1.-4. anyag Flashcards by Zita Tokaji

The importance of economic indicators

Insight into Economic performance
Assessment of Economic health and strength
Informed Decisions

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It measured the total value of all the finished goods and services produced within a country‘s borders in a specific time period

GPD

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Compared the year-over-year change in a country‘s economic output to measure how fast an economy is growing

GDP growth rate

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It is a measurement of the GDP per person in a country‘s population.
It indicates the amount of output or income per person in an economy.

GDP per capita

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It is adjusted to inflation in its measurement of economic growth.
Used by policymakers to determine growth over time by comparing GDP from different time periods.
Also compare the growth rate of similar economies with different rates of inflation.

Real economic growth rate

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Real DPD=

GDP/(1+inflation since base year)

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Designated year, updated periodically by the government and used as a comparison point for economic data such as the GDP

base year

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GNP

Gross national product

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It is the value of all finished goods and services produced by a country’s citizens both domestically and abroad.
Measures how much of the value stays in the country.

GNP

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It is a sum of all income earned by citizens or nationals of a country, regardless of whether the underlying economic activity takes place domestically or abroad

GNI

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GNI

Gross national income

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Human development index

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Measure the countries‘ social and economic development

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UN: 4 areas of interest

Mean years of schooling
Expected years of schooling
Life expectancy at birth
GNI per capita

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Refers to a situation where a person active searches for employment but is unable to find work.
= Unemployed people / number of people in the labour force

Unemployment rate

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Labour force=

The employed + the unemployed

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Unemployment types

Classical
Seasonal
Cyclical
Frictional
Structure
Hidden

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Calculated as the average price increase of a basket of selected goods and services over one year

Inflation rate

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Annual consumer price index (CPI) =

(Value of basket in current year / value of basket in prior year) x 100

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Inflation rate =

(New CPI - prior CPI / prior CPI) x 100

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Normally associated with periods of expansion in the business cycles and high employment
2-3% inflation

Moderate inflation

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A rapid and accelerating increase in in the general price level of goods and services in an economy

Galloping inflation

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A period of fast-rising inflation

Hyperinflation

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Economic stagnation combined with inflation

Stagflation

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Prices decline and purchasing power increases, negative inflation

Deflation

Prices continue to increase but at a slower rate

Disinflation

Results from the general increased in the costs of the factors of production, the inputs required to produce goods and services

Cost-push Inflation

An excess of aggregate demand relative to aggregate supply

Demand-pull Inflation

A charge to the borrower for the use of an asset

Interest

The interest rate at which a nation’s central bank lends money to domestic banks

Base rate / (central) bank rate

Loan used to purchase real estate

Mortgage

Times of rising economic output, increasing profits, rising demand -> rising prices, growing interest rates

Expansions, upturns

Long period of expansion

Boom

The biggest point of economic growth

Peak

Times of decreasing profits and lower output

Contraction, downturn

Significant, widespread, and prolonged downturn in economic activity

Recession

A severe and prolonged downturn in economic activity

Depression, slump

The lowest point of negative economic growth

Trough

The most probable cause is people‘s spending or consumption decisions, which in turn are based on future expectations

Endogenous theory

Global economic changes Natural disasters Elections or political shocks Demographic changes Scientific advences - creative destruction

Exogenous theory

4 p‘s

Product Price Place Promotion

Divide the market into distinctive groups of buyers who have different needs based on age, income, social class, lifestyle, geographical location, etc

Market segmentation

Choosing the most profitable segment, focusing on a narrow segment/target group

Niche marketing

Bought with a minimum of comparison and buying effort

Convenience goods

Bought on a regular basis

Staples

Bought without planning

Impulse goods

Sell quickly, relatively low cost

Fast moving consumer goods (FMCG)

Bought by final consumers for personal consumption

Consumer goods

The consumer puts more buying effort into the purchase, checking quality, suitability, price

Shopping goods

High value, luxury goods

Speciality goods

The buyer is unaware of, or would prefer not to think about buying

Unsought goods

A branding strategy promoting the name of the company to market it’s products Philips

Corporate branding

The company brands each product line individually Coca-cola: Fanta, fuse tea, sprite

Individual branding

How familiar are consumers with a brand

Brand awareness / recognition

A consumer purchases a given brand without considering alternatives

Brand loyalty

Consumers are not loyal to a given brand

Brand switching

Represents the value of a brand

Brand equity

Created by the reseller

Private brand / own-brand

Brand name becomes a product name or products that are not branded

Generic brand / product, generics

When a brand is given legal protection

Trademark

To replace a basic model with a more expensive one

Trade up

To replace an expensive model with a cheap one

Trade down

Cheapest price

Low-priced model Low-end / bottom-end product Entry-level model Downmarket

High-priced Model High-end / Top-end product

Upmarket

Priced between low-end and high-end product

Mid-priced models are mid-range

Recommended by the manufacturer

Recommended retail price List price

Difference between the buying and the selling price

Profit margin

A low price used when the product is launched

Introductory offer Launch price Early bird price

Calculating the cost and adding a markup

Cost-plus pricing

Calculating the price on what the customer believes it is worth

Value-based pricing

Set a low price to enter a competitive market and raise it later

Penetration pricing

To sell something below cost to create store traffic

Loss leader pricing

Sales promotion efforts to stimulate demand

Promotional pricing

Set a high price and lower it as the market evolves

Price skimming

Using high prices to suggest quality and exclusivity

Prestige pricing

Two or more products are combined in the same package

Product bundle pricing Bundled pricing

Basic product is relatively cheap, components are expensive

Captive product pricing

Selling directly to the consumer without a middleman / intermediary

Direct distribution Direct marketing

Marketing product through a distribution channel (resellers)

Indirect distribution

Selling products usually in large quantities to the retailer

Wholesaler

Selling products to the end-user (consumer)

Retailer

Part of a group of shops

Chain store Retail store

Small shop in a residential area

Convenience store

Large shop selling mainly food

Supermarket

Large shop selling food and non food items

Hypermarket

A group of retail stores and service establishments

Shopping Center Mall

Grant a license to the franchisee

Franchisor

Manufacture / market the franchisor products or operate his services

Franchisee

On-off franchise payment

Franchise fee Front end fee

An shred percentage of the revenue of franchise

Royalty Management services fee

Selling on the internet

E-commerce operations E-tailing

Only online operations, seller

Pure play online seller

Combination of online and offline operations, sells

Click and mortar shops

Only offline operations, sells

Brick and mortar shops

A deficit in a bank account by drawing more money than the debit card holds

Overdraft

Selling to the public

B2C Business to Consumer

Firms ordering supplies on the internet E-procurement

B2B Business to business

Communication with government departments, apply for contracts, pay taxes

B2G Business to government

Tv, press, Print, Radio, Outdoor, online Pay for space

Above the line

Sales promotion, pr, personal selling, word-of-mouth Pay a fee

Below the line

Direct marketing, combination of above and below the line

Through the line

Communication channels that a company owns - website, blogs, email, newsletter, forum, social media

Owned media

Free coverage the brand receives - reviews, recommendations, sharing content, links

Earned media

The company pays for promotion

Paid media

Promotion of goods and services through the mass media

Advertising

Face to face interactions with the consumers

Personal selling

Short-term incentives to encourage the purchase or sale of a product or service

Sales promotion

Building good relations with the company’s various publics

Public relations

Advertising- Factual information about price, quality product benefits

Informative advertising

Advertising- Convince consumers to buy the product

Persuasive advertising

Advertising - Contrasting the product with competing offers

Comparative advertising

Advertising - promote the image of an organisation

Image advertising

Advertising - reminds consumers of previous advertising

Reminder advertising

Advertising - to promote issues of social interest

Public service advertising (PSA)

Advertising - communication false information

Deceptive advertising

Distributing free trial amount of the product

Free samples Sampling

Price-off Deal

Special offer Discount

Provide a saving

Coupon

Giving points for purchase, redeemed later

Loyalty card

Consumer can win something

Competition Sweepstakes

Buy one get one free

BOGOF

When you buy one product, you are recommended to buy another that goes with it

Cross promotion