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Questions and Answers
Which factor does NOT influence demand?
Which factor does NOT influence demand?
Price elasticity of demand measures how supply responds to changes in price.
Price elasticity of demand measures how supply responds to changes in price.
False (B)
Define the term 'market equilibrium price'.
Define the term 'market equilibrium price'.
The price at which demand equals supply.
Excess ______ exists when supply is greater than demand.
Excess ______ exists when supply is greater than demand.
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Match the following factors influencing supply with their descriptions:
Match the following factors influencing supply with their descriptions:
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What does 'elastic' mean in terms of demand?
What does 'elastic' mean in terms of demand?
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Seasonality is a factor that affects neither supply nor demand.
Seasonality is a factor that affects neither supply nor demand.
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What is the formula for Price Elasticity of Demand (PED)?
What is the formula for Price Elasticity of Demand (PED)?
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What is a primary advantage of collective bargaining?
What is a primary advantage of collective bargaining?
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Collective bargaining typically results in less strain on relationships between employers and employees.
Collective bargaining typically results in less strain on relationships between employers and employees.
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Define recruitment.
Define recruitment.
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___ involves promoting or transferring existing employees to fill job vacancies.
___ involves promoting or transferring existing employees to fill job vacancies.
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What is a disadvantage of collective bargaining?
What is a disadvantage of collective bargaining?
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What is selection in the context of recruitment?
What is selection in the context of recruitment?
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One drawback of internal recruitment is that it may lead to _____ among staff.
One drawback of internal recruitment is that it may lead to _____ among staff.
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Match the recruitment types with their definitions:
Match the recruitment types with their definitions:
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What type of marketing strategies does a mass market typically utilize?
What type of marketing strategies does a mass market typically utilize?
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A niche market typically offers standardized products to appeal to a broad range of consumers.
A niche market typically offers standardized products to appeal to a broad range of consumers.
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Define customer loyalty.
Define customer loyalty.
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The design mix includes key elements such as aesthetics, function, and _______________ .
The design mix includes key elements such as aesthetics, function, and _______________ .
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Match the marketing strategies with their respective market types:
Match the marketing strategies with their respective market types:
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Which of the following is a key element of the design mix?
Which of the following is a key element of the design mix?
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Higher prices in niche marketing are typically due to economies of scale.
Higher prices in niche marketing are typically due to economies of scale.
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List two ways businesses can build customer loyalty.
List two ways businesses can build customer loyalty.
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Which of the following is NOT a role of an entrepreneur in running a business?
Which of the following is NOT a role of an entrepreneur in running a business?
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Intrapreneurship involves employees taking initiative and thinking like entrepreneurs.
Intrapreneurship involves employees taking initiative and thinking like entrepreneurs.
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What is a common barrier to entrepreneurship related to knowledge or skills?
What is a common barrier to entrepreneurship related to knowledge or skills?
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Entrepreneurs must possess the necessary __________ and attitude to succeed.
Entrepreneurs must possess the necessary __________ and attitude to succeed.
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Which of the following is a financial motive for setting up a business?
Which of the following is a financial motive for setting up a business?
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Adaptability refers to the ability to remain rigid in changing environments.
Adaptability refers to the ability to remain rigid in changing environments.
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Match the following barriers to entrepreneurship with their explanations:
Match the following barriers to entrepreneurship with their explanations:
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What distinguishes risk from uncertainty in business?
What distinguishes risk from uncertainty in business?
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What is the definition of resilience in a business context?
What is the definition of resilience in a business context?
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An intrapreneur does not take risks because they are employed by someone else.
An intrapreneur does not take risks because they are employed by someone else.
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A __________ is the purpose or motivation behind starting a business.
A __________ is the purpose or motivation behind starting a business.
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Match the following entrepreneurial motivations to their descriptions:
Match the following entrepreneurial motivations to their descriptions:
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Name one characteristic of an entrepreneur that involves inspiring others.
Name one characteristic of an entrepreneur that involves inspiring others.
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Which of the following best describes social entrepreneurship?
Which of the following best describes social entrepreneurship?
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Risk-taking is unnecessary for entrepreneurial success.
Risk-taking is unnecessary for entrepreneurial success.
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What is one non-financial motive for starting a business?
What is one non-financial motive for starting a business?
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Which motivation theory focuses on scientific methods to improve efficiency?
Which motivation theory focuses on scientific methods to improve efficiency?
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Herzberg's Two-Factor Theory identifies 'motivators' as factors that prevent dissatisfaction.
Herzberg's Two-Factor Theory identifies 'motivators' as factors that prevent dissatisfaction.
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What is the main principle of Maslow's Hierarchy of Needs?
What is the main principle of Maslow's Hierarchy of Needs?
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Piecework involves paying employees based on the number of ______ they produce or tasks they complete.
Piecework involves paying employees based on the number of ______ they produce or tasks they complete.
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Match the financial methods of motivation to their descriptions:
Match the financial methods of motivation to their descriptions:
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What is a major disadvantage of piece rate payment?
What is a major disadvantage of piece rate payment?
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Profit sharing can create a sense of ownership among employees.
Profit sharing can create a sense of ownership among employees.
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List one benefit and one drawback of profit sharing.
List one benefit and one drawback of profit sharing.
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Study Notes
Mass Market
- Refers to a large group of consumers with similar needs and preferences.
- Consumers are willing and able to buy at an affordable price.
Niche Market
- A small but specialized group of consumers with unique needs and preferences.
- A smaller segment of a larger market.
Mass Markets: Benefits
- Economies of scale, leading to lower costs per unit.
- Wider customer base for increased sales and revenue.
Mass Markets: Drawbacks
- Intense competition and price wars.
- Significant advertising and marketing expenses to reach a broad and diverse customer base.
Niche Markets: Benefits
- Less competition than mass markets.
- Easier to target customers.
Niche Markets: Drawbacks
- Higher unit costs, limiting economies of scale.
- Demand may not be constant, increasing risk.
Market Size
- The total number of potential customers or sales revenue for a specific product or service in a particular market.
Market Growth Calculation
- [(New market size - Original market size) / Original market size)] x 100
Market Share
- The percentage of total sales revenue/customers generated by a particular company for a specific product or service.
- Calculated by: (Company's sales / Total market sales) * 100
Brand
- A name, logo, or symbol that distinguishes a product or service from its competitors.
Strong Brand Benefits
- Increased customer recognition and loyalty, leading to higher sales and revenue.
- Ability to charge a premium price, improving profit margins.
Online Retailing
- The process of selling goods and/or services through a website or online platform to reach a wider customer base.
Online Retailing: Benefits
- Increased accessibility and convenience for customers, potentially leading to higher sales and reduced costs.
- Ability to reach a global audience.
Online Retailing: Drawbacks
- Increased competition from other online retailers.
- Potential for technical issues and security concerns related to online transactions.
Product Innovation
- The development or creation of new products not previously available.
Product Innovation: Benefits
- Increased customer satisfaction and loyalty, potentially leading to higher sales and market share.
- Ability to charge a premium price for unique and innovative products.
Product Innovation: Drawbacks
- High costs and risks associated with research and development.
- Potential for failure if the product does not meet customer needs or fails to gain market acceptance.
Dynamic Market
- Markets characterized by frequent shifts in consumer preferences, technological advances, and competitive forces.
- These changes create both challenges and opportunities for businesses operating in that market.
Responding to Market Changes
- Flexibility
- Conduct market research
- Develop niche markets.
Risk vs Uncertainty
- Risk: The possibility of a lower-than-expected profit or a loss.
- Uncertainty: The inability to predict external shocks or future events.
Market Research
- The process of collecting and analyzing data about consumer preferences, market trends, and competitive forces to inform business decisions.
Primary Research
- Collecting new and original data directly from consumers or the market.
Secondary Research
- Analyzing and using existing data from published sources or databases.
Quantitative Research
- Using numerical data collection and analysis techniques to measure and quantify consumer behaviors and preferences.
Qualitative Research
- Collecting and analyzing non-numerical data, such as focus groups, interviews, and observations, to gain insights into consumer attitudes, perceptions, and motivations.
Primary Research Methods
- Surveys/questionnaires
- Focus groups/consumer panels
- Face-to-face/telephone interviews
- Product trials/test marketing
Secondary Research Methods
- Websites/social media
- Newspaper/TV/Radio reports
- Databases
Sampling Methods
- Random
- Quota
- Stratified
Market Positioning
- The approach where businesses focus on understanding and meeting the needs and wants of specific customers, aligning strategies and activities accordingly.
Market Orientation
- An approach to business where the company prioritizes understanding and meeting customer needs and wants.
Product Orientation
- Companies prioritize the development and improvement of their products and processes, without necessarily considering customer needs and wants.
Product Orientation: Benefits
- Lower costs due to a lack of market research.
- Potential for high-quality products and innovations.
- Economies of scale.
Product Orientation: Drawbacks
- Ignores changing customer needs and preferences, potentially causing products to not be in demand.
- Risks being outcompeted by companies focused on customer needs.
Market Mapping
- A technique used to identify and visualize the position of a firm's products or services relative to competitors.
Market Mapping: Benefits
- Identifies market gaps and potential for product differentiation.
- Provides insights into how customers perceive products.
- Helps companies position themselves against competitors.
Market Mapping: Drawbacks
- Can be time-consuming and expensive.
- Data quality can limit accuracy in certain industries.
Market Segmentation
- The process of dividing a market into smaller groups of consumers with similar needs or characteristics.
Market Segmentation Methods
- Demographic
- Geographic
- Psychographic (Lifestyle)
- Behavioural
Competitive Advantage
- Ways a business differentiates itself from competitors (price, added value, innovation, reliability, quality, reputation/branding, convenience, customer service).
Product Differentiation
- Distinguishing a product or service from competitors.
Product Differentiation Purpose
- Creates competitive advantage
- Enables consumers to perceive differences and pay a premium price.
Production Differentiation: Benefits
- Gaining recognition
- Charging higher prices for perceived quality
- Creating USP (Unique Selling Proposition) and winning market share.
Production Differentiation: Drawbacks
- Higher production costs
- Limits market reach and potential customer base.
Added Value
- The difference between the selling price and the total cost of inputs required to create the product/service.
Adding Value Methods
- Packaging
- Customisation
- Speed of response to customers
- Customer service
- Frequent buyer offers
Adding Value Benefits
- Higher profit margins
- Competitive advantage
- Customer loyalty
Demand
- The willingness and ability of consumers to purchase a good or service at a particular price over a given period of time.
Factors Influencing Demand
- Changes in the prices of substitutes
- Changes in the price of complementary goods
- Changes in consumer incomes
- Fashions, tastes, and preferences
- Marketing, advertising, and branding
- Demographics
- External shocks
- Seasonality
Supply
- The willingness and ability of producers to sell goods and services at a particular price over a given period of time.
Factors Influencing Supply
- Costs of production
- New technology
- Indirect taxes
- Government subsidies
- External shocks
Market Equilibrium Price
- The price where demand equals supply.
Excess Demand vs. Excess Supply
- Excess Demand: Demand is higher than supply; creates a shortage.
- Excess Supply: Supply is higher than demand; creates a surplus.
Price Elasticity of Demand (PED)
- Measures how responsive quantity demanded is to a change in price.
PED Formula
- PED = (% Change in Quantity Demanded) / (% Change in Price)
Elastic vs. Inelastic Demand
- Elastic Demand: Quantity demanded changes significantly with a small price change.
- Inelastic Demand: Quantity demanded changes very little with a price change.
Factors Influencing PED
- Availability of substitutes
- Frequency of purchase
- Relative price/expense of a product
- Whether the product is a luxury or necessity
- Time
PED and Pricing Strategy
- Inelastic: Higher prices increase total revenue.
- Elastic: Lower prices increase total revenue.
Income Elasticity of Demand (YED)
- Measures how responsive quantity demanded is to a change in consumer income.
YED Formula
- YED = (% Change in Quantity Demanded) / (% Change in Income)
Normal Goods
- Demand increases as income increases.
Inferior Goods
- Demand decreases as income increases.
Luxury Goods
- Large increase in demand when income increases.
Necessity Goods
- Small increase in demand when income increases.
YED Values Interpretation
- Positive values indicate normal or luxury goods.
- Negative values indicate inferior goods.
Marketing Mix & Strategy
- The set of actions a company uses to promote its goods or services (product, place, price, promotion).
Marketing Objectives
- Increase market share
- Increase revenue
- Build a brand
Product Life Cycle (PLC)
- The stages a product goes through from development to decline.
PLC Stages
- Development
- Introduction
- Growth
- Maturity
- Decline
Extension Strategies
- Actions used to extend the life of a product.
- Examples include updating packaging, adding new features, changing the target market, running new advertising campaigns, or reducing price.
PLC Benefits & Limitations
- Benefits: Helps with effective resource allocation, adjusting the product to market needs, and understanding the competitor's activities.
- Limitations: Doesn't predict lifespan accuracy, all products don't follow the same life cycle.
Product Portfolio
- A range of products a company sells.
Boston Matrix
- A management tool for analyzing a company's product portfolio.
- Categories include Star, Cash Cow, Question Mark, and Dog.
Marketing Mix Elements
- Product
- Place
- Price
- Promotion
B2B vs. B2C Marketing Strategies
- B2B: Tailored, informative, relationship-building, lower prices based on volume.
- B2C: Focus on design, quality, branding, persuasive promotion, widespread distribution.
Customer Loyalty
- Continued repeat purchase of goods and services from a specific seller/manufacturer.
Building Customer Loyalty
- Communication (keeping customers informed)
- Customer service (good quality product/service)
- Customer incentives (loyalty rewards/special offers)
- Personalization/personalised service (attention to individual customers)
- Preferential treatment (VIP lounge)
Design Mix
- The key elements businesses consider when developing or improving a product or service.
- Elements include aesthetics, function, and cost of manufacture.
Social Trends Influencing Product Design
- Recycling
- Reuse
- Ethical sourcing
Ethical Sourcing
- Sourcing products from suppliers who treat their workers well, care for the environment, and operate responsibly
Ethical Sourcing: Benefits
- Good reputation
- Reduced risks of legal issues
- Competitive advantage
Ethical Sourcing: Drawbacks
- Higher costs
- Monitoring challenges
- Limited supplier options
Promotion
- Activities used to raise awareness about a product or service, attracting customers' attention.
Promotional Methods
- Personal selling
- Direct marketing
- Advertising
- Public relations
- Sponsorship
- Sales promotion
- Digital communication
Brand Benefits
- Increased value
- Charging premium prices
- Reducing price elasticity of demand (PED)
Building a Brand
- Creating a USP
- Advertising
- Sponsorship
- Social media
Social Trends Affecting Promotion
- Viral marketing
- Social media
- Emotional branding
Pricing Strategies
- Cost-plus: Profit margin added to cost per unit.
- Price Skimming: High initial price, reduced over time.
- Penetration Pricing: Low initial price, increased over time.
- Predatory Pricing: Below-cost pricing to eliminate competitors.
- Competitive Pricing: Similar or lower prices than competitors.
- Psychological Pricing: Prices are set to influence consumer perception.
Factors Influencing Pricing Strategy
- Number of USPs
- Price elasticity of demand
- Level of competition
- Brand strength
- Product life cycle stage
- Costs
Social Trends Affecting Pricing
- Online sales
- Price comparison websites
Channels of Distribution
- Methods a company uses to sell products to consumers or give them access.
- Examples can be retailers like stores, wholesalers, distribution networks to retailers, direct marketing (manufacturer to consumer).
Staffing
- Viewing employees as assets (long-term investment) or costs (to be minimized)
- Employees can be a source of innovation and creativity or a liability.
Flexible Working
- Options for employees to adjust work schedules/location.
- Can boost work-life balance, cost efficiency, and skill diversity.
- Drawbacks include reduced supervision/cohesion, coordination issues, communication problems.
Recruitment and Selection
- Recruitment: The process of attracting, sourcing, and hiring candidates for job vacancies.
- Selection: Reviewing and choosing the most appropriate candidate from the pool.
Internal Recruitment
- Hiring from within an organization through promotion or transfer.
- Pros include faster process, cost savings, loyalty boosts, familiarity with company.
- Cons include limited talent pool, potential stagnation.
External Recruitment
- Hiring candidates from outside the organization.
- Pros include diverse talent pool, fresh ideas, internal conflicts mitigated.
- Cons include higher costs, longer onboarding times, cultural fit challenges.
Training
- Induction Training: Introduction to an organization's culture, policies, procedures, and roles.
- On-the-job training: Hands-on learning within the workplace.
- Off-the-job training: learning outside the immediate work environment (courses, seminars, workshops).
Organizational Design & Structure
- The way an organization arranges its hierarchy, roles, and relationships to achieve its goals effectively.
- Structures include tall, flat, or matrix forms.
Tall Structure
- Multi-layers of management.
- Narrow spans of control.
- Clear reporting structures but slow decisions, less empowerment.
Flat Structure
- Few layers of management.
- Wide spans of control.
- Faster decisions and enhanced communication, but limited oversight.
Matrix Structure
- Employees report to multiple managers (e.g., functional and project).
- Allows for skill development but can lead to conflicting priorities and communication issues.
Leadership
- Inspiring and guiding individuals or groups to achieve common objectives.
Management
- Overseeing process, coordinating resources, and ensuring operational efficiency to achieve company objectives.
Leadership Styles
- Autocratic: Leader makes decisions independently.
- Paternalistic: Leader acts like a parent, considering employee welfare.
- Democratic: Leader collaborates with the team.
- Laissez-faire: Leader gives minimal guidance.
Entrepreneur
- Person who starts a business and takes risks to earn a profit or reward.
- Stages of setting up a business (Idea, Research, Planning, Location, Finance, Resources, Launch).
- Roles of an entrepreneur (Financial Management, Administration, Marketing, Managing People, Production).
Intrapreneur
- Employee who acts like an entrepreneur, fostering new ideas and driving innovation within a larger organization.
Barriers to Entrepreneurship
- Entrepreneurial capacity
- Access to finance
- Lack of training/know-how
- Fear of failure
- Lack of confidence
Other Business Objectives
- Survival
- Profit maximization
- Cost efficiency
- Market share
- Sales maximization
- Employee welfare
- Customer satisfaction
Opportunity Cost vs Trade Offs
- Opportunity Cost: The value of the next best alternative foregone when making a choice.
- Trade-Offs: When pursuing one objective may mean sacrificing another in the pursuit of another objective.
Business Objectives in Exams
- Expect questions comparing different objectives.
- Consider trade-offs, especially between profit, ethics, and social considerations.
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Description
Test your knowledge on demand, supply, and collective bargaining with this comprehensive quiz. Questions cover key concepts such as market equilibrium price and price elasticity of demand. Perfect for reinforcing your understanding of economic principles.
