Theme 1

• How do businesses make money?

  By selling goods or services
• What are some methods businesses use to sell their products?


  Over phone, email, newspapers, and online
• What are the key components of marketing?

  Understanding the customer base, charging the right price, and making the product available in convenient locations
• What are the characteristics of mass and niche markets?

  • Mass markets sell to a wider population
  • Mass markets can produce large quantities at lower unit cost
  • Niche markets sell to a smaller customer group
  • Small firms can't survive by supplying niche markets
  • Size of market = total sales in all businesses in the market
  • Volume = physical quantity of products produced and sold
  • Market share could indicate a business that is a market leader
• What does it mean for markets to be dynamic?

  Markets need to change over time to adapt to changes
• What is online retailing?


  A popular branch of e-commerce that involves shoppers ordering online
• What are some advantages of online retailing for retailers?

  Advertise more, support people who can't shop in person, available 24/7, avoid rent and staff wages
• How do markets change over time?

  • Some markets stay stable, while others grow or fall
  • The structure and nature of the market is subject to change
  • Markets can grow due to the world's population having more money to spend
• What are some ways businesses can adapt to change?

  • Prepare for change with flexible working practices, machinery, pricing, or staff
  • Conduct regular market research and communicate with customers
  • Make investments in unique new models to rejuvenate sales
  • Implement continual improvements in customer service
  • Develop a niche to save a business
• What are some strategies for business competition?

  • Lowering prices
  • Making products look different or better quality
  • Buying a rival or creating obstacles for new entrants
  • In the absence of competition, businesses may raise prices
• What is the definition of risk in a business context?

  Risk is when owners make decisions or outcomes where the outcome is unknown
• How many businesses are expected to fail each year?

  Around 23,000 businesses
• What is uncertainty in a business context?

  Uncertainty refers to businesses being subject to external influences beyond their control
• What are the effects of high competition on businesses?

  • Increased likelihood of business failure
  • Closer market share among competitors
  • More rivals in the market
  • Potential for lower prices to attract customers
  • Increased innovation
• How are customers affected by high competition?

  • More variety of products available
  • Businesses try harder to gain customer attention
• What are the benefits of building a brand for a business?

  • Helps build loyalty and repeat business
  • Adds value, allowing businesses to charge higher prices
• What is brand extension?

  • Adding new product ranges to a recognized brand
  • Enhances consumer loyalty
• What is brand value?

  The brand name adds value to the product
• Consumer panels 


  Groups of customers are asked for feedback about products over a period of time.
• What is a monopoly?

  One seller on the market
• What characterizes a monopoly market?

  A large firm that controls a percentage of the market
• What is product orientation in business?

  A business that focuses on the production process and the product itself
• What is market orientation in business?

  A business that continually identifies and analyses consumer's needs
• What are the advantages of market orientation?

  • Respond more quickly to market changes
  • More confident that a product will be a success
• Why must a firm innovate to survive?

  Because of the nature of the product
• What policy decisions might a business focus on?

  Production may focus on safety and quality, while marketing may focus on market share
• How does the nature and size of the market affect production orientation?

  If production costs are very high, a business is more likely to be market oriented
• How does the degree of competition influence a company's resource allocation?

  A company with less market competition may devote more resources to research
• What is the purpose of market research?

  To gather and analyze data to further the business
• What type of data do businesses need to identify customer features?

  Qualitative data
• What is primary research?

  Collecting data that never existed before
• What are some methods of primary research?

  • Questionnaires (closed and open questions)
  • Telephone interviews
  • Personal interviews
  • Focus groups
  • Observation
  • Test marketing
• What is secondary research?

  Collection of data that already exists
• What are some methods of secondary research?

  • Market research reports
  • Sales figures
  • Information from competitors
  • Data from customer complaints
  • General publications
  • Internet websites
• What is the difference between qualitative and quantitative data?

  Qualitative data involves attitudes, beliefs, and opinions, while quantitative data can be measured
• What is a limitation of market research?

  90% of products fail despite intense research
• How can human behavior affect product success?

  Human behavior can change in the future, affecting product success
• What is sample discrepancy in market research?

  Results from a sample may differ from the whole population being questioned
• What is a database in the context of business?

  An electronic filing system that allows a great deal of data to be stored
• How can businesses use databases?


  By allowing them to see products customers like