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Unit 1 Condensed Study Notes
Unit 1 Condensed Study Notes
Unit 1
The market - a place were buyers and sellers meet in order to exchange goods and services.
Markeing - the managerial process of identifying, anticipating and satisying customer wants
and needs profitably.
Mass market - large unspecialised market where the products are aimed at the whole
market.
advantages:
disadvantegs:
Niche market - small targeted / specialised market which allows the supplier to meet the
individual needs of the customers.
advantages:
• less competition
• higher consumer satisfaction - repeat customers/ brand loyalty
• meets the market demand easier
disadvantages:
Brand - a unique company image that differentiates from the rest of the market / other
suppliers.
Market research - the collection and analysis of data and information about consumers,
competitors and suppliers to inform a business about its market.
Primary research - data collected first hand about the market that didn't exist before.
Secondary research - data collected by someone else about the market / data that already
existed.
Quantitative research - statistical data that looks at the amount of items sold.
Qualitative research - non-statistical data that looks at why the customers buy the products.
Segmentation - the breaking down of a large homogeneous market into smaller easily
identifiable sections that have similar wants, needs and demand characteristics.
Demand - the amount a customer is willing and able to buy at a given price.
Supply - the amount a producer is willing and able to sell to the market at a given price in
a given time period.
Price elasticity of demand (PED) - a measure of how quantity demanded reacts to a change
in price.
Design mix:
Sustainability:
Marketing mix - refers to the set of actions or tactics that a company uses to promote its
brand or product in a market.
Price - reflects the brand, quality and values as well as the amount the customer pays.
Pricing tactics - the day to day changes you can make to prices in order to achieve targets.
Pricing strategy - process by which a business plans to change the amount paid by the
customer in the medium to long term.
Price skimming - setting the initial price high in order to cover their costs leaving the option
to lower the prices in the future.
advantages:
disadvantages:
Price penetration - setting the prices low in order to gain market share with the intentions
of raising those prices later on.
advantages:
• lower costs can lead to higher sales as the product is more affordable
• conomies of scale due to more being produced in order to deal with high levels of
demand
• stores may provide high distribution levels and maintain good in store displays
disadvantages:
Distribution - the process of getting the product from the producer to the right place for
customers to make their purchases.
Distribution channel - the routes through which the product passes from the manufacturing
to the customer.
Product life cycle - a model showing the sales of a product over time and that all products
follow a similar pattern.
stages:
• intro
• growth
• maturity
• saturation
• decline
Extension strategy - an attempt to prolong the life cycle of a product by preventing decline
and prolonging saturation e.g. re-packaging, discounting etc.
Product portfolio analysis - examines the market position of a companies products and
places them on a matrix in terms of their market share and the market growth.
Job description - outlines what the job entales / what the applicant needs to do e.g.
responsibilities.
Person specification - what qualities / qualifications a person needs for a job role.
Internal reqruitment - when candidates for a position are recruited from within the
organisation e.g. promotion.
benefits:
limitations:
• higher costs
• may be awkward for those candidates who don't receive the job
• reduces the talent available to them
External recruitment - when candidates for a position are recruited from outside the
organisation.
benefits:
limitations:
• higher costs
• may upset internal candidates
• not able to see candidates at work over a period of time
Induction - training given to all employees at the outset of their contract when they are
first employed.
Mentoring - being allocated a more experienced employee to give advice and demonstrate
tasks
Job rotation - swapping duties with another employee in a different role to gain more
experience
Off the job - taking the employee out of the immediate work situstion but not out of the
workplace e.g. a conference room
Organisation structure - the relationship between different people and functions of an
organisation
Division of labour - part of the job design process where processes are divided into distinct
tasks
Tall structure - many levels of hierarchy, narrow span of control and long chain of command
benefits:
benefits:
• more empowered
• more trust of workforce
• flexible working environment
• more efficient/ lessons the loss of communication
Motivation:
Taylorism:
Efficiency, speeds up the workforce, division of labour, assembley lines formed, incentives
created through higher wages, trade unions were banned, hard work equals good pay,
workers were supervised, workers were payed on the basis of results, however workers
had to endure tough, repetitive work.
Maslow:
Hierarchy of needs:
• physical needs
• safety needs
• psychological needs
• esteem needs
• self actualisation
Herzberg:
Motivation factors - things that motivate, promotion opportunities, recognition, praise and
responsibility.
Hygiene factors - things that prevent demotivation, money and working conditions
Job enrichment - is a management concept that involves redesigning jobs so that they are
more challenging to the employee and have less repetitive work
Job enlargement - hire someone with the potential to do a larger job e.g. learning on the
job and increasing their skills
Job rotation - the ability to change from one job to another, enables emplyees to gain a
greater variety of experience by doing a range of alternative jobs
Leadership:
Autocratic - authoritarian, tell employees what to do and don't listen to what they have to say.
Democratic - like to include workers in their decision making, listne to employees and ensure
they contribute in discussions.
Management by objectives - clear goal agreed with staff, provides the necessary resources,
day-to-day decisions made by staff.
Laissez-faire - let it be - managers are either busy or lazy, time isn't taken to ensure junior
staff know what to do.
Paternalistic - manager is like a parent, tries to do what is best for staff, but decisions made
by the head.
McGregor:
theory x:
theory y:
Enterprise - the willingness to undertake new ventures and show initiative with a view to
gaining rewards.
Entrepreneur - a person who spots an opportunity and shows initiative amd a willingness
to take risks in order to benefit from the potential rewards.
• spotting trends
• identifying a market niche
• copying ideas from other countries
• innovation
• spotting a gap in the market
Barriers to entrepreneurship:
• lack of finance
• lack of entrepreneurial capacity
• responsibilities
• legal / red tape
• lack of ideas
• fear of failure
• avasion to risk
• corrupt or unsupportive government
• profit maximisation
• growth
• social or ethical aims
• survival
Unlimited liability - the finances of the business are inseperable from the finances of the
business owner
Sole trader - a business run and owned by one person with unlimited liability
advantages:
disadvantages:
• unlimited liability
• problems caused by the owner being ill or away from work
• lack of finance - banks may be less willing to give loans
Partnership - more than one owner, involves a partnership agreement to distinguish sho
gets what within the business
advantages:
disadvantages:
• unlimited liability
• all partners are affected by the actions of another
• potential for disagreements between partners
• descision making takes longer as each partner must be consulted
Limited liability - the legal duty to pay the debts of the busines stays with the business
Private limited company (ltd) - needs shareholders to agree to any transfer in ownership
of the business shares
advantages:
Public limited company (plc) - allowed to sell shares on the stock exchange
advantages:
disadvantages:
Franchise - when a business (the franchiser) gives another business (the franchisee) the
right to supply its products and services
the franchiseor sells the franchisee a licence to sell their products, often within a specific
georgraphical area. The franchisee will then sell the franchisor's products under the
franchisor's name and trademark. The franchisor will often continue to give support in
exchange for a licence fee and royalties on the products sold.
Franchisor
advantages:
• rapid growth
• regular income
disadvantages:
Franchisee
advantages:
disadvantages: