business chapter 2

What is USP

Unique selling point

Why is brand image important

Shows the reputation of the business to customers 

Methods of primary research

• Questionaries

• Focus groups

• Interviews

• Trials

Examples of secondary research

• Websites

• Internal data

• Newspapers

• Magazine

• Census

What is competitor pricing 

Business matches the price of its competitors 

What is penetration pricing

A product starts of in a new market with low prices then eventually raises them

What is cost plus pricing 

Adds price to the product according to changes in costs faced by the seller

What is skimming

Increased initial price and then gradually lowered

What is promotional pricing

Reducing the price to boost sales in certain products 

What are factors affecting price

• Cost of production

• Life stage of product

• Fixed costs

• n.o. Employees 

• Demand

• Stock

Formula for market share

No. Products sold by business/ total products sold in market *100

5 ways to segment the market

• Lifestyle

• Age

• Gender

• Location

• Wealth

Why is market research important

Helps businesses understand needs and wants of target market and customers

What are the 4 stages called in product lifecycle

• Introduction

• Growth

• Maturity

• Decline

Explain this physical distribution method: 

Producer<->Retailer<->Customer 

Retailer supplies its products from a supplier and then sells to the customer

purpose of Regional distribution centre and a Wholesaler

RDC stores large amounts of storage often from different producers

The wholesaler often buys in bulk and sells in smaller quantities to the retailer

Advantages of digital distribution 

• 24/7 access to products and services

• Quickly downloadable goods

• No physical product- saves cost of delivery

• sell anywhere in the world

Disadvantages of digital distribution

• Not all goods are suitable for DD 

• Businesses forced into DD may not be able to match competitor’s services/price

• Illegal DD is easier so business may lose sales

Give 2 examples of an extension strategy

• Discounting old products so they become appealing to customers

• Selling the product in a new market