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Notes from IGCSE Business Studies Textbook - Coggle Diagram
Notes from IGCSE Business Studies Textbook
Marketing
Types of Markets
Mass Markets
If a product has a very large number of sales, it could be said to be sold to a mass market (many people in the population will buy this product)
Examples - Aspirin, soaps, shampoos are all products that have mass markets
Niche Markets
Some products are sold to only small number of customers who form a small segment of a large market and these are known as niche markets
Example - Expensive items such as Rolex watches and designer clothes are all targeted to a niche market because not many people will be able to afford them
Marketing Mix
The Product
Should satisfy existing needs and wants of customer
Not too expensive to produce
Performance, reliability, quality should all be consistent with the brand image
Has something very distinctive that makes it appear different
Good branding
Unique name
Unique packaging
Protects the product
Suitable for the product to fit in
Easy to transport
Eye-catching
Provides information about the product
Brand loyalty
The Price
Pricing Startergies
Cost-plus pricing
Competitive pricing
Psychological pricing
Penetration pricing
Price skimming
Promotional pricing
Dynamic pricing
Promotion and Technology
Inform people about issues
Create brand image
Increase sales
Introduce new products
Compete with competitor products
Types of Advertising
Television
Cinema
Radio
Mail
Posters
Internet
National Newspapers
Types of Sale Promotions
Price Reductions
Gifts
BOGOF
Free Samples
Production of Goods & Services
Productivity
Measure of efficiency
Quantity of Output / Quantity of Input
Labor Productivity
Output / Number of employees
Ways to Increase Productivity
Improve quality control
Use machines instead of people
Improve employee motivation
Introduce new technolog
Train staff to be more efficient
Methods of Production
Job Production
Products are made specifically to order
Batch Production
Products are made in batches
Flow Production
Large quantities of products are made in a continuous process
Business Costs
Needed to calculate profit and loss
Can be either fixed or variable with output
Help managers to make decisions
Total cost = fixed + variable costs
Finance
Financial needs
Capital expenditure
Revenue expenditure
Start-up capital
Capital to expand the business
Additional working capital
Internal sources of finance
Retained profits
Sale of surplus assets
Selling inventories
Sole trader or partnership
External sources of finance
Bank loans
Sell debts to debt factor
Micro-finance
Grants and subsidies from government
Debentures
Sale of shares
Factors affecting the choice of sources of finance
Purpose and period of time required
Risk and gearing
Status and size of business
Amount required
Cash Flow
Cash is needed to pay. expenses
Cash flow is not the same as profit
Cash is received from customers, but also from bank loans and sale of assets and shares
Cash flow problems can occur from overtrading or giving too much credit
Cash is the most liquid asset
Lack of cash can cause a liquidity problem
Income Statements
Gross profit = sales revenue (less cost of goods sold)
Net profit = gross profit (less expenses)
Retained profit = net profit (less taxes)
Used by managers to compare business performance
Shows profit/loss and not the cash flow
Balance Sheets
Lists assets and liabilities
Assets can be either current or non-current
Working capital = current assets - current liabilities
Capital employed = shareholder's funds + long term liabilities
Liabilities can be either current or non-current
Shareholders' funds = total assets - total liabilities