Defenitions to remember for this test

Question 1

the market

Answer 1

where buyers meet sellers, either face-to-face or online

Question 2

economies of scale

Answer 2

factors that cause costs per unit to fall when a firm operates at a higher level of production

Question 3

franchise

Answer 3

a business that sells the rights to the use of its name, and trading methods to local businesses

Question 4

generic brands

Answer 4

brands that are so well known that customers say the brand when they mean the product e.g. i’ll hoover the floor

Question 5

product differentiation

Answer 5

the extent to which consumers perceive your brand as being different from others

Question 6

market research

Answer 6

gathers information about customers, competitors and distributors within a firms target market. it is a way of identifying customers buying habits and attitudes to current and future products

Question 7

bias

Answer 7

a factor that causes research findings to be unrepresentative of the whole population e.g. bubbly interviewers or misleading questions

Question 8

primary research

Answer 8

finding out information first-hand - for example, coca-cola designing a questionnaire to obtain information from people who regularly buy diet products

Question 9

secondary research

Answer 9

finding out information that has already been gathered - for example, the governments estimates of the number of 14-16 year olds in wales

Question 10

sample size

Answer 10

the number of people interviewed; this should be large enough to give confidence that the findings are representative of the whole population

Question 11

market positioning

Answer 11

when launching a new product or service, companies need to decide where exactly they want to position the brand in relation to customer perceptions and the positioning of competitors. this is largely achieved by market mapping

Question 12

market map

Answer 12

a grid plotting where each existing brand sits on scales based on two important features of the market e.g. in the car market: luxury/economy and green/gas guzzling

Question 13

price elasticity

Answer 13

a measurement of the extent to which a product’s demand changes when its price is changed

Question 14

unique selling point

Answer 14

a consumer benefit that no rival can match, perhaps because it is protected by a strong patent

Question 15

demand

Answer 15

measures the level of interest customers have in buying a product. to be effective, that interest must be backed by the ability to pay

Question 16

complementary goods

Answer 16

these are bought in conjunction with each other, such as eggs and bacon or cars and petrol

Question 17

inferior goods

Answer 17

ones for which sales fall when people are better off, but rise when consumers are struggling financially

Question 18

luxury goods

Answer 18

ones for which sales rise rapidly when people are better off, but may fall rapidly in hard times

Question 19

normal goods

Answer 19

ones for which sales move in line with changes in consumer incomes e.g. sales at dry cleaning outlets

Question 20

seasonal variation

Answer 20

change in the value of a variable e.g. sales that are related to the seasons

Question 21

substitutes

Answer 21

products or services in competition with each other, so customers will substitute one for the other e.g. dairy milk and galaxy

Question 22

supply

Answer 22

supply is the quantity of the product that producers are able to deliver within a specific time period

Question 23

market price

Answer 23

the price of commodity that has been established by the market - that is, where supply equals demand

Question 24

supply chain

Answer 24

the whole path from suppliers of raw materials through production and storage on to customer delivery

Question 25

supply curve

Answer 25

a line showing the quantity of goods firms want to supply at different price levels (higher the price, the more enthusiastic the supply)

Question 26

markets and equilibrium

Answer 26

the point where there is a balance between supply and demand; this makes the price stable