3 PED/YED; ATL/BTL Marketing; Segmentation, Targeting & Positioning

Question 1

Definition of PED

Answer 1

the correlation between price and the quantity demanded

Question 2

PED Equation

Answer 2

% change in quantity demanded / % change in price (usually a negative figure)

Question 3

PED > 1

Answer 3

price elastic
demand change > price change
demand is responsive to price changes

Question 4

PED < 1

Answer 4

price inelastic
demand change < price change
demand is unresponsive to price changes

Question 5

PED = 1

Answer 5

unitary elasticity
demand changes same as price changes

Question 6

Why is PED usually a negative figure?

Answer 6

when the price increases, demand falls
when price falls, demand increases
opposite and negative relationship

Question 7

Examples of price inelastic goods

Answer 7

necessities
heavily branded products
USP (added value/differentiated)
patent or trademarked goods
expensive/difficult to switch supplier

Question 8

Examples of price elastic goods

Answer 8

luxury goods
more (cheaper) substitutes available
over time - convenience

Question 9

YED Definition

Answer 9

the responsiveness of demand to a change in income

Question 10

YED Equation

Answer 10

% change in quantity demanded / % change in customer income

Question 11

Why is YED usually a positive figure?

Answer 11

when income rises, people buy more and revenue rises

Question 12

YED > 1

Answer 12

income elastic
demand changes by a more significant amount with an income change - consumers buy more luxury goods as they become wealthier
demand is responsive to a change in income

Question 13

YED < 1

Answer 13

income inelastic
demand is unresponsive to change in income
usually includes necessities such as basic foods/fuel

Question 14

YED = 1

Answer 14

unitary income elasticity
consumer income change is cancelled out by demand changes

Question 15

What type of goods have a negative YED?

Answer 15

Inferior goods - increase in income decreases quantity demanded

Question 16

What type of goods have a positive YED?

Answer 16

Normal (& luxury) goods - increase in income increases quantity demanded.

Question 17

What is Above the Line Marketing? (ATL)

Answer 17

focuses on mass media promotion to reach a large audience to establish brand image

widespread media campaigns, largely untargeted and undertaken at a general level

Question 18

Examples of ATL Promotion?

Answer 18

TV ads
Radio ads
Newspapers
Magazines
Billboards
Print Media

Question 19

Benefits of ATL Promotion

Answer 19

brand awareness
attention grabbing
large reach
increase visibility

Question 20

Drawbacks of ATL Promotion

Answer 20

cost of production
bad placement
small airtime
cannot calculate effectiveness (ROI)
less engaging
limited in personalisation
less control over message
slower response time

Question 21

Below The Line Marketing (BTL) Definition

Answer 21

directed to reach a small, targeted audience of potential customers

Question 22

Examples of BTL Promotion

Answer 22

direct mail
event management
door to door
sampling
sponsorships
brochures
trade shows and exhibitions
email marketing
targeted search enginer marketing
in store promotion (store fronts etc)

Question 23

Benefits of BTL

Answer 23

customer loyalty
focuses on segments - meeting needs
can give insight into audience
measurable success (ROI)
often lower costs
more frequent communication
faster response time

Question 24

Drawbacks of BTL

Answer 24

smaller audience
can still be costly for small business
most people ignore junk mail
risk of spending money without results

Question 25

Market Segmentation

Answer 25

occurs when similar customer needs are grouped within a market (MARKET SEGMENTS)

Question 26

Demographic Segmentation

Answer 26

characteristics of the people in the target population age, gender, stage of life

Question 27

Geographic Segmentation

Answer 27

based on the area that customers live in tyre tread (snow/ice); types of houses; types of food

Question 28

Behavioural Segmentation

Answer 28

the benefits that customers want from the product & brand loyalty how/when/why/what they buy

Question 29

Income Segmentation

Answer 29

luxury vs inferior goods income categories

Question 30

Process of Market Segmentation

Answer 30

segmentation -> targeting -> positioning

Question 31

Value of Segmentation

Answer 31

more cost-effective focused advertisements focused marketing budgets understamds customers to try and satisfy varying needs

Question 32

Targeting

Answer 32

occurs when a business decides which segments to operate in and market to a specific segment ability to be competitive & gain sales sufficient demand & potential profit to justify investment

Question 33

Positioning

Answer 33

establishing customers' perception of how a product is distinguished from its competitors - brand loyalty/brand identity

Question 34

Niche Marketing Definition

Answer 34

targeting a specific segment of a larger market

Question 35

Niche Marketing Advantages

Answer 35

few competitors - minimising competition can charge higher prices easier/more cost effective marketing better customer loyalty less money spent on advertising

Question 36

Niche Marketing Disadvantages

Answer 36

sales are limited in comparison to mass marketing more suseptible / vunerable to external market changes limited growth new competitors having large impact on customers

Question 37

Mass Marketing Defintion

Answer 37

aims to provide products that meets the needs of most people

Question 38

Mass Marketing Advantages

Answer 38

potential for high sales and growth cost-effective, wide range of customers builds brand identity increased sales volumes easier logistics - larger warehouses

Question 39

Mass Marketing Disadvantages

Answer 39

advertising may not appeal to everyone standardised goods, less able to personalise does respond to all geographical areas high competition assumption all customer needs are the same

Question 40

Factors influencing a company's positioning

Answer 40

price product image services