markets and customers

Question 1

what will the degree of confidence depend upon?

Answer 1

how the sample was chosen and the size of the sample

Question 2

define the confidence interval

Answer 2

there will always be a margin of error, the wider the margin of error (confident interval) the higher your confident level will be

Question 3

what is market mapping?

Answer 3

market mapping helps firms to understand how customers perceive their firm or product by looking at different features that distinguish different products or firms. they position the product so that it meets the needs of the target customers

Question 4

what are the methods of analysing trends? describe what they are

Answer 4

correlation- identify relationships between variables and strengths of them
extrapolation- look at previous trends to predict and estimate the future sales
forecasting- different methods used depending on the nature of product and market situation

Question 5

what are the uses of correlation?

Answer 5

identify relationships between variables, so firms can use the information for decision making

Question 6

what are limitations of correlation?

Answer 6

correlation only shows the link between two variables, and does not show a cause and effect relationship between the variables

Question 7

what is a sales forecast?

Answer 7

a month by month forecast of the level of sales you expect to achieve, which are usually drawn up annually

Question 8

explain why it is risky to assume cause and effect when looking at factors that are correlated

Answer 8

factors change in market conditions (extrapolation) so correlated factors may not always be accurate

Question 9

explain why bungee jumping us a good example of an elastic response to a change in variable

Answer 9

stretch is great compared to action. one small change in prices makes a big difference to sales

Question 10

in terms of price elasticity, what happens to revenue if prices are elastic

Answer 10

increase price, revenue falls or decrease price, revenue increases

Question 11

what happens to revenue when prices are inelastic?

Answer 11

increase price, increase revenue or decrease price, decrease revenue

Question 12

what are price elastic products?

Answer 12

a change in the price of a price elastic product will result in a proportionally larger change in demand. a small change in price will lead to a large change in demand

Question 13

what are price inelastic products?

Answer 13

a change in price of a price inelastic product will result in a smaller change in demand. a large change in price will lead to a small change in demand

Question 14

a price cutting strategy will increase revenue for an ______ product

Answer 14

elastic

Question 15

a price increasing strategy will increase revenue for an ________ product

Answer 15

inelastic

Question 16

price elastic products have an elasticity of _____ than 1

Answer 16

more

Question 17

price inelastic products have an elasticity of ____ than 1

Answer 17

less

Question 18

what is it called when elasticity is at 1?

Answer 18

unitary elasticity

Question 19

what is the formula for change in demand?

Answer 19

change in price X price elasticity

Question 20

calculate the change in demand when a business puts up its prices by 10% when the price elasticity of demand for its product is -2.0

Answer 20

10% X -2.0 = 20%

Question 21

what factors can affect the price elasticity of a product?

Answer 21

the degree of product differentiation 
proportion of their income
time 
branding
availability of substitutes

Question 22

what are the types of income elasticity?

explain what will happen to the correlation between consumers income and the demand of a product

Answer 22

normal goods- a fall in income will lead to a fall in demand and an increase in income will lead to a rise in demand

inferior goods- a fall in income will lead to a rise in demand and an increase in income will lead to a fall in demand

Question 23

how much does demand change in relation to change in income for income elastic goods?

Answer 23

the percentage change in demand is more than the percentage change in income so it is greater than 1

Question 24

how much does demand change in relation to a change in income for income inelastic goods?

Answer 24

the percentage change in demand is less than the percentage change in income so it’s less than 1

Question 25

define price elasticity of demand

Answer 25

the responsiveness of demand to a change in price i.e. does demand change by a large or small amount when there is a change in income

Question 26

what is income elasticity of demand?

Answer 26

the responsiveness of demand to a change in income i.e. does demand change by a large or small amount when there is a change in income

Question 27

what is the confidence level?

Answer 27

how confident the researchers are that their results from which they have sampled are accurate