AQA A Level Business - Unit 3

Price taker

A business must accept the SPPU due to little ability to compete with the price maker

Necessity Goods

Demand increase proportionally less than income

Product life cycle

Theory that sales of all products follow a similar pattern over time - development, introduction, growth, maturity and decline

Brand

A name, sign, symbol, slogan that is recognizable

Builds customer loyalty to brand

Socio Economic Status

Segmentation method using income

Market targeting

Deciding which part of the population to target

Market positioning

Where a product stands in relation to competitors

Sales volume

Number of items sold in a certain time period

Sales value

Volume sold x Selling price

Primary market research

research collected first-handed by the business itself, e.g. surveys

+ Reliable, valid and up to date

- Expensive, difficulties in making analysis

Quantitative

Numerical data from e.g. multiple choice questions, made on a mass scale

+ Concise data, easy to analyse

- Answers 'what' not 'why'

Qualitative

Opinions

+ Great insights, may highlight issues business unaware of

- Expensive to collect, difficult to analyse, small sample

Market mapping

Identifies features of a market

Can find gaps in market

Good starting point for research

Confidence levels

Margin of error in figures

Shows accuracy of sample

Correlation

Strength of relationship between data sets

Technology to collect data

Easy to collect

(Fast, accurate, lots of data)

(Data overload and finding correlations)

Competitiveness

Measures a firms ability to offer a better combination of price and quality than its rivals

USP

A point of genuine difference that makes one product stand out from the crowd

Marketing Objectives

Targets set for the marketing department to help meet the goals of the organisation as a whole, e.g. increase brand loyalty

Corporate Objectives

The targets deciding for the company as a whole

Market share

the percentage of total sales in a market held by one brand or company

(sales of one product / sales in total market) * 100

Repositioning

Positioning the products, branding, and image to shift the proposition to a different place in the market sector

Short termist

Taking decisions on the basis of short-term benefits e.g. for shareholders, rather than long term benefits

Predatory Pricing

When a large company sets prices low with the deliberate intention of driving a weaker rival out of business

Market

Where buyers meet sellers

Luxury Goods

Products that people buy much more of when they feel better off, i.e. when income increase

Normal Goods

Products or services for which sales change broadly in line with the economy

Market Research

Collection and analysis of data and information about consumers, competitors and distributors within a firms target market

Place (7Ps)

Where customers can buy a product (bricks and clicks) or placement on shelf /webpage or distribution channel.

Target audience must be able to buy product / service easily

Price (7Ps)

Having identified the right product to appeal to its target market, the business must set the right price

Product (7Ps)

The business must identify the right features and design to make their offering both appealing and distinctive

Promotion (7Ps)

Marketing managers must create then communicate an image for the product using e.g. advertising or PR to the right target audience

Attention

Interest

Desire

Action

Process (7Ps)

Practical aspects of the purchase process, the customer experience e.g. phoning or trying to use the website

People (7Ps)

Employees that a customer comes into contact with during the sales process. Customers form an impression of the business that can have an effect on customer satisfaction

Bias

A factor that causes research findings to be unrepresentative of the whole population

Sample Size

The number of people interviewed

Sampling Method

The approach chosen to select the right people to be part of the research sample

STANDARD DEVIATION

Sample findings tend to form a bell-shaped curve when shown on a graph. within this curve, the standard deviation of the data reflects how wide or narrow is the likely variation from the mean average of the findings.

MARKET DATA AND ANALYSIS

Breaking the market down statistically to assess the types of product, consumer and competitor

PRODUCT POSTIONING

Deciding on the image and target market you want for your own product or brand

TARGET MARKET

The type of customer your product or service is aimed at

Segmentation

Finding ways to divide a market up to identify untapped opportunities, among older consumers. This offers up the possibility of new targets and a new positioning within the market.

DEMOGRAPHIC

Population subset e.g age, ethnic origin, gender, family size

GEOGRAPHIC

Segmenting by urban, rural, region or by country

BEHAVIOURAL

Method of segmentation - Identifying and reacting to the different ways in which people live and spend their income

INCOME

Segmenting markets in relation to household incomes

MULTIPLE SEGMENTATION

Breaking a market down into many segments and then developing many different products to fill each segment

MASS MARKETING

Devising products with mass appeal and promoting them to all types of customer

NICHE MARKETING

Tailoring a product to a narrow range or particular type of customer. Specialised products / services

MARKETING MIX

Is the balance between seven elements involved in a successful marketing strategy

MARKETING STRATEGY

The medium to long-term plan for meeting the firms marketing objectives

MARKETING BUDGET

The sum of money provided for marketing a product or service during a period of time

PRICE ELASTICITY of DEMAND FORMULA

% change in quantity demanded/ % change in price. Queue up to pee down

PRICE ELASTICITY of DEMAND

The responsiveness of quantity demanded of a good or service to a change in its price (when nothing but the price changes).

INCOME ELASTICITY of DEMAND FORMULA

% change in demand/ % change in real incomes (incomes after inflation)

INCOME ELASTICITY of DEMAND

The sensitivity to quantity demanded for a good or service to a change in the disposible income of the people demanding the good

BOSTON MATRIX

It helps businesses analyse their portfolio of businesses and brands. Two axis - market growth and % share of market. Four categories - problem child/question mark, cash cow, stars and dogs.

Secondary Research

Data already collected by another organisation, e.g. a market research company

+Cheap to collect, quick to analyse

- Unreliable, not up to date

Sampling

A group that represents the whole population/wider society.

Market Segmentation

Classifying potential customers into subgroups makes marketing more targeted. (Demographic, Geographic, Income and Behavioral)

Market Factors

Nature of product: trends/fashion.

Social change: people's attitudes.

Competitors: following market leaders or them following you.

Technology: changes everything.

Economic GDP: interest rates, recession.

Suppliers: Fairtrade, quality or cost-effective.

Ethical and environmental: can be used as PR tool.

Market Leadership

Business which has the highest market share

Market growth

((market size in year - market size in previous year)/market size in previous year) * 100

Extrapolation

Using previous data to predict future data.

Psychological Pricing

A pricing strategy based on the theory that certain prices have a psychological impact

Penetration Pricing

Offering a low price for a new product or service during its initial offering in order to lure customers away from competitors.

Price Skimming

Starts at a relatively high initial price for a product or service at first, then lowers the price over time.

Price Leadership

The setting of prices in a market by a dominant company, which is followed by others in the same market.

Sales Growth

(sales in that year- sales in previous year/ sales in previous year)* 100

External Influences

Influences on a business that they cannot control PESTLE.comp