Definitions 1.1

Question 1

Marketing mix

Answer 1

The plan for getting the right blend of product, price, promotion and place

Question 2

Marketing objectives

Answer 2

the targets the marketing department must achieve, such as increasing sales by 15% within 12 months

Question 3

Market segmentation

Answer 3

dividing a market up by customers’ age, gender or income to find areas that are under-served

Question 4

Marketing strategy

Answer 4

the medium-to-long term plan for meeting the marketing objectives, delivered through the marketing mix

Question 5

Economies of scale

Answer 5

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

Question 6

Franchise

Answer 6

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

Question 7

Generic brands

Answer 7

brands that are so well known that customers say the brand when they mean the product - for example, ‘I’ll hoover the floor’

Question 8

Product differentiation

Answer 8

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

Question 9

Bias

Answer 9

a factor that causes research finding to be unrepresentative of the whole population

Question 10

Primary research

Answer 10

finding out information first hand

Question 11

Secondary research

Answer 11

finding out information that has already been gathered

Question 12

Sample size

Answer 12

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

Question 13

Market map

Answer 13

a grid plotting where each existing brand sits on scales based on two important features of a market

Question 14

Price elasticity

Answer 14

a measurement of the extent to which a products demand changes when the price is changed

Question 15

Unique selling point

Answer 15

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

Question 16

Complementary goods

Answer 16

these are bought in conjunction with each other

Question 17

Inferior goods

Answer 17

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

Question 18

Luxury goods

Answer 18

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

Question 19

Normal goods

Answer 19

goods for which sales move in line with changes in consumer incomes

Question 20

Seasonal variation

Answer 20

change in the value of a variable, e.g. sales, in relation to the seasons

Question 21

Substitutes

Answer 21

products or services in competition with each other, so customers will substitute one for the other

Question 22

Supply curve

Answer 22

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

Question 23

Demand curve

Answer 23

a line showing the demand for a product at different prices (the higher the price, the lower the demand)

Question 24

Market price

Answer 24

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

Question 25

External constraints

Answer 25

something outside the firm’s control that can prevent it achieving its objectives

Question 26

Predatory pricing

Answer 26

pricing low with the deliberate intention of driving a competitor out of a business

Question 27

Price-elastic

Answer 27

a product with demand that is highly priced sensitive, so price elasticity is above 1

Question 28

Price-inelastic

Answer 28

a product with demand that is not very price sensitive, so price elasticity is below 1

Question 29

Negative income elasticity

Answer 29

a product for which sales fall when people are better off (but rise when people are worse off)

Question 30

Positive income elasticity

Answer 30

a product for which sales rise when people are better off (but fall in recessions)