract competing firms, Potential for sales is much low than mass marketing.
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What ways can businesses ensure they gain customer loyalty?
Loyalty/point cards, Saver schemes, Excellent customer service.
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What are the problems with loyalty? (businesses can not always assume customers are loyal)
Convenience (the shop may be near to where they live), Price (may be cheaper than other businesses), Indifference (may find it difficult to switch/change purchasing from a business or may continue out of habit - often applied to insurance etc).
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Card 2

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What should all distribution networks do? (6)

Back

Encourage repeat purchases, Safe delivery, Maximise the number of potential customers for a product, Quick delivery, Provide market info to producers/retailers, Positive relations between producer and consumer.

Card 3

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What is a distribution channel?

Back

Preview of the front of card 3

Card 4

Front

What are the 2 groups in distribution?

Back

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Card 5

Front

What does short channel distribution mean?

Back

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