Promotion is the way a business communicates with customers to inform them about a product and persuade them to buy it.

What is a loss leader?

A loss leader is a product sold below cost to attract customers into a shop. The shop hopes customers will buy full-price items while they are there.

What is the risk of using a loss leader?

Customers may buy only the cut-price item and nothing else. The shop then makes a loss on each of those sales.

How can a competition promote a product?

A competition, such as a prize draw on the packet, creates excitement and encourages repeat buying. Entry details can also give the business customer data.

OCR GCSE Business J204

Business Activity

Topic overview Enterprise and entrepreneurship Business planning and the business plan Sole traders, partnerships and limited companies Business aims and objectives Internal and external stakeholders Organic and external growth How business functions depend on each other

Marketing

Topic overview The purpose of marketing Primary and secondary market research Market segmentation Product design and the product life cycle Pricing methods Point of sale promotion and advertising Place and the marketing mix

People

Topic overview The role of human resources Organisational structures and ways of working Communication in business Recruitment and selection Employee motivation and retention Training and staff development Employment law

Operations

Topic overview Production processes Quality of goods and services The sales process and customer service Consumer law Business location Procurement and choosing suppliers Logistics and supply chains

Finance

Topic overview The role of the finance function Sources of finance Revenue, costs, profit and loss Break-even Cash, liquidity and profit Cash flow forecasts

Influences on Business

Topic overview Ethical and environmental considerations The economic climate Globalisation and multinational companies International branding and competition

Marketing

Point of sale promotion and advertising

3 things to know
Component 01

Overview

Point of sale price cuts, loss leaders, competitions and free samples, advertising on social media, websites, print, television and radio, and promotion on a small budget.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What is promotion?

Key term

What is point of sale promotion?

Key term

Why do shops offer price reductions at the point of sale?

Questions from this subtopic

Each one with the model answer underneath.

1
What is promotion?
Model answer
Promotion is the way a business communicates with customers to inform them about a product and persuade them to buy it.
2
What is point of sale promotion?
Model answer
Point of sale promotion takes place where the product is bought, such as in-store displays and special offers at the till.
3
Why do shops offer price reductions at the point of sale?
Model answer
A temporary price cut encourages customers to buy on impulse or to stock up. Price cuts also help clear old or seasonal stock.
4
What is a loss leader?
Model answer
A loss leader is a product sold below cost to attract customers into a shop. The shop hopes customers will buy full-price items while they are there.
5
What is the risk of using a loss leader?
Model answer
Customers may buy only the cut-price item and nothing else. The shop then makes a loss on each of those sales.
6
How can a competition promote a product?
Model answer
A competition, such as a prize draw on the packet, creates excitement and encourages repeat buying. Entry details can also give the business customer data.

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Business Activity

Marketing

People

Operations

Cram a whole paper in one sitting

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Customers may receive quality.

poorerbetterhigher

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AOwners may gain from higher profit.

BEmployees may lose jobs or face lower pay.

CCustomers may receive poorer quality.

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Assemble a full-mark answer from its marking points, in the order an examiner wants them.

Aim means a broad long-term goal of a business.

TrueFalse

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