Business Studies Module 2

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  • Created on: 23-04-16 13:06
What is market research?
The systematic gathering of information required for a business to understand what its customers want
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What is primary research?
Market research done by the business itself, first hand. AKA field research
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What is secondary research?
2nd hand market research from sources of already published data. AKA desk research
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Give 2 examples of primary research
Surveys, focus groups, observations of how people react
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Give 2 examples of secondary research
Magazines, internet, published market research data, company reports
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Give 2 advantages of secondary research
Cheap because you don't have to hire people to collect information. Quicker because it's faster to access already published information from a DESK
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What are the disadvantages of secondary research?
It is not unique so competitors may use the same info. Information might be old so no longer relevant
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What are the advantages of primary research?
Up to date and you know how reliable it is, can be kept secret, it is highly relevant
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Give 2 disadvantages of primary research
It's expensive because people have to be paid to collect it. It takes long because the data must be analysed and has not been collected before
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How can secondary and primary research be used to completely research the market?
Secondary research for the most part and then primary research is used to fill in the gaps
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What is market segmentation?
Splitting a large market into smaller blocks which can easily be targeted
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Give 3 ways a market can be segmented
Geo-location, age, sex, socio-economic group (social class) and income
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What is a niche marketer?
A business which segments the market then provides products for one or two blocks of the market only. E.g. Lotus Cars
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What is a mass marketer?
A business which produces products for everyone at a low cost without segmenting the market
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Give 2 reasons why a business would segment the market
Advertising to a smaller target market is cheaper, gets you loyal customers and you can compete with large brands
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What are the 5 stages of the product life cycle?
Introduction, growth, maturation, saturation, decline
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How can a product's life be extended?
Use an extension strategy such as lowering the price, promotions, new packaging, new use (e.g. Lucoszade)
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How does the Boston Matrix classify products?
Problem child, star, cash cow and dog
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What is a dog?
An outdated product that isn't making any money anymore
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What is a cash cow?
A mature product doing well, earning lots of money
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What is a star?
A new product that should become a cash cow
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What is a problem child?
A new product not doing very well straight away
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Give 3 functions of packaging
Hold the product, keep the product from spoiling (e.g. letting bacteria in), displays the product, allows product to be kept on a shelf, gives nutritional info/cooking instructions, contains brand info (e.g. logo)
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What is a portfolio of products?
Having more than one product to sell
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Give 2 reasons why having a portfolio is good
Gives the customer choice = more likely to buy, offers upgrades from last product to next for existing customers, spread risk around a number of products, brand extension
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Give 2 reasons why having an innovative idea is important
Protected by patents, less competition, can charge high prices, people are more likely to buy it
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What is a logo?
A symbol which identifies a product or service. E.g. the Nike tick
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What is a trademark?
A logo, but only people with the owner's permission can use it
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What is branding?
The process of coupling a logo and and company name with positive thoughts. Usually done through advertising
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What is cost plus pricing?
Calculating the price of production and then adding a percentage on top
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What is competitive pricing?
Taking into account what other companies are charging for a similar thing then setting your own price, whether it be the same, higher or lower
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What is penetrative pricing?
Setting a low price to gain market share and loyal customers, then raising the price
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What is skimming/creaming the market?
Going in with a high price (for products in high demand) then lowering the price to expand your customer numbers
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What happens to demand if price is raised?
Demand falls because it's expensive to more of a sacrifice to obtain
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What happens to demand if price falls?
Demand increases because it's less of a sacrifice to obtain the product
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What happens to supply if prices increase?
Suppliers will supply more because there is a bigger reward for them
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What happens to supply if prices fall?
Suppliers will supply less because there is less of a reward for them
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What is above the line promotion?
Where you message is carried by another business/with the help of the media. E.g. boards on a bus
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Give 3 examples of above the line promotion
TV, radio, newspaper, website (other than your own), magazine etc
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What is below the line promotion?
Promotion the business does itself, by using its own means
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Give 2 examples of below the line promotion
Leaflets, direct mail, special BOGOF offers etc
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What is the relative overall cost of TV advertising?
Very expensive
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What is the relative overall cost of newspaper advertising?
Expensive if in a national newspaper, otherwise not
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What is the relative overall cost of radio advertising?
Low - usually used by small businesses
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What is a retailer?
Sells products to the end user (consumer). E.g. Next
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What are wholesalers?
Sell to small businesses. They buy in bulk = discount
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What are agents?
Self-employed people, will specialise in an area and will repeatedly sell products in that area
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What is E commerce?
The ability to sell products over the internet
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Give 2 advantages of E commerce
Cheap because you don't need physical shops. You can reach people all over the world quickly
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Give 2 disadvantages of E commerce
High delivery costs, might not be trusted, customers can't see the product well so customer less likely to buy, delivery might take a while and you may have to rely on external companies which will give you a bad rep if they fail
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What is an advantage of locating locally?
Less competition so higher prices can be charged and allows survival, lower rent than town center so lower break even
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What is a disadvantage of locating locally?
Lower footfall might mean there aren't enough customers to survive, access issues for customers
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What is an advantage of locating out of town/rural?
Lots of space, much lower rental costs, people tend to go out of town to make large purchases, usually built on main road
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Give a disadvantage of locating in a rural location
Lots of competition so your prices must be low, won't be in a very nice area
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What is an advantage for locating in a town center?
High footfall, high prices can be charged because due to atmosphere, easily accessible through public transport
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What is a disadvantage of locating in a town center?
High rental costs, customers may be put off by high parking fees,
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Who sets the constraints on marketing?
The ASA (Advertising Standards Authority)
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What are the constraints on marketing?
Health scares, ASA regulation (e.g. no swearing) and pressure group protests
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What is cashflow?
The movement of money in and out of a business
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Give 2 extension strategies
Find new market for existing product, widen product range, segment market, change packaging, update design
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What are the 4 Ps (marketing mix)?
Price, Promotion, Place, Product
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Other cards in this set

Card 2

Front

What is primary research?

Back

Market research done by the business itself, first hand. AKA field research

Card 3

Front

What is secondary research?

Back

Preview of the front of card 3

Card 4

Front

Give 2 examples of primary research

Back

Preview of the front of card 4

Card 5

Front

Give 2 examples of secondary research

Back

Preview of the front of card 5
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