business functions

What is the definition of marketing?

the management process of identifying, anticipating and satisfying customer requirements profitably
(getting the right product, to the right place at the right time and at the right price).

What is the difference between product orientation and market orientation?

Product orientation- when a business bases its marketing mix on what the business sees as its internal strengths (places main focus on the production process and product itself)
Market orientation\=when a business bases its marketing mix on its perception of what the market wants

What is asset-led marketing?

when marketing decisions are based on the needs of the consumer and the strengths of the business (mix of product and market orientation)-find out what market wants and uses their own strengths to meet these needs)

What are the 4 Ps and additional 3Ps?

- price, product, place, promotion
-People, Physical Evidence and Process.

Give an example of how the marketing mix might change between a local vs global company

local markets allow specific marketing tactics to be used, adapt 4p's to local taste and income and exchange rate
global markets need to establish an identifiable global brand, making promotion as universal as possible e.g. same advert with different voiceover

Give an example of how the marketing mix might change between a small or large company

- large company may use larger scale promotions like tv ads, billboards etc that are more expensive while small company may use leaflet or newspaper ads as will spend less on promotion
- larger companies often use multichannel of distribution whereas smaller companies often use c1
- larger businesses can often charge less as can benefit from economies of scale

Give an example of how the marketing mix might change between a Goods or Services company

Services focus on the additional 3 Ps. People, process and physical environment

Give an example of how the marketing mix might change between a niche or mass market company

- price of mass market is much lower, niche can charge a higher price
- mass markets market products to wide range of people whereas niche market to a small, specific group of people

Give an example of how the marketing mix might change between a business that holds a monopoly and one that is in perfect competition

Pricing - in a monopoly you don't need competitive pricing where as in competitive market you do

Define the terms product protfolio and brand

Product portfolio\= the mix of products the business produces and sells
brand\=a product/ range of products with a unique +easily recognizable character

Define the terms unique selling point using the term differentiation within your definition

the aspect of your product that differentiates it from anything that's been sold before

Explain what is meant by a product life cycle

\=describes the different stages in the life of a product from it being until its removed from the market

Explain in order the stages of a product life cycle

introduction, growth, maturity, saturation, decline

Explain what happens to costs and revenue during the R&D phase of the product life cycle

costs are high and revenue is low as not making many sales

Explain what happens to costs and revenue during the Growth phase of the product life cycle

Costs are still high - product development, no economies of scale, high marketing costs

Explain what happens to costs and revenue during the Saturation phase of the product life cycle

Costs will be lower - economies of scale, maybe additional cost for extension strategies. Revenue will be slowing down but higher than at growth

Using an example, explain what is meant by an extension strategy

used to extend the life cycle of the product
e.g.
- advertising-try to gain new audience or remind current
- price reduction-more attractive to customers
- adding value-add new features to the current products
- explore new markets-try selling abroad
- new packaging

Give 2 possible extension strategies for the board game monopoly

advertising- try to gain new audience or remind current
new packaging
sell abroad, different languages
price reduction
adding value-add new features to the current products

Explain how cash-flow would change during each stage of the product life cycle

initially high development and promotional costs (r+d, marketing etc) means negative cash flow but as moves through growth into maturity cash flow should start to become positive. No revenue is earned until sales begin and therefore cash flow improves. Significant expenditures involved in developing and launching products are payed off

Explain what the Boston Matrix is and how a business could use it

- Allows business to analyse their products by dividing the products into four categories
- These categories depend on their market share and the level of growth that is occurring in the market

\> Helps with long term strategic planning
\> To judge how to manage individual products and the product range, given market conditions
\> To see whether they have products in fast growing and potentially very profitable market sectors

Using the words Market share and Market Growth each time, outline the four types of product in the Boston Matrix

stars\= high market share, high market growth
question marks\= low market share, high market growth
cash cows\= high market share, low market growth
dogs\= low market share, low market growth

What 3 Cs should a business consider when setting price?

costs, competitors, customers

Explain and give one benefit and drawback of penetration pricing

penetration\= charging a lower price when entering the market. Once customer base/ market share been established, put prices up
✔️\=encourages to switch from competitors ,encourages people to buy in bulk, creates brand loyalty, helpful when there's too much competition
❌\= low price might suggest low quality so people may not buy and may struggle to make enough revenue to cover costs, may initially lose revenue

Explain and give one benefit and drawback of price skimming

price skimming\=charging a high price to maximise profits on each item sold for a limited period.. this is what apple does with new iPhone
✔️\=allows business to maximise sales revenue whilst product in high demand to pay off research and development costs
❌\= some customers will simply wait for the price reduction, need to be careful not to set too high that might put customers off so not make many sales

Explain and give one benefit and drawback of cost-plus pricing

cost plus pricing\= when a business looks at how much it cost them to make a product and then adds on a percentage to ensure they make a profit
✔️\= good way to ensure products sold actually made a profit
❌\= cost plus alone may be difficult to use especially in a competitive market (cost may be too high against competitors, as costs change time and money will need to be sent to change prices, whilst easy to calculate cost of making / buying each product it can be difficult to know how much to charge to cover all the running costs of the business (fixed costs)

Explain and give one benefit and drawback of competitive pricing

where a business keeps a close eye on competitors prices and tries to match or beat them
✔️\= customers like to find the best price so attract away from competitors
❌\= lowering price to meet competitors can damage profit margin, small businesses will find it hard to match/ beat the prices of competitors because they don't benefit from economies of scale

Explain and give one benefit and drawback of psychological pricing

psychological\= prices are set at the level that matches what consumers may expect to pay or Consumers perceive that they are receiving value from the price paid.
✔️\= makes product look much cheaper than actually is, may influence to buy it
❌\= when suppliers put price up e.g. 20p retailers may have to absorb some of the costs e.g. not put price up to £10.19

Explain and give one benefit and drawback of contribution pricing

contribution pricing\=it ignores fixed costs and considers the variable cost only (e.g cost of materials). As long as selling price per unit is above the variable cost per unit, then the sale of the product is 'contributing' to the fixed costs;
✔️\= each sale contributes to paying off the fixed costs which eventually help the business to make a profit, business can calculate exactly how much each unit needs to contribute in order to fully pay off fixed costs thus making a profit, allows flexibility in the pricing of individual products - low volume or successful products can be priced to give a higher contribution to indirect costs
❌\= a reasonable contribution per unit price might not be competitive, It may be difficult to allocate costs accurately or appropriately across the full product range and so difficult to assess the most appropriate contribution, If costs are difficult to allocate then this may lead to the pricing being inaccurate

Identify two pricing strategies a new chocolate brand could use

competitive and psychological

Identify two pricing strategies a well-established sports brand could use for a new piece of sports fitness equipment

price skimming, cost plus pricing, psychological

Define the term 'promotion'

the attempt, through various forms of media, to draw attention to a product and thereby gain and retain customers

What is the difference between above and below the line promotion?

Above the line promotion\=using media with no direct contact with potential customers whereas Below the line\= using media with direct contact with potential customers

Identify 3 forms of above the line promotion

tv ad, radio ad, newspaper ad

Identify 3 forms of below the line promotion

packaging, direct mail, personal selling sales promotion- people in town centre, sales promotion e.g. 3 for 2, public relations (PR)- sponsoring events

Identify one above and one below the line promotion method that could be used by a local garage

newspaper ad, sales promotions

Identify one above and one below the line promotion method that could be used by a major supermarket

tv ad, direct mailing

Identify one above and one below the line promotion method that could be used by an international bank

tv ad, public relations- sponsoring events

Explan what we mean by the term 'place' in marketing

\=the channel or the route through which goods move from the source to the final user
(how the product is distributed to the customer)

Explain the process of Channel 1 and Channel 2 (Channels of Distribution)

c1\= manufacturer-consumer
c2\= manufacturer-retailer-consumer

Explain the process of Channel 3 and Channel 4 (Channels of Distribution)

c3\= manufacturer-wholesaler-retailer-consumer
c4\= manufacturer-agent-wholesaler-retailer-consumer

Using an example, explain what is meant by the term multi-channel distribution

using more than one distribution channel. E.g. apple has own stores, sells through retailers and has online store

Explain one benefit and one drawback of Channel 1

✔️\=business has closer control over distribution, much cheaper, allows manufacturers to keep more of the profits and attract customers through competitive prices and convenience.
❌\=it can become increasingly difficult to sell directly to a large number of customers.

Explain one benefit and one drawback of Channel 2

✔️\= retailer provides a convenient place for consumers to buy, easier for producer to distribute products, The business does not have to bear the cost of the retail outlet, Allows the products to be displayed to a much wider potential market on a nationwide basis.growth in the size of retailers has led to a reduction in the need for the middleman - wholesalers are cut out of the chain. This reduction in the length of the distribution chain cuts costs for large businesses and represents a good example of a purchasing economy of scale.
❌\= lose some of the revenue as retailers will take a %, or cause higher prices for the end consumer as the retailer must make a profit, poor customer service could limit sales,

Explain one benefit and one drawback of Channel 3

✔️\=easier for manufacturers to sell to one wholesaler rather than many retailers, retailers don't have to store large amount of stock who do not have the facilities to hold large stocks (such as village shops), able to sell to retailers for cheaper than buying directly from manufacturer, stock goods produced by manufacturers and so retailers gets to select a wide range of merchandise.
❌\= manufacturer lose revenue by selling at discount

Explain one benefit and one drawback of Channel 4

✔️\= can negotiate sales, They link buyers and sellers and are used in various markets., They may be used when exporting and can reduce risk of selling oversea with knowledge of the country and the market.
❌\= lost revenue again, lost control (longer the channel, less control they have)

Identify 2 factors that might impact what channel of distribution a company uses

- is the product perishable- how fast does it need to get to consumer?
- is the product personalised (mass or niche)
- size of business

Identify 3 ways in which technology is used in marketing

- to communicate with consumers- can connect on more personal level
- selling goods without the need for a physical store- convenient for customers and saves costs
-advertising
- market research
- Manufacturers can use it to sell directly to customers, therefore cutting out retailers completely, lowering costs.

What is meant by the term e-tailing?

buying over the internet

What is meant by the term m-commerce?

- Selling of goods over wireless handheld devices such as mobile phones

What is meant by the term digital media? Give an example of it being used in marketing

advertising on the internet
e.g. pop up ads

Explain two ways in which social media is used in the marketing process (use an example)

- advertise products
- increase brand awareness
- engage with consumers- personalises brand
- helps spread brands message in relaxed way
e.g. advertising on celebrities instagram post

Identify 3 functions of the finance department

- budgeting
- pay roll
- taxes
- cash flow forecast

Explain what is meant by a budget

\=the financial plan of action over a given time period

Identify 3 benefits to a business of budgeting

- control income and expenditure-sets clear targets and responsibilities which helps ensure resources are used in most efficient way
- tool for decision making
- way to monitor business performance
- allow delegation without loss of control-responsibility for spending money can be placed in hands of front line managers who know how to spend it meaning senior management are free to do other things. Will speed up decision making and gives freedom to act within the budget. Also allows sense of achievement if targeted figures met
- help to ensure everyone is working towards a common goal
- motivate staff
- improved management control of business-know who is spending what and why
- improved financial control-know what's going on
- allows managers to be aware of their responsibilities-aware of what they should be achieving and how their role fits with the businesses objectives
- ensures limited resources are used effectively-allocates resources to where they are most likely to help
- motivate managers-have a commitment to budgets being met and get sense of achievement if they meet it
- can improve communication systems within the organization

What is a budget variance?

the difference between the budgeted amount and the actual amount that you spend

Explain one benefit/drawback of using owner's capital as a source of finance

✔️\= no interest, readily available
❌\=may not have enough

Explain one benefit/drawback of using sale of assets as a source of finance

✔️\= no interest, can sell assets that are no longer required
❌\= - May not have any/ enough, Smaller businesses unlikely to have unwanted assets and in order to grow, want to acquire assets not lose them

Explain one benefit/drawback of using overdrafts as a source of finance

✔️\= quick, allows emergency purchases
❌\=high interest, only short term solution

Explain one benefit/drawback of using business loans as a source of finance

✔️\=- flexibility - wont control how you spend the money
- maintain control-don't give up equity if pay on time
if application is successful, immediately available
❌\= - requires collateral-risky if lose it
- time consuming-paperwork
interest has to be paid

Explain one benefit/drawback of using share capital or venture capital as a source of finance

✔️\= doesn't have to be repaid, advice may also be given, large sums of money can be attained quickly
❌\=loss of control- decisions can be influenced by new investors, will take a shareholding

Explain one benefit/drawback of using leasing as a source of finance

✔️\=- gets use of rsource without large cost of buying
- maintenance and repair bills met by leasing company
- leases generally easier to get than loans
equipment can be updated regularly-if don't meet needs any more can lease elsewhere without having to sell and buy
❌\=- over long period of time can be expensive and spend more than the price of purchasing the resource
doesn't get to own items leased-don't get any money back

Explain one benefit/drawback of using debt factoring as a source of finance

✔️\=- amounts owed by customers (recievables) are turned into cash quickly
- business can focus on selling rather than collecrting debts
- no security required like a loan or overdraft
- results in savingsn in admin costs
effective alternative to overdraft as cost is generally lower
❌\=only offered to businesses with a good trading record and reliable customers

Explain one benefit/drawback of using trade credit as a source of finance

✔️\= interest free
❌\= late repayment can lead to a business gaining a bad reputation

Explain what is meant by the terms cash flow and cash flow forecast

cash flow\= \=the movement of cash into and out of a business
cash flow forecast\= a prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month

Name 3 causes of cash flow problems

- sales not at predicted levels-could be due to: change in competion, economic growth/ decline, change in spending patterns of consumer, change in fashions, government influences like change in tax
- costs increase-raw materials increase, higher inflation level than expected, increase interest rate, increased labour costs
- internal factors-poor initial predictions of income and expenditure, poor budgeting and lack of control of spending, late payment of debts
- low profits
- too much production capacity
- excess inventory held
- allowing customers too much credit and too long to pay
- seasonal demand
- overtrading-grow3ing the business too fast

Give 2 reasons why managing cashflow is important

- allow business to get clear idea of how its performing and how its likely to perform in the future
- managers able to specify times business may need additional funding
- also when predicted to be large positive cash flow, can plan ahead an prepare how to use this money e.g. pay off debts, invest etc
- shareholders/ owners will be able to see whether the business is likely to be in a positive or negative cash flow situation. They can use the cash flow info to make key decisions and if it looks negative, can make changes immediately
- will tell managers the amount of money they have available to spend-less likely to over/underspend
- employees may want to see the cash flow position to know if their job is secure or not
- banks will use cash flow forecasts to decide whether they should lend to a business, how much and over what period of time
- suppliers may want to know if a business is financially secure before offering trade credit. May also want to kow how much a business regularly spends on supplies so known how much profit they will get and how much stock they need

Name one benefit and one limitation of producing a cash flow forecast

✔️\=- gives clear idea of how business is performing and how its likely to perform in future
- managers able to specify times business may need additional funding
- also when predicted to be large positive cash flow, can plan ahead an prepare how to use this money e.g. pay off debts, invest etc
❌\=
- takes time that could be more productively used completing other tasks in business
- need to be accurate to have value-may be difficult to achieve if business has little or no trading history to base predicted cash flow on
- longer the time scale, less accurate forecast is likely to be
- inflation can impact accuracy of figures
- need to be monitored to have ongoing usefulness-more time spent

In Cash flow forecasts, Receipts - Payments \=?

net cash flow

In Cash flow forecasts, Opening Balance + Net Cash Flow \= ?

closing balance

January's Closing Balance is equal to February's ???

opening balance

Give two ways in which a business could improve its cash flow position

- use reliable cash flow forecasting
- reduce costs-may affect quality-unhappy customer
- reduce wages-unmotivated staff and may leave
- try and increase sales-difficult as if ads increase, costs also increase
- negotiate lower charges e,g rent, electricity, insurance but time consuming and difficult
- keep costs under control
- manage working capital effectively
- choose the rigt source of finance
- keep records up to date-keep receipts, invoices, transactions, staff rates
- plan ahead-aims, objectives, workforce planning, market research
- operate an efficient credit control system (to prevent slow/late payments)- trade credit agreements, debt factoring companies
- offer discounts for early payments
- leasing not buying
- using high interest savings accounts

In a trading account Sales (Revenue) - Cost of Sales \= ????

gross profit

What is the formula to calculate cost of sales in a trading account?

opening stock + purchases - closing sales

Give examples of Expenses a business may have

- rent/ mortgage
- employee salaries
- advertising costs
- raw materials
- fuel
- electricity
- insurance

Gross Profit - ?????? \= Net Profit

expenses

What is the formula to calculate the Gross Profit Margin?

gross profit
\---------------- x100
sales revenue

What is the formula to calculate the Net Profit Margin?

net profit
\---------------- x100
sales revenue

how to improve gross profit margin

-Increasing sales: Through marketing efforts
- Decreasing cost of goods sold: through more cost-efficient manufacturing and/or distribution strategies.

How to improve net profit margin

increase gross profit
and reducing expenses.

flexible workforce

a workforce whose members are capable of doing many tasks, either at their own workstations or as they move from one workstation to another
-one that is ready to meet organisational needs when required.
aim of a flexible workforce is to meet the ever-changing demand patterns of a business by providing labour specifically when it is needed.

Including one benefit and drawback to the employer or employee what is meant by flexi hours

Flexible hours\=requires employees ti be at work during a specified core period but lets them otherwise arrange their hours to suit themselves
✔️\= embitter workalike balance ployee-can fit work better around their home lives, more motivated as happier and less stressed, better productivity
❌\= communication is harder if workers aren't all working at same time, things may take longer to get done

Including one benefit and drawback to the employer or employee what is meant by home working

Homeworking\= allows employee to work some or all of their scheduled hours from home
✔️\=save money on costs such as, can have workers from further away on team- not restricted to those in area, less travel costs
❌\= may be more distractions at home, lack of community and team work-lose team spirit,- They may feel isolated and the ideas springing off of each other may not happening lead to less innovation, relies on technology which doesn't always work, unmonitored performance may result in slacking/ reduced productivity, tech is expensive, depends on if business can afford

Including one benefit and drawback to the employer or employee what is meant by part time working

Part time working\=employee doesn't work a full working week (usually 30+ hours). They may only work on certain days or only in morning etc
✔️\= fit work better around schedule/ family life-better work life balance
❌\=Lower engagement: Part-time employees don't spend as much time at work, so they may not contribute as much to company culture or be motivated to achieve company goals, may cause understaffing at times, difficulty in coordinating projects and scheduling meetings, employee earns less

Including one benefit and drawback to the employer or employee what is meant by temporary contracts

\=employing workers for a set period of time instead of permanently
✔️\=- temporary staff may be cheaper to employ as unlikely to get any of the benefits available to permanent staff-e.g. training
❌\=- temp staff less likely to have same commitment-lower standard-may damage companys reputation and result in loss of customers

Including one benefit and drawback to the employer or employee what is meant by job sharing

Job sharing\= allowing multiple employees to share one role
✔️\= more flexibility in work scheduling- likelihood is at least one will be able to fit in, different expertise, skills opinions and ideas, allows relaxation for workers/ less stress as its shared
❌\=could lead to competition-may increase productivity but increase tension, communication problems-must stay very well connected for it to work which is difficult

Including one benefit and drawback to the employer or employee what is meant by multi-skilling

Multiskilling\= training employees up so that they can perform multiple roles in the organization
✔️\= less recruitment costs, greater flexibility, increased job security
❌\=quality may be worse than someone who specialises in one area

Including one benefit and drawback to the employer or employee what is meant by zero hour contracts

Zero-hour contracts\=allow employers to hire staff with no guarantee of work. Mean employees work only when needed, often at short notice
✔️\=don't have to pay employees if they don't need the work-only paying for what they actually need
❌\= no income security- may end up with no work so won't be paid, often end up working at short notice-sttressful and may not be available-having to cancel plans-unhappy, miss out on benefits that full time or permanent employees get as standard, like a pension and redundancy rights.

Including one benefit and drawback to the employer or employee what is meant by hot desking

Hot desking\=an office organization system which involves multiple workers using a single physical workstation during different time periods
✔️\= cheaper rent costs-not wasting money on loads of desks that don't get used half the time
❌\=loss of structure-constant change may be disruptive and reduce productivity, can hinder sense of belonging

Identify two ways in which technology has impacted flexible working patterns

- can work from home
- can communicate better
- speed and efficiency increases
- employees aren't restricted to certain area-if working online can get better employees who don't live close
- however tech is expensive and doesn't always work- it depends on if businesses can afford the new technology and that it actually works when its required to

Explain what is meant by the term workforce planning

the method of a business forecasting how many + what type of employees it needs now and in the future

Identify two ways a business can ensure it has the right staff with the right skills to meet their objectives

proper training and recruitment

Explain what is meant by internal and external recruitment

Internal recruitment\=when a vacancy is filled by someone who is an existing employee of the business
external\= when a vacancy is filled by someone who is not an existing employee of the business + will be new to the business

Give one benefit and one drawback of internal recruitment

✔️\= employee already knows the business and how it runs
-saves time and money- no need to advertise and interview
-person is already known to the business, know their reliability and potential
-person knows the company's way of working and what is expected of them
-can be motivating for other employees to see workmates promoted to positions of responsibility
❌\=
no new ideas or experiences
-may be jealousy and rivalry amongst existing employees

Give one benefit and one drawback of external recruitment

✔️\= new skills and expertise
❌\=
-expensive and time consuming
-don't know persons reliability, potential, how they get along with others

Explain the purpose of job analysis

It is a process which identifies and determines in detail the particular duties and requirements of the job. and also what the position requires in terms of aptitudes, knowledge, and skills.a study of what the job entails. job analysis allows the completion of a job description

Explain the purpose of a job description with 2 examples of information it would contain

show what the job entails and what employee will be expected to do. explains the tasks of job, the job title, responsibilities of the job, place of work, and employment conditions (holidays, salary etc.)

Explain the purpose of a person specification with 2 examples of information it would contain

a profile of a person suited for the job/ what they're looking for
.describes the skills, knowledge and experience needed by an individual to complete the job e.g.
educational requirements, experience and skills needed, perhaps physical attributes (e.g., for a fireman) and important aspects of personality required.

Which is considered the most important document in the recruitment process?

Person specification because it describes the ideal candidate so the interview or test could be checked against it

Identify one benefit and one drawback of interviews as a selection method

✔️\=- Allow all round picture of candidate
- See what they have to offer company
- Can assess personality, communication skills, attitude to work, ability to use initiative, can assess body language and general appearance
❌\=time consuming, discrimination may occur based on physical appearance, may be nervous and nit act naturally, personal prejudices may impact opinions