business unit 3

PED definition

The responsiveness of quantity demanded to a change in price.

PED formula

% change in quantity demanded ÷ % change in price.

Elastic demand (PED > 1)

Demand changes more than price; consumers are sensitive to price.

Inelastic demand (PED < 1)

Demand changes little with price; consumers are less responsive.

Use of PED in business decisions

Helps decide pricing strategy and predict revenue changes.

Limitation of PED

Based on past data; may not reflect future consumer behaviour.

Income Elasticity of Demand (YED)

Responsiveness of demand to changes in consumer income.

Positive YED

Indicates normal goods.

Negative YED

Indicates inferior goods.

Promotional Elasticity of Demand

Responsiveness of demand to changes in promotional spending.

Use of promotional elasticity

Helps decide advertising budgets and predict campaign effectiveness.

Product development definition

Creating or improving products to meet customer needs.

Sources of new product ideas

R&D, competitors, customer feedback.

Importance of R&D

Drives innovation, supports competitiveness, creates USP.

Prototype definition

Early sample product used for testing and refinement.

Market testing

Introducing a product in a limited area to assess consumer response.

Sales forecasting definition

Estimating future sales using past data and market information.

Uses of sales forecasting

Supports budgeting, capacity planning, staffing and inventory decisions.

Time series analysis

Using historical data to identify trends and seasonal patterns.

Moving average definition

Average of data points used to smooth out short-term fluctuations.

Centred moving average

Adjusted moving average that aligns with the middle of the period; used to identify trend.

Limitation of sales forecasting

Unpredictable market changes reduce accuracy.

Marketing plan definition

Document outlining how a business will achieve marketing objectives.

First component of a marketing plan

Purpose and mission of the business.

Situational analysis components

SWOT, PEST, competition analysis, market research.

SMART objectives definition

Specific, Measurable, Achievable, Realistic, Time

Marketing strategy definition

Overall approach to achieving marketing objectives.

Marketing budget purpose

Ensures planned activities are financially feasible.

Benefit of marketing planning

Improves coordination and reduces risk.

Limitation of marketing planning

Time-consuming; may become outdated quickly.

Coordinated marketing strategy

All elements of the marketing mix work together to support the objectives.

Strategy consistency requirement

Must align with business goals, product type and market conditions.

Role of IT in marketing

Supports data analytics, online promotion and targeted advertising.

Role of AI in marketing

Personalisation, predictive analytics, and customer profiling.

International marketing definition

Marketing products in foreign markets.

Why enter international markets?

To increase sales, spread risk, and reach new customer groups.

Factors in selecting international market

Market size, competition, cultural fit, economic and political stability.

Pan-global marketing definition

Using the same product and promotion worldwide.

Localised marketing definition

Adapting product and promotion to local preferences.

Benefit of pan-global strategy

Economies of scale and consistent global branding.

Benefit of localised strategy

Better customer satisfaction and cultural alignment.

Foreign market entry methods

Exporting, franchising, licensing, joint ventures, FDI.

Joint venture definition

Partnership with a local firm in the target country.

Risk of international marketing

Cultural misunderstandings, legal barriers or poor market fit.