Business Unit 3

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Marketing
Involves identifying and understanding customer needs and wants.
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Market Segment
A group of customers in a market that have similar characteristics and needs.
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Benefits of Market Segmentation
Helps business: carry out market research, tailor products to customer needs, target promotions at specific groups.
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Product Trail
When customers buy a product for the fist time to assess whether or not they want to buy it again.
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Customer Loyalty
Where customers will buy a product more than once and keep coming back.
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Boston Matrix
A product portfolio analysis tool used used to plan the development of products.
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Boston Matrix - Star
Very successful product, but growth has to be funded to keep up with demand and cash flow may be a problem.
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Boston Matrix - Cash Cow
Little growth, but an established and profitable product that can support others.
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Boston Matrix - Question
Presents a problem - should the business invest to increase sales?
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Boston Matrix - Dog
Few prospects, but should the business continue to sell it if it is profitable and it funds other products.
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The Product Life Cycle - Introduction
net cash flow is negative (more money goes out than comes in).
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The Product Life Cycle - Growth
Net cash flow is positive but small (a little more comes in that goes out).
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The Product Life Cycle - Maturity and Decline
At maturity, cash flow is likely to be positive; in decline, a business will start to experience cash-flow issues.
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Brand
A named product which customers see as being different from other products and which they can associate and identify with.
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Market Map
Shows the difference between strongly branded products.
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Product Differentiation
About making a product different from others in some way.
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Differentiating a Product
Unique and catchy product name, quality, design, formulation or function, packaging, customer service.
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Marketing Mix
A combination of factors which help a business to take into account customers needs when selling a product.
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Marketing Mix - Product
Must meet the needs of the customers.
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Marketing Mix - Price
Important because: the price gives the customer an indication of quality, branded products generally have a higher price than non-branded products because they are more expensive to product and promote.
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Marketing Mix - Promotion
The way in which a business makes customers aware that a product is for sale.
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Marketing Mix - Place
It's about having a product available to customers when they want it and where they want it
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Just In Time (JIT)
A stock management system where stock is delivered only when it is needed by the production system, and so no stock is kept by a business.
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Re-order Level
The point at which new stock will be ordered by the business.
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Buffer Stock
The lowest amount of stock the business will hold.
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Benefits of Holding Stock
Business can meet up unpredicted surges in demand, business can replace damaged goods, a business can receive discounts for bulk buying, limited problems.
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Benefits of Holding Little or No Stock
Cost saving in not having to store stock, less chance of damaged or stolen stock, employees can focus on tasks other than managing stock, can reduce cost of production.
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Quality Control
One part of the chain production. It will examine and/or test for quality once a product has been made.
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Quality Assurance
Involves on quality at every stage of the production process. Everyone is involved and is responsible for contributing towards the achievements of a quality standard.
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Benefits of Good Quality
Allows for a premium price to be charged, builds a strong brand image, linked to meeting customer needs, a way of differentiating a product.
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Productivity
Output per worker. It measures how much each worker produces over a period of time. TOTAL OUTPUT/NUMBER OF WORKERS
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Sales of Goods Act
This relates to the products and services being sold by businesses. All products must: be of merchantable quality, match their description, be fit for purpose.
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The Trade Description Act
This relates to how businesses deal with and sell to customers. All businesses must not: give false information, fail to give important information, act aggressively.
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Financial Management
Is about changing monetary variables such as cash flows to achieve financial objectives such as improved cash flow.
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Improving Cash Outflows
Delay paying invoices, leasing rather that buying, reduce stock orders, improve credit terms with suppliers, use cheaper suppliers.
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Improving Cash Inflows
Increasing sales revenue, de-stocking, reduce credit terms with customers, encourage customers to pay early, use short-term sources of finance.
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Total Revenue
NUMBER OF PRODUCTS SOLD X AVERAGE PRICE
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Total Costs
FIXED COSTS + VARIABLE COSTS
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Break-Even Piont
The point on the graph where total costs and revenue meet.
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Total Revenue
The amount of money earned by a business from selling products. It increases directly with the number of products sold.
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Break Even
FIXED COSTS/CONTRIBUTION
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Contribution
PRICE PER ITEM - VARIABLE COST PER ITEM
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The Margin Of Safety
The amount of output between the actual level of output where profit is being made and the break-even level of output. This is how much production could fall before the business starts to make a loss.
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Internal Sources of Finance
Owner funds, asset sales, retained profit.
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External Sources of Finance
Overdraft, loans, bonds, trade credit.
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Hierarchy
A structure of different levels of authority in a business organisation, one on top of the other.
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Centralised Decisions
Decisions made by senior managers.
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Decentralised Decisions
Decisions are delegated to regional employees at local stores and branches.
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Chain of Command
The path that decisions and orders will pass through from the top of the hierarchy to the bottom.
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Span of Control
The number of workers in a business that a particular manager is directly responsible for.
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What Can Motivation Lead To
a hard-working and flexible workforce, greater commitment to the organisation, less time off with illness, improved customer service, improved communication within the business.
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Maslow's hierarchy of Needs
Maslow suggested that people are motivated by five needs. In theory, people are driven to meet these needs in order.
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Self-Actualisation
Creating job opportunities, [promotion and training to allow employees to achieve their potential.
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Self-Esteem
Creating promotion opportunities, empowering employees, using rewards to recognise the achievement of employees.
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Love and Belonging
Organising the workforce into teams, creating opportunities for employees to socialise.
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Safety
Ensuring long-term progression and job security.
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Physiological
Providing a clean and safe working environment and well-paid jobs.
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Formal Communication
Approved by organisation. It lays down rules of communication within a business.
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Informal Communication
Used in a business, such as gossip. It can get in a way of effective communication.
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Trade-Off
When something is given up in order to gain or achieve something else.
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Pressure Groups
Organisations that try to get business to change what they are doing.
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Taxations
Value Added Tax (VAT), Corporation Tax, Income Tax, National Insurance (NI).
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Other cards in this set

Card 2

Front

A group of customers in a market that have similar characteristics and needs.

Back

Market Segment

Card 3

Front

Helps business: carry out market research, tailor products to customer needs, target promotions at specific groups.

Back

Preview of the back of card 3

Card 4

Front

When customers buy a product for the fist time to assess whether or not they want to buy it again.

Back

Preview of the back of card 4

Card 5

Front

Where customers will buy a product more than once and keep coming back.

Back

Preview of the back of card 5
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