Business paper 1

• Good


  a physical item that can be touched
• Service


  Non tangible but involves action performed by other people to aid the customer
• Customer needs


  Providing goods and services that people will want to buy
• How to add value to a product


  - make it more convenient for customers to get or use

  - build a good brand image

  - prove product design and quality

  - give product a unique selling point
• Benefits of building a good brand image

  Customers are willing to spend more money on the product as they'll recognise the brand and know its trustworthy and desirable
• How do new business ideas come about?


  - adapting existing products

  - changes in technology (brought apps)

  - new original ideas

  - changes in customer wants
• Entrepenuer


  Someone who takes on the risks of enterprise activity
• To successfully run a business entrepreneurs must ..


  Take risks

  Make business decisions

  Organise resources
• What is a risk an entrepreneur takes


  Giving up their job and investing money that they could lose if the business fails
• Risks of running a business

  financial loss, lack of security, business failure
• Rewards of running a business


  Business success, profit, independence
• Usefulness of understanding the Market


  - allows you to see size of market

  - see how well they are performing in it

  - see there market share

  - seeing competitors
• What does competition affect


  Price

  Customer service

  Quality

  Product range

  Location
• market research


  The activity of gathering information about consumers' needs and preferences.
• Benefits of market research


  - reduces risks

  - able to accurately predict future trends and increases chances of success

  - spot a gap in market

  - make informed decisions
• Primary research


  research done firsthand for the first time
• How can primary research be done


  - asking customers for their opinions

  - surveys

  - pressure groups
• Benefits of primary research


  - more accurate

  - up to date

  - specific to needs
• Disadvantages of primary research

  costly and time consuming
• Secondary research


  past research which has already been performed and often already published

  ( magazines newspapers)
• Advantages of secondary research

  Cheap

  Less time consuming

  Instantly available
• Disadvantages of secondary research


  not specific to topic

  limited knowledge of research methodology and collection

  conflicting viewpoints

  lack of depth

  Out of date
• Uses of social media for market research


  - see what products or services are popular

  - allows a business to interact with customers

  - allows customers to provide a clear postive response

  - business can post a product and see if people are interested depending on likes

  - helps with promotion
• Quantitive data


  information that can be measured and recorded using numbers
• Qualitative data


  information that can't actually be expressed as a number

  - data involving people's feelings or opinions
• Segmentation


  When people within a market divided into groups
• Benefits of segmentation


  Allows a business to identify their target market which can allow the business to create a marketing strategy to make sure their marketing is effective
• Factors within segmentation


  Age

  Income

  Location

  Lifestyle
• Financial aims


  Survival

  Maximise profit

  Maximise sales

  Increase market share

  Achieve financial security
• Market share


  Tells you what percentage of a markets total sales a particular product or company hays made
• Large market share benefits

  allows you to take sales away from competitor
• Financial security


  A point where it can depend on its revenue to fund its activities
• Non-financial aims


  -personal challenge

  - personal satisfaction

  - gain indépendance and control

  - doing what's right for society
• Objectives


  Measurable step that a business will set in order to work towards an aim
• Factors that affect aims and objectives


  - size and age of the business

  - who owns the business

  - level of competition
• Size and age of business affect on aims and objectives


  If it's a small and new business they are likely to focus on survival and growth but as they grow and become more stablished they may focus on increase sales.

  If they are a larger business they may focus on social aims to avoid bad publicity
• Revenue


  the income earned by a business(selling products)
• revenue equation


  Revenue= Price x Quantity

  R=PXQ
• Fixed costs


  costs that do not vary with output

  - meaning they have to be paid even if firm makes nothing
• Variable cost


  Cost that will increase as the firm expands output