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Business - Theme 1 > 1.2 The Market and 1.3 Marketing Mix and Strategy > Flashcards

1.2 The Market and 1.3 Marketing Mix and Strategy Flashcards

1
Q

what is an equilibrium price?

A

when supply and demand meet and are equal

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2
Q

what is a supply curve?

A

A line which is drawn on a graph that shows how much of a good which sellers are willing to supply at different prices

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3
Q

how would an increase in demand be shown on a supply and demand curve?

A

a shift to the right

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4
Q

how would a decrease in demand be shown on a supply and demand curve?

A

a shift to the left

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5
Q

if supply increases how will this be shown on a supply and demand curve?

A

shift to the right

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6
Q

if supply decreases how will this be shown on a supply and demand curve?

A

a shift to the left

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7
Q

what is disequilibrium?

A

when supply and demand are equal

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8
Q

what is excess demand

A

The position where demand is greater than supply at a given price and there are shortages in the market

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9
Q

what is excess supply

A

The position where supply is greater than demand at a given price and there are unsold goods in the market

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10
Q

what is price elastic demand?

A

a change in price results in a large change in demand

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11
Q

what is price inelastic demand?

A

a change in price results in a smaller change in demand

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12
Q

price elasticity of demand

A

The responsiveness of demand to a change in price

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13
Q

how do you calculate elasticity of demand?

A

percentage change in quantity demanded / percentage change in price

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14
Q

interpretation of numerical values of price elasticity of demand

A

less than one = price inelastic

greater than one = price elastic

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15
Q

factors influencing price elasticity of demand

A
  • competition for the same product : if they increase price, consumers will go to cheaper alternatives
  • branding: branding will allow them to charge a higher price
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16
Q

what is income elastic demand

A

The percentage change in demand for a product is proportionately greater than the percentage change in income

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17
Q

what is income elasticity of demand

A

the responsiveness of demand to a change in income

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18
Q

calculation for income elasticity of demand

A

percentage change in quantity demanded/percentage change in income

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19
Q

interpretations of the numerical values of income elasticity of demand

A

greater than one = income elastic

less than one = income inelastic

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20
Q

factors influencing income elasticity of demand

A

necessities and luxuries:
if a good is a necessity, these goods are income inelastic
if a good is a luxury, these goods are income elastic

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21
Q

what is the design mix made up of?

A

function (what it does)
aesthetic (how it looks)
cost (price)

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22
Q

how would waste minimisation affect the design mix?

A

function: make it more durable and sustainable

aesthetic: make it smaller and lighter to save the amount of material used in production

cost: more expensive to switch to re usable alternatives

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23
Q

3 benefits of adapting product designs to changes in social trends

A
  • by reducing waste, they are using less resources, resulting in lower costs and higher profits
  • if designs reflect social trends, consumers will be more attracted to buy the products
  • they can charge a premium price for being ‘economically friendly’
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24
Q

what is above the line promotion

A

adverts using the media

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25
Q

what is advertising ?

A

Communication between a business and its customers where images are placed in the media to encourage the purchase of products

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26
Q

what is advertising ?

A

Communication between a business and its customers where images are placed in the media to encourage the purchase of products

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27
Q

what is informative advertising?

A

adverts used to raise awareness of the business’ products

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28
Q

what is persuasive advertising?

A

advertising putting pressure on consumers to buy their product rather than a competitor

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29
Q

what is reassuring advertising?

A

aimed at existing customers, comforts them, telling them they were right to purchase from that brand

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30
Q

what is below the line promotion?

A

promotion that doesn’t involve any form of advertising

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31
Q

what are sales promotions?

A

incentives used to encourage people to buy products, things like loyalty cards, buy one get one free or discounts

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32
Q

what is public relations?

A

an organisation that helps improves the image of a business, for example, sponsorship

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33
Q

what are manufacturer brands?

A

brands created by the producers of goods and services, like Kellog’s corn flakes

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34
Q

what are own label brands?

A

brands manufactured for wholesalers/ retailers by other businesses, for example, Tesco own brand stuff

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35
Q

what are generic brands?

A

products that only contain the name of the product category rather than the company or product name e.g aluminium foil

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36
Q

state 3 benefits of strong branding

A

added value: businesses will have a competitive edge

ability to charge premium prices

reduced price inelasticity of demand

36
Q

state 3 benefits of strong branding

A

added value: businesses will have a competitive edge

ability to charge premium prices

reduced price inelasticity of demand

37
Q

how can you build a brand

A

exploit a USP
advertising
through social media

38
Q

what is viral marketing?

A

a strategy that would encourage people to pass on messages to others about a product or a business, it would be something interesting or eye catching

39
Q

what is emotional branding?

A

using the emotions of a customer to build a brand, like how apple users stay loyal to the company and consistently buy apple products

40
Q

what is a pricing strategy?

A

pricing methods used when deciding what to charge for its products

41
Q

what is cost plus pricing?

A

adding a percentage (mark up) to the unit costs

42
Q

give 2 limitations of cost plus pricing

A
  • ignores market conditions
  • difficult to identify all the costs associated with production of a particular product
43
Q

what is price skimming?

A

when the business is launched into the market with a high price for a limited time period, this would generate high revenue before competitors arrive

44
Q

what is penetration pricing?

A

entering the market charging a low price, this will encourage customers to like the product at a low price, meaning they will continue to purchase even when the price rises

45
Q

what is predatory pricing?

A

aims to eliminate competitors from the market, involved charging a very low price for a period of time until one or more rivals leave the market

46
Q

what is competitive pricing?

A

charging the same price as competitors, this is a safer pricing strategy

47
Q

what is psychological pricing?

A

setting a price slightly below the round number to make the product appear cheaper, for example, £9.99 instead of £10

48
Q

how does differentiation/USP determine price?

A

the business can charge a higher price if they have a USP

49
Q

how does price elasticity determine price?

A

if the product is inelastic, they can increase the price and demand won’t change

50
Q

how does the amount of competition determine price?

A

little competition in the market will lead to higher prices, but more competition will lead to lower prices in the market

51
Q

how does strength of the brand determine price?

A

a strong brand will generate a higher price as they charge premium prices

52
Q

what is a mark up?

A

The percentage added to unit cost that makes a profit for a business when setting the price

53
Q

what is dynamic pricing?

A

when prices change depending on the situation, for example, in the travel industry, prices of flights go up and down depending on the time of year

54
Q

what is subscription pricing?

A

charging customers a regular monthly fee

55
Q

what are price comparison sites?

A

sites that compare prices of different businesses

56
Q

what are distribution channels?

A

the route taken by the product from the producer to the consumer

57
Q

what are the different distribution channels for consumer goods?

A

manufacturer -> consumer

manufacturer -> retailer -> consumer

manufacturer -> wholesaler -> retailer -> consumer

manufacturer -> agent/broker -> wholesaler -> retailer -> consumer

58
Q

what is direct selling?

A

when producers sell their products directly to consumers, for example, hairdressers or restaurants

59
Q

how can direct selling be done?

A

the internet, direct mail, door to door selling

60
Q

what is retailing?

A

when a business buys goods from manufacturers and wholesalers and sells them in small quantities to consumers

61
Q

what is wholesaling?

A

they buy from manufacturers and sell to retailers in bulk

62
Q

what are agent/brokers?

A

an intermediary that brings buyers and sellers together, like travel agents to book holidays

63
Q

what is online distribution? and how is it split up into 2 sections?

A

when good and services are sold via the internet, split up into B2B and B2C

64
Q

what are 3 benefits to the consumer of online distribution?

A
  • can shop 24/7
  • more choice
  • can shop from anywhere
65
Q

3 benefits to the business of online distribution

A
  • low start up costs
  • more choice of where to locate operations
  • they can serve customers 24/7
66
Q

2 drawbacks to the business of online distribution

A
  • high competition as it is a cheap method of distribution
  • lack of human contact, can’t offer customer service
67
Q

give 2 examples of products that have changed to a service

A
  • CDs are now online streaming
  • DVDs are now film channels
68
Q

what is the product life cycle?

A

it is the stages a product goes through when being introduced into the market, the process is: development, introduction, growth, maturity, decline

69
Q

what is introduction stage of the product life cycle?

A

launching of the product

70
Q

what is the growth stage of the product life cycle?

A

once customers are aware of the product and sales begin to grow rapidly

71
Q

what is the maturity stage of the product life cycle?

A

when sales have peaked, they will become stable and competitors will have entered the market

72
Q

what is the decline phase of the product life cycle?

A

when sales decline, usually due to consumer tastes or new technology

73
Q

what is an extension strategy? how can it be done?

A

ways to prolong a products life before it enter the decline stage

74
Q

give 2 ways a product can be extended

A

product adjustments: repackaging or updating the product

promotion: finding a new use for the product to increase sales, or finding a new marker for the product

75
Q

what is the boston matrix?

A

A matrix model that analyses a product portfolio according to growth rate of the market and the relative market share of products within the market

76
Q

what is a star? (boston matrix)

A

a product with high market growth and high market share, it is highly profitable

77
Q

what is a cash cow? (boston matrix)

A

high market share low market growth, meaning it generates profit, but there is little chance of growth in the future

78
Q

what is a question mark? (boston matrix)

A

low market share high market growth, investment is needed to improve growth

79
Q

what is a dog? (boston matrix)

A

low market share low market growth, not profitable

80
Q

what is a product portfolio?

A

the collection of products a business is currently marketing

81
Q

what is a product line?

A

products categorised into groups, e.g dairy products

82
Q

what is a marketing strategy?

A

a set of plans that aim to achieve a market objective

83
Q

what are the marketing strategies for a mass market? (4 Ps)

A

product: differentiate/USP their products as there are many substitutes

price: they competitively price within the market, meaning many prices are the same and very low

promotion: they invest heavily in marketing and advertising to stand out in order to gain a competitive edge

place: often use multiple channels to distribute their goods

84
Q

what are the marketing strategies for a niche market? (4 Ps)

A

product: the products are very different to each other in a niche market as there are very little competitors

price: often charge premium prices as there is less competition

promotion: advertising is more targeted and they often use less media as they have a smaller target market

place: they are often more selective, and distribute their products privately

85
Q

how would a B2B strategise their marketing?

A

outbound and inbound marketing strategies, an hybrid strategies

86
Q

what is an outbound marketing strategy? what is a limitation to this?

A

directing marketing material at potential customers, this can be through email or sponsorship, but these can be easily ignored

87
Q

what is an inbound marketing strategy? what is a limitation to this?

A

attracting potential customers to websites when they are looking for solutions to problems, like blogging or social media, however, it is hard to keep up to date with trends

88
Q

what are hybrid marketing strategies?

A

a combination of inbound and outbound methods

Business - Theme 1 (4 decks)

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