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a level business > 3.2 Understanding markets and customers > Flashcards

3.2 Understanding markets and customers Flashcards

1
Q

Market growth

A

When an industry grows in terms of either volume or value

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2
Q

Sales growth

A

When a business increases its sales in terms of volume or value

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3
Q

Market share

A

The proportion of a market that a business controls in order to satisfy customer needs

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4
Q

Market share calculation

A

(sales of on product) / (total market sales) X 100

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5
Q

What information does market research gather

A
  • Demand
  • Competition
  • Target market
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6
Q

Demand

A
  • Insights into customer’s wants and needs to help improve a product, spot market opportunities and stay competitive
  • spot opportunities for growth and potential threats from new products/technology
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7
Q

Competition

A
  • Can help to understand major threats in the market and then be prepared to deal with these threats
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8
Q

Target market

A

Insights into customer’s wants and needs and how they are changing over time

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9
Q

What does market mapping measure

A

Price vs Quality

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10
Q

Methods of market research

A
  • Sampling
  • Technology
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11
Q

Sampling

A

When a business selects a sample of the population to save collecting data from everybody in that population

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12
Q

Advantage of sampling

A

Reduces costs - chooses a cross-section of the population instead of collecting data from everybody

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13
Q

Disadvantage of sampling

A

May not accurately reflect the full target market if the sample is not chosen properly

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14
Q

Technology in market research

A

Used to analyse market research data by completing calculations and creating graphs and charts which can be used by managers and leaders

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15
Q

How to calculate PED

A

% change in quantity demanded / % change in price

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16
Q

What is the co-efficient

A

a value / number

17
Q

What elasticity is penetration pricing likely to have

A

Elastic

18
Q

What elasticity is price skimming likely to have

A

Inelastic

19
Q

What does PED measure

A

The responsiveness of demand after a change in price

20
Q

What does it actually mean?

A

For every 1% change of price, demand is going to change by the co-efficient value

21
Q

Co-efficient GREATER than 1 means a product is…

A

Price Elastic

22
Q

When a product is price elastic it means…

A

% change in quantity demanded is GREATER THAN the % change in price

23
Q

Co-efficient LESS than 1 means a product is…

A

Price inelastic

24
Q

When a product is price inelastic it means…

A

the % change in quantity demanded is less than the % change in price

25
Q

When the price elasticity is exactly 1, it means…

A

the % change in quantity demanded = the % change in price

26
Q

Impact on profit & sales revenue if a product/service is price ELASTIC

A

Decrease in price = Increase in sales revenue
WHEREAS
Increase in price = Decrease in sales revenue

27
Q

Impact on profit & sales revenue if a product/service is price INELASTIC

A

Decrease in price = decrease sales revenue
WHEREAS
Increase in price = Increase in sales revenue

28
Q

What does YED measure

A

The responsiveness of quantity demanded to a change in consumer income

29
Q

Formula for YED

A

(% change in quantity demanded) / (% change in income)

30
Q

Co-efficient is positive for YED

A

An increase in income will increase demand and a fall in income will decrease demand
e.g luxury items

31
Q

Co-efficient is negative for YED

A

An increase in income will decrease demand and a fall in income will increase demand
e.g changing from Sainsburys to Aldi products

32
Q

YED less than 1

A

Inelastic - the change in income will lead to a change quantity demanded which is less than the change in income

33
Q

YED more than 1

A

Elastic - the change in income will lead to a change in quantity demanded which is greater than the change in income

a level business (43 decks)

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