Theme 1 - How do firms compete?

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  • Created by: becky.65
  • Created on: 06-05-17 16:34
What is market positioning?
It shows how consumers view individual products or brands, in relation to competing products.
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How can positioning your product in the right place in the market be very beneficial?
It may secure brand loyalty or increase its market share
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What is market mapping?
It is the use of a grid showing two features of a market. Individual brands are added to the grid to show potential niches or gaps in the market and it also helps to position products in relation to each other
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How can market mapping help when designing a product?
As it helps firms identify a niche or a gap in the market so they can design products to match the needs to maximise sales
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What are the advantages of market mapping?
It enables a business to spot gaps in the market and can help a business to differentiate its product from the competition
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What are the disadvantages of market mapping
It is subject to someone's opinion so may not always be accurate and identifying a gap does not mean there is a need for a product to fill it
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What is a competitive advantage?
Any feature of a business that enables it to compete effectively with rival products
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What may a competitive advantage be based on?
Price, quality, service, reliability, reputation, convenient location and product differentiation
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How can cutting costs create a competitive advantage?
By allowing a business to compete on price and still make a profit
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How can can a business cut costs?
Improvements in staff training, improving relationships with suppliers and striving for greater efficiency in the use of resources
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What is added value?
The difference between the price of a good or service and the cost of its material inputs
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How can adding value create a competitive advantage?
It may achieve greater quality by making the product more useful, reliable or desirable
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How can a business add value?
By introducing new products or re-designing existing ones, targeting product reliability or customer service through staff training and producing a consistently reliable branded product that will sell for more than a generic one
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How can adding value allow a business to raise prices?
Because a brand image may become associated with technical excellence or appealing fashion design
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What is product differentiation?
Each product is designed to be in some way different from competing products in order to attract customers or change perspectives on a product
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What are unique selling points?
Features of a product that no competing product can match
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How can a business use competitive advantage, adding value, market segmentation and product differentiation to maximise profit?
Businesses add value, to build a product, so they can recover the costs of adding value and make a profit. To do this they must have a competitive advantage that allows them to survive in the market and in order to do this they use segmentation to fi
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What is a pricing strategy?
The way in which a business decides upon the price of its product
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What factors to price and output depend on?
How much competition a business has; What competitive advantages it has; Is the economy growing?
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With a long established product, how is their pricing strategy decided?
By its position in the market; if its a market leader it can charge a high price and maintain sales with brand loyalty
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With a new and unknown product, how is their pricing strategy decided?
The price has to be competitive to establish a reputation
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What is a dynamic market?
One that is changing all the time so decisions are always being made by buyers and sellers to alter the nature of the market
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What is a stable market?
One in which the pace of change is slow; market size and market share are fairly constant with little variation in price
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What is market orientation?
Creating products and services to fit the needs and wants of the customer. The business adapts its products to compete with rivals
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How can firms develop market orientation to improve their prospects?
Market research, competitive advantage and brand loyalty to charge higher prices to maximise profit
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Other cards in this set

Card 2

Front

How can positioning your product in the right place in the market be very beneficial?

Back

It may secure brand loyalty or increase its market share

Card 3

Front

What is market mapping?

Back

Preview of the front of card 3

Card 4

Front

How can market mapping help when designing a product?

Back

Preview of the front of card 4

Card 5

Front

What are the advantages of market mapping?

Back

Preview of the front of card 5
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