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Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 7 - 2010
Question 7
Read the information supplied and answer the questions which follow. (A) State three factors which affect the price of a product. (B) Draft and label the Product L... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 7 - 2010
Step 1
State three factors which affect the price of a product.
Answer
- Cost of Production: The costs incurred in producing the product must be calculated and recouped over its lifetime.
- Competition: Prices may be influenced by competitors' pricing strategies, encouraging businesses to align or differentiate their offerings.
- Economic Conditions: In a booming economy, consumers might be willing to pay more, whereas in a recession, lower prices may be necessary.
Step 2
Draft and label the Product Life Cycle diagram.
Answer
The Product Life Cycle (PLC) consists of the following stages:
- Introduction: Launch of the product; sales are low as awareness is being established.
- Growth: Sales start to increase rapidly; the product gains market acceptance.
- Maturity: Sales reach their peak and start to level off; competition increases.
- Saturation: Market becomes saturated; sales start to decline as the competition intensifies.
- Decline: Sales decrease as consumer preferences shift or new alternatives emerge.
Step 3
State two reasons why a business would carry out market research.
Answer
- Understanding Customer Needs: To gather insights on what customers want or need from products and services, allowing businesses to tailor offerings accordingly.
- Competitor Analysis: To examine what competitors are doing, which can help in positioning their own products better and avoiding potential market failures.
Step 4
State two benefits of using a brand name.
Answer
- Differentiation: A strong brand name sets a product apart from its competitors, helping consumers to easily identify choices in the marketplace.
- Customer Loyalty: Customers are more likely to remain loyal to recognizable brands, which can lead to repeat sales and increased profitability.
Step 5
Step 6
Explain the term ‘target market’.
Answer
A target market is a specific group of consumers identified as the intended audience for a particular product or service. It is typically characterized by demographics, such as age, income level, location, and lifestyle.
Example: Athletes would be the target market for energy drinks, as such products are designed to meet their performance and hydration needs.