CAIE A2 Level Business (9609) Theory - Marketing Review

A comprehensive set of vocabulary flashcards covering elasticity, product development, sales forecasting, and international marketing strategies based on the CAIE A2 Level Business syllabus.

Price elasticity of demand (PED)

A measure of the relationship between price changes and the proportion of the resulting change in demand, calculated as $\frac{\text{Percentage change in Quantity Demanded}}{\text{Percentage change in Price}}$.

Perfectly inelastic demand

A classification where demand stays the same at any price, represented by a numerical value of $0$.

Unitary elasticity

Occurs when $PED = 1$, meaning demand changes equally with price and sales revenue is maximized as it remains constant.

Perfectly elastic demand

A situation where demand is infinite at one price but drops to zero with any price increase, represented by the symbol $\infty$.

Inelastic demand

Demand that changes less than price (numerical value between $0$ and $1$), where higher prices lead to increased revenue.

Elastic demand

Demand that changes more than price (numerical value between $1$ and $\infty$), where lowering prices increases demand and revenue.

Income elasticity of demand

A measure of how much demand changes when consumer income changes, calculated as $\frac{\text{Percentage change in demand for the product}}{\text{Percentage change in consumer incomes}}$.

Inferior good

A product for which demand rises as income falls and falls as income rises, characterized by a negative income elasticity.

Normal good

A product with positive income elasticity where demand rises as income rises and falls as income drops.

Luxury good

A product with an income elasticity exceeding $1$, typically having inferior substitutes, where demand changes more than income.

Promotional elasticity of demand

A measure of how demand responds to changes in promotional spending, calculated as $\frac{\text{Percentage change in demand for the product}}{\text{Percentage change in promotional spending}}$.

Unique selling point (USP)

A desirable feature or benefit that makes a product stand out from its competitors.

Idea screening

The second stage of new product development that eliminates product ideas unlikely to succeed commercially based on consumer benefit, technical feasibility, and profitability.

Test marketing

A stage in product development where a small, representative market is selected to observe consumer behavior before a full-scale launch.

Offensive R&D strategy

A strategy where a business leads with innovation to gain market share and dominance, such as the approach taken by Apple.

Defensive R&D strategy

A strategy where a business learns from innovators and improves or diversifies products to avoid falling behind the competition.

Extrapolation

A sales forecasting method that predicts future sales by extending past trends on a time series graph.

Moving averages

A forecasting method used to identify the underlying trend by smoothing out seasonal, cyclical, and random fluctuations in data.

Trend

The underlying movement in time series data after seasonal fluctuations have been removed.

Seasonal fluctuations

Short-term variations in sales data that occur at specific times of the year, such as peak ice cream sales in summer.

Sales force composite

A qualitative forecasting method based on individual estimates compiled from sales representatives who have direct contact with customers.

Delphi method

A qualitative forecasting technique that gathers expert opinions through anonymous questionnaires until a consensus is reached.

Jury of experts

A forecasting method using senior managers to develop predictions based on their expertise, which is quicker and cheaper than the Delphi method.

SMART objectives

Marketing goals that are Specific, Measurable, Achievable, Relevant, and Time-bound.

Pan-global marketing strategy

A strategy that treats the world or large regions as a single market using standardized products, branding, and promotions.

Global localisation (Glocalisation)

An international marketing approach summarized as "Thinking global - acting local," involving the adaptation of the marketing mix to suit local needs and cultures.

Direct exporting

Selling products directly to foreign customers, often through e-commerce or by establishing internal marketing divisions in the target country.

Indirect exporting

Selling products to international markets via trade agents or companies that specialize in managing sales for other businesses.

International franchising

Using foreign franchisees to operate a firm's business abroad, benefiting from the franchisees' local market knowledge.

Licensing

An arrangement where a foreign business is permitted to produce a firm's branded or patented products under controlled quality terms.