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Start Up Costs
These are costs a business pays out when they are first setting up. For example a new bakery would need to buy an oven. They are things a business has to pay for before it can start trading
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Operating Costs
Things a business pays for on a regular basis. Thye are also known as running costs . Some examples are rent , staff wages and materials. Operating costs are spilt into two types which are fixed costs and variable costs .
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Fixed Costs
They dont change depending on output. A business has to pay its fixed costs even if it produces nothing . Rent is an example of a fixed cost . Even if a business produces nothing the rent still has to be paid.
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Variable Costs
A cost that varies with the level of output. Examples of common variable costs include raw materials, packaging, and labor directly involved in a company's manufacturing process. The term variable cost is not to be confused with variable costing, whi
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Revenue
Revenue is the income earned by a business over a period of time, eg one month. The amount of revenue earned depends on two things - the number of items sold and their selling price. In short, revenue = price x quantity.
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Profit
profit is the surplus left from revenue after paying all costs. Profit is found by deducting total costs from revenue. In short: profit = total revenue - total costs.
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Loss
A loss is made when the revenue from sales is not enough to cover all the costs of production. For example, if a company has a total revenue of £60,000 and a total cost of £90,000, then they have lost £30,000 from trading.
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Customers
Customers. Price affects sales. Lowering the price of a product increases customer demand. However, too low a price may lead customers to think you are selling a low quality ‘budget product’.
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Competitors
A business takes into account the price charged by rival organisations, particularly in competitive markets. Competitive pricing occurs when a firm decides its own price based on that charged by rivals. Setting a price above that charged by the marke
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Costs
Costs. A business can make a profit only if the price charged eventually covers the costs of making an item. One way to try to ensure a profit is to use cost plus pricing. For example, adding a 50% mark up to a sandwich that costs £2 to make means se
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Penetration
Penetration pricing means setting a relatively low price to boost sales. It is often used when a new product is launched, or if the firm’s main objective is growth.
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Price skimming
means setting a relatively high price to boost profits. It is often used by well-known businesses launching new, high quality, premium products.
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Which of the following best describes 'price'?
'Price' is the amount customers are charged for an item.
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When is penetration pricing used?
Penetration pricing is used to gain market share.
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When is price skimming used?
Price skimming is used to make as large a profit as possible.
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When is loss leader pricing used?
Loss leader pricing is used to gain market share.
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What is the selling price of an item which costs £5 to make and has a 50% mark up?
The item selling price is £7.50.
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When is a profit made on the sale of a product?
A profit is made when the price covers the firm's costs.
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Which pricing strategy would a business use to encourage a trial purchase?
A business would use penetration pricing to encourage a trial purchase.
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Which of the following could a business use to ensure a profit is made when an item is sold?
A business could use cost plus pricing to ensure a profit is made when the product is sold.
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What is the best pricing method for a well known firm selling a new hi-tech, high quality mobile phone model most likely to be?
The best pricing method is likely to be price skimming.
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Retailers.
Retailers. Persuading shops to stock products means customers can buy items locally. However, using a middle man means lower profit margins for the producer.
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Telesales and mail order
Direct communication allows a business to get products to customers without using a high street retailer. This is an example of direct selling.
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where a business pays for messages about itself in mass media such as television or newspapers. Advertising is non-personal and is also called above-the-line promotion.
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Sales promotions
which encourage customers to buy now rather than later. For example, point of sale displays, 2-for-1 offers, free gifts, samples, coupons or competitions.
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Direct marketing
takes place when firms make contact with individual consumers using tactics such as ‘junk’ mail shots and weekly ‘special offer’ emails.
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Personal selling
using face-to-face communication, eg employing a sales person or agent to make direct contact with customers.
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In the marketing mix, what does the term 'place' refer to?
The term 'place' refers to anywhere products are made available to customers.
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What are channels of distribution?
The channels of distribution are all the places where products are made available to customers.
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In the marketing mix, what is a business website an example of?
A business website is an example of place and promotion.
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In the marketing mix, what is a business website an example of?
A business website is an example of place and promotion.
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What does a business using direct selling NOT make use of?
A business using direct selling does NOT make use of a retailer or a wholesaler.
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How important is place in the marketing mix?
In the marketing mix place is an equally important part
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Which of the following most accurately describes promotion activity?
Promotion activity involves using advertising and other marketing techniques to sell products.
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What is an example of above the line promotion?
A television advert is an example of above the line promotion.
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Why do businesses use market research?
Businesses use market research to identify customer needs.
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What is the first step for a new business?
The first step for a new business is to attract trial purchases.
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What does desk research involve?
Desk research involves gathering existing data.
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What is information collected about opinions and views called?
Information about opinions and views is called qualitative data.
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What is the name of an individual who is asked questions in a survey?
An individual who is asked questions in a survey is called a respondent.
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Other cards in this set

Card 2

Front

Things a business pays for on a regular basis. Thye are also known as running costs . Some examples are rent , staff wages and materials. Operating costs are spilt into two types which are fixed costs and variable costs .

Operating Costs

Card 3

Front

They dont change depending on output. A business has to pay its fixed costs even if it produces nothing . Rent is an example of a fixed cost . Even if a business produces nothing the rent still has to be paid.

Card 4

Front

A cost that varies with the level of output. Examples of common variable costs include raw materials, packaging, and labor directly involved in a company's manufacturing process. The term variable cost is not to be confused with variable costing, whi

Card 5

Front

Revenue is the income earned by a business over a period of time, eg one month. The amount of revenue earned depends on two things - the number of items sold and their selling price. In short, revenue = price x quantity.