1.5 External Factors That Influence Needs, Wants And Aspirations

Question 1

Name the major external factors

Answer 1

Marketing and advertising.
Peer pressure.
Trends, fashion and role models.

Question 2

What is marketing?

Answer 2

Marketing includes advertising, selling and delivering products to people.

Question 3

What is promotion?

Answer 3

Marketing activities that have been paid for eg advertising.
Includes activities that aim to:
- communicate with people.
- inform them of goods and services.
- persuade them to buy.

Question 4

What is advertising?

Answer 4

Used to inform customers of an available product and persuade them to buy it.

Question 5

Where do companies like banks, building societies and insurers put advertisements?

Answer 5

TV
Radio
Newspapers
Magazines
Online
Posters
Billboards
Cinema

Question 6

Give the ways that businesses can promote their products

Answer 6

Advertising
Carrying out product trials
'Money off' coupons
'Buy one get one free'
Customer competitions
Sponsoring events
Banks - cash back to customers who choose its credit cards.

Question 7

What should people be careful for when choosing a financial product?

Answer 7

‘Small print’ - terms and conditions that determine amount of interest received, fees charged etc.

Bonus / discounts

Question 8

What is public relations (PR)?

Answer 8

Advertising that is not paid for directly but which keeps a business’s product in the public eye

Question 9

Describe how PR might work

Answer 9

Eg businesses may have an agreement with a celebrity to use their products / merchandise when they are at public events, in order to promote the business.

Question 10

Name two aspects of PR

Answer 10

Product placement

Sponsorship

Question 11

What is product placement as an aspect of PR?

Answer 11

Product placement involved a product appearing on a TV show / film.
Eg a character shown using a specific brand’s product

Question 12

What is sponsorship as an aspect of PR?

Answer 12

Sponsorship involves a business paying for a sporting / entertainment event or venue.
It can advertise at the event/ in promotional materials.
The business name may be included in the name of the event or venue.

Question 13

How can someone be encouraged to spend differently / buy certain products by others that they know?

Answer 13

Peer pressure - wanting to fit in, esp young people

Question 14

How can someone be encouraged to spend differently / buy certain products by the current environment in society?

Answer 14

Trends - eg current state of economy, recession.
Fashions - eg latest smart phone.
Role models - eg family members.

Question 15

How can current trends and fashions influence the decisions and choices people make?

Answer 15

They affect the attitudes and values that people have

Question 16

Give the ways that trends affect financial services

Answer 16

The way in which people pay for goods / services eg cash, card.
Attitudes to saving.
How people view using credit.

Question 17

Give an example of how changing trends / attitudes have led to differences in how people use financial services

Answer 17

Borrowing money.
People used to look down on people who bought goods on credit -> it showed they couldn’t afford it.
Now it is desirable to fund a ‘high class’ lifestyle on credit, people shoe off their many credit cards.