1.3 introducing market Flashcards

1
Q

consumer sovereignty

A

the principle that consumers, through their purchasing decisions, determine the demand for goods and services

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2
Q

demand

A

quantity of a good or service consumers are willing and able to buy at a given price

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3
Q

law of demand

A

inverse relationship between the
price of a good and the demand for a good - as prices fall customers buy more and vice versa

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4
Q

shifts in demand

A
  • population
  • advertising
  • substitute goods
  • income (disposable)
  • fashion + trends
  • income tax
  • complementary goods
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5
Q

producer objectives

A

when prices are high, suppliers are willing to produce more output

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6
Q

supply

A

quantity of a good or service business are willing and able to provide at a given price.

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7
Q

shifts in supply

A
  • production costs
  • indirect tax
  • no of firms
  • technology
  • subsidies
  • weather (external shocks)
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8
Q

equilibrium

A

when the price and quantity are at a level at
which supply equals demand - market ‘clears’

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9
Q

excess demand

A

where demand outstrips supply - leads to shortage

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10
Q

excess supply

A

where supply is greater than demand - leads to surplus

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11
Q

ceteris paribus

A

all things being equal

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12
Q

perfectly competitive market

A
  • homogenous products (basic generic items)
  • large numbers of buyers and sellers
  • perfect knowledge of prices
  • low barriers to exit and entry in the market
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13
Q

price mechanism

A

the means by which millions of decisions taken by consumers and businesses interact to determine the allocation of scarce resources

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14
Q

incentive

A

consumers choices reflect demand so higher prices act as incentive to suppliers to raise output

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15
Q

signalling function

A

consumers decisions inform suppliers (e.g. more demand from customers signals to suppliers to increase output and raise prices)

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16
Q

rationing function

A

prices serve to ration scare resources (if there is a limited supply prices are higher so only a certain number of people are willing and able to purchase)

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17
Q

mass market

A

one where products used by most people are sold in large quantities meaning there are large numbers of buyers and sellers

18
Q

niche market

A

a smaller part of a larger market where customers display similar characteristics and where there are only a few suppliers

19
Q

market share

A

% of all sales within a market that are held by a particular product/company

20
Q

potential market growth

A

implies increase in demand for a product
depends on:
- whether the product is luxury or not
- new technology
- creative destruction
- changing fashions

21
Q

market research

A

systematic and objective collection, analysis, and evaluation of information intended to assist the marketing process

22
Q

reasons for market research

A
  • understand and identify consumers wants and needs
  • understand patterns and purchasing behaviours
  • predict future trends
  • reduce risk of product failure
  • measure how effective marketing strategy has been
  • provide latest and up to date market information
23
Q

primary

A

gathering information from a first hand source: observation, surveys + questionnaires, focus groups

24
Q

secondary

A

finding and using information that has been collected by someone else: internet, government reports, market reports

25
qualitative
information about the market based on subjective factors such as opinions and reasons (cost and time implications)
26
quantitative
information about the market based on numbers and trends (quick and easy to collect but not as in depth)
27
limitations
non sampling errors - caused by human error sampling errors- sample size too small/ not representative
28
quota sampling
population is divided by the most important variables such as income, age and location and the required quota is selected from each segment
29
random sampling
makes sure every member of the public has an equal chance at selection
30
stratified sampling
target population is subdivided into segments of same characteristics and members are chosen from each strata
31
market segmentation
sub group of consumers with similar characteristics in a given market
32
types of segmentation
- geographic - demographic (characteristics e.g. age, income, gender) - psychographic (lifestyle choices/personality e.g. social and economic values/status)
33
target market
group of consumers with common needs/wants that a business decides to sell to
34
market positioning
designing a product that meets needs of consumers better than the competitors do
35
competitive advantage
an advantage based on price, quality, service, reliability, reputation or innovation
36
product differentiation
a products feature that differentiates it from other competing products in the market - USP (unique selling point)
37
added value
difference between price of finished product and cost of inputs used to make it - convenience, branding, quality, design and unique selling point
38
dynamic markets
changing all the time
39
stable markets
pace of change is slow, prices stay similar
40