Cottage industries and small businesses
What is a cottage industry?
A small home-based business where goods are produced mainly by hand.
What is a small business?
An independently owned and operated business with few employees and limited revenue.
What is a linkage industry?
An industry that depends on another industry for production or sales.
Define marketing.
The process of identifying, creating, communicating and delivering value to customers at a profit.
What is cost-plus pricing?
Adding a markup to the cost of production.
Name ONE example of a cottage industry.
Basket weaving, pottery, soap making, wood carving, embroidery, handmade jewelry.
State ONE advantage of a small business.
Quick decision-making, innovation, local employment, increased consumer choice.
What type of linkage exists when cocoa farmers supply cocoa to chocolate manufacturers?
Forward linkage.
What is market research?
The collection, analysis and interpretation of information about a market.
Which pricing strategy sets a low price to enter a market quickly?
Penetration pricing.
State ONE advantage of a cottage industry
Creates employment, preserves traditional skills, encourages entrepreneurship, low startup cost.
State ONE disadvantage of a small business.
Difficulty raising capital, limited resources, inability to compete with larger firms.
What type of linkage exists when supermarkets depend on manufacturers for products?
Backward linkage.
State TWO objectives of marketing
Which pricing strategy uses prices like $19.99 instead of $20?
Psychological pricing.
State TWO differences between a cottage industry and a small business
What is internal growth?
Growth achieved by using the business's own resources.
State TWO benefits of linkage industries.
What is a market?
All consumers willing and able to buy and all producers willing and able to supply a product.
Which pricing strategy involves selling a product below cost to attract customers?
Loss leader pricing.
Which level of production involves producing goods mainly for foreign markets?
Export (Surplus) Production.
Facebook purchasing Instagram is an example of what type of external growth?
Acquisition
State ONE challenge of developing linkage industries.
Lack of capital, limited resources, import restrictions, export barriers
Name the FOUR elements of the marketing mix.
Product, Price, Place and Promotion.
What is price discrimination?
Charging different prices to different groups of people for the same product.