Chapter 21 - Marketing Analysis Flashcards
Price Elasticity of Demand ( PED )
A measure of the responsiveness of demand for a product following a change in its price.
Zero PED
Perfectly Inelastic
Between 0 and 1
Inelastic Demand
Unitary 1
Unit Elastic
Between 1 and infinitiy
Elastic Demand
Infinity
Perfectly Elastic Demand
Factors Determining PED
1) Necessity of product
2) Number of close competitors
3) Consumer Loyalty
4) Price of product to consumer income
Impact of PED on business decisions
1) Pricing Decisions
2) Wage Decisions
Income Elasticity Of Demand
% Change in demand for the product / % Change in consumer income
Promotional Elasticity
% Change in demand for the product / % Change in promotional spending
Inferior Good
A product that experiences an increase in demand when consumer incomes fall.
New Product Development
The design, creation and marketing of new goods and services.
Sources of New Ideas
1) Company R & D
2) Adaptation of competitors’ product
3) Market research
4) Employees
5) Sales Employees
6) Brainstorming in groups
Process of NPD
1) Generating new ideas
2) Idea Screening
3) Concept Development
4) Business Analysis
5) Product Testing
6) Test Marketing
7) Commercialisation
R & D
The scientific research and techincal development of new product and processes.
Test Marketing
The launch of the product on a small scale market to test consumer reactions to the product.
Factors Influencing R & D Expenditure
1) Nature of industry
2) Level of R & D spending by competitors
3) Business Expectations
4) Risk profile and culture of business
5) Government policies towards grants to businesses and universities for R & D
Sales Forecasting
Predicting future sales levels and sales trends.
Trend
The underlying movement in a series of data over time
Seasonal Fluctuations
The regular and repeated variations that occur in sales data with a period of 12 months
Cyclical Fluctuations
Variations in sales over periods of time of much more than a year which are due to the business cycle
Random Fluctuations
Variations that occur at any time and cause unusual and unpredictable sales figures, due to events such as exceptionally poor weather or negative public image.
Qualitative Sales Forecasting
Predictions about future sales which use expert judgement instead of numerical analysis.
Sales forecast Composite
A method of sales forecasting that adds together the individual predictions of future sales from all the sales representatives working for a business.
Delphi Method
A long-range qualitative forecasting technique that obtains forecasts from a panel of experts.
Jury Of Experts
A method that uses the specialists within a business to make forecasts for the future
