business paper 2 aqa

what are customer needs?

things customers can't live without

what are customer wants?

products and services customers don't need but would like to have

why is it important to meet customer needs?

it makes customers more likely to buy the product/service

what does it mean to be market-driven?

being driven by fulfilling customer needs - increasing sales, products and customer satisfaction

what are three elements of a market-driven approach?

finding the correct marketing mix, avoiding costly mistakes, and being competitive

what is primary market research?

market research done by a firm for its own use e.g. questionnaires, surveys, interviews

what is secondary market research?

market research which is collected by a firm but conducted by other organisations or people e.g. articles, government reports

what is the key benefit of primary market research?

it is tailored exactly to the firm's needs

what is the benefit of secondary market research?

cheap, non-time consuming

what is the benefit of having a successfully integrated marketing mix?

it gives competitive advantage

product, price, place, promotion

product - quality, design, brand, packaging

price - retail price, payment plans, discounts, credit forms

place - retail location, downloads, delivery, distribution

promotion - advertising, PR, personal selling, emails

what are 2 internal factors affecting pricing?

costs, product life cycle

what are 2 external factors affecting pricing?

nature of product, degree of competition

what are 4 variables of market segmentation?

income, location, age, gender

what does market mapping enable a business to do?

identify gaps in the market based on competition

what does market research help a business understand?

competition, demand, target market

define qualitative data

information on opinions & views (data not easily quantified)

define quantitative data

factual information easily quantified and recorded

what is price skimming?

sets a high price gradually lowering it over time in order to cover fixed costs like R&D and maximising revenue

what is a disadvantage of price skimming?

slower unit sales growth - gives competitors a chance to enter the market

what are 3 different pricing methods?

price penetration, cost-plus pricing, competitive pricing

what is price penetration?

where a business tries to increase market share by offering a low initial price

what are loss leaders?

products/services sold where a business makes a loss, designed to attract new customers to make additional purchases

what is cost-plus pricing?

setting a price which covers the cost of production plus a set amount for profit

what is competitive pricing?

where prices are based on what competitors are charging

what is product differentiation?

where a business makes their product different to competitors, giving it a USP

what are the 3 elements of the design mix?

aesthetics, function, cost

what is the product life cycle?

the stages a product goes through over its' lifetime

what are the six stages of the product life cycle?

development, introduction, growth, maturity, saturation, decline

what are 4 strategies to extend product life cycle?

adding more/different features

re-branding packaging

advertising

changing target market

what is a product portfolio?

the full range of products and services that a company offers

why is it difficult to find complexity balance within a product portfolio?

it can be difficult to manufacture many different products at a time and maintaining each properly would strain a company

what is the boston matrix?

a product portfolio analysis tool used to plan the development of products

what are 3 benefits of developing new products?

higher sales, diversification, brand value

what are 2 risks of developing new products?

damage brand, lose investments

what are six promotional methods?

sales promotion

social media

product placements

public relations

advertising

sponsorship

what should a business consider when making decisions about advertising?

types of platform (e.g. newspapers, TV) in order to reach specific target markets

what is the aim of public relations?

making sure information spread about the company is positive and reaches the largest possible audience

what is an example of PR?

newspaper editorials - keeping good relations with newspapers to avoid spread of bad information

what are six examples of sales promotion?

discount coupons

value for money offers (e.g. buy one get one free)

samples

point of sales display

free gifts

competitions

what is a celebrity endorsement?

celebrities are associated with a particular company or product, celebrity needs to be widely known to be effective, usually done with pictures so the buyer can see the celebrity with the product, has "snob appeal"

why is using social media beneficial?

cheap and relatively easy way to reach a target audience to promote

what are the five factors affecting the promotional mix?

nature of the product/service

finance available

target market

nature of the market

competitor actions

when is advertising more important?

when the market is growing fast

what are 4 reasons for promotion?

to inform/remind customers about the product/service

to create/change the image about the product/service

to create/increase sales

to persuade customers to buy the product/service

what are distribution channels?

routes by which goods are moved from producers to consumers

what is M-commerce?

purchasing goods through mobile devices

what are 3 benefits of E/M commerce?

reach more customers

sell directly to customers

cheaper to set up a business

what are 3 drawbacks of E/M commerce?

investments needed

increased competition

selling online creates practical issues e.g. customer may want to see the product before purchase

what are 3 internal sources of finance?

personal savings

selling assets

retained profit

what are 6 external sources of finance?

share capital

government grants

trade credit

bank loans/mortgages

hire purchases

loans from family and friends

what are 4 factors affecting best sources and methods of financing?

financial situation

cost

long-term vs short-term

new vs established business

what are cash inflows?

cash coming into the business

what are cash outflows?

cash coming out of the business

what are net cashflows?

cash inflows minus cash outflows

what are cash flow forecasts?

prediction of cash coming in and out of a business bank account monthly

what is a liquidity problem?

short term lack of cash

how can businesses solve liquidity problems?

reduce/delay cash outflows

increase/speed up cash inflows

what are 3 consequences of cash flow problems?

business may not be able to pay employees

business may not be able to pay suppliers

business may not be able to pay creditors and may squash chances of getting another loan

what are 5 solutions to cash-flow problems?

finding new sources of finance

overdrafts

increasing cash inflows

rescheduling cash payments

reducing cash outflows

what are fixed costs?

costs that do not vary with output

what are variable costs?

costs that change as output changes

what are three major investment projects?

buildings

vehicles

machinery

what is ARR?

average rate of return compares the average annual profit with the level of investment

what is the break-even point?

the quantity at which total revenue and total cost are equal

what is the margin of safety?

gap between current level of output and break-even point

what are 2 limitations to break-even analysis?

assumes the firm will be able to sell all units produced

assumes firm would not have to change price with output

what is a cash flow statement?

information about cash coming in and going out

what is an income statement?

a report of net income and expenses to be over a certain period of time

what is a balance sheet?

a statement of the financial condition of a business on a specific date.

what are assets?

all things the firm has or owns, tangible or intangible

what are liabilities?

all the firms debts

what is equity?

portion of the company's assets owned by the owner

what is gross profit?

revenue - cost of sales

what is gross profit margin?

gross profit/sales revenue x 100

why is higher gross profit margin better?

they are able to turn a higher portion of revenue into profit

What is Brand Equity?

The commercial value that derives from consumer perception of the brand name of a particular product or service.

What is a SWOT Analysis?

An analysis that identifies a company's strengths, weaknesses, opportunities, and threats.

What is a Marketing Plan?

A comprehensive document outlining a company's overall marketing efforts.

What is Viral Marketing?

A marketing technique that uses pre-existing social networks to promote a product or service.

What is a Focus Group?

A small group of people brought together to provide feedback on a product or service.