mr smith-the market Flashcards
what is demand
quantity of a product that that consumers want to buy within a given amount of time
supply
quantity of a product that consumers are willing and able to supply in a given time
demand slope
normally goes downwards
shows as a price increases, demand decreases
beacsue at higher price, fewer consumers wanting to spend the money so demand falls
supply slope
shows difference in price and quanity supplied
usually slopes upwards the higher the price charged, higher the quanity supplied
what is equillbrium price
when amount demanded matches the amount supplied
what happens to the slopes during a surplus
surplus-where prices are increased
cause movement to right across supply curve and movement to left across demand curve
what happens to sopes during a shortage
demand cruve goes to right
supply cruve goes to left
factors which influence demand
SAC
substitutes-demand for a praticualr product tyoe can eb affected by chnage in price of subsitute
e.g amount for butter rises, demand for margarine will rise
adveristing and branding-increases demand as encourage existing consumers to stay loyal
complemetatiry goods-products which worjk together e,g printer and ink cartilages
e.g if demand for printers falls, so could ink cartilaidges
consumers prefernces-relies on what consumers want. e.g increase in diets, decrease demand for sugary drinks
incomes-higher income increase demand for expensive products, lower income decreases demand for expensive products
relationship between demand and price
as price increases, demand will fall
as price decreases, demand will rise
facts affecting supply
NIC
New tchnology
Indirect taxes
C
price elasticity of demand
how much the price change affects rhe demand
calcualtion of price elasticity of demand
PED
percentage chnage of qunaity demanded
divided by percenatge chnage in price
price elastic
if price elasticty of demand is greter then 1, product is price elastic
price inelastic
if price elsaticity of demand is lower then 1, productis price inelastic
price elasticity of demand depends on several factors
nessary products-e.g milk are price ine;astic
chnaging price does not affect price much
what is distribution
route a product takes from manfacturer or producer to consumer
usally passes through an intermediaries e.g ratins, wholesalers
retailers
shops who sell to consumers
final stage of distribution channel e.g asda, aldi
wholesalers
make life easier for retailers
buys goods from manufactureres in bulk
sells them in samller quantities to retailers
called breaking bulk
do not have to wait for customers to buy product before getting cash like retailers
make distribution simplier
without wholesaler, manufacturer would have to make seperate deliveries to retailers
selling to whoelsaler cuts down number of journeys
wholsalers act asstorage cupboads for retailers
can store more goods than a retailer can
agents
e.g travel agents
sell products to cuncometers on behalf of businesses
different channels of distribution
direct selling-manufacturer to consumer
e.g internet, buying and selling on internet is ecommerence
can also be done by door to door selling
indirect selling(three stage channel)-manufacturer to retailer to consumer
often for clothes in high streets
indirect selling (four stage channel)-manufacturer-wholesaler-retailer-consumer
used for groceries
what is a munlti channel distribution
business sell through more than one method e.g online and in store
online distribution
steaming or downloading media content via the internet
consumer able to pirchase and have right to download rather then buying a ohsycial product
advantages of online retailing
lower costs for boxing items
persson gets product immediately /doesnt have to wait for product to come
moreenviormentally friendsly
reduces pollution from transporting pshycial goods
can be run from anywhere
easy to set up
Dis of online retailing
need different set of skills IT training required
what is a product life cycle
shows sales of a product over time
valuable for planning ,marketing strategies
developemnt stage of product life cycle
research and devlopment department develop product
marketing department do research
costs high, arent any sales yet to cover costs
high failure rate
introduction stage of product life cycle
where product is launched
somtimes launched with complementiry products
promotion high to get sales
price skimming may be used so that initial costs cover promotional costs
may start low to encorugae sales-penetration pricing
have to pay for fixed cost of development before can make profit
not many outlets for new product-business work hard to get retailers to sel it
competion may be limited (innovative product)
growth stage of product life cycle
sales grow fast
new customers and repeat customers
ciompetitors may be attracted to market
products often improved or developed and maybe trgeted at new target makets
maturity stage of product life cycle
sales reach a peak
saturation (market full and has reached full growth) sales may begin to drop
sales more liekly to drop for products which are long-lasting and customers are not liely to switch
decline stage of product life cycle
product does not appeal anymore
sales fall rapidly
profitsdedcrease
if sales carry on falling, product may be withdrwan or sold to another business
what are extension strategies
strategies that improve sales of a product which are starting to decline
e.g product development dredisgning product e.g chnaging packaging to make it mre up to date
or can change way it promotes the product e,g ad campaign or special offers
boston matrix
compares market gworth with market share
each circle represents on eproduct
size of circel represent sale volume of product
what does the boston matrix consist of
question marks
cash cows
stars
dogs
quesion marks
all new products
small market share high market growth
arent profitable yet, could succeed, could fail
need heay marking to give them a chance
cash cows
low market grwth but high market share
there in maturity phase
already been promoted
bring in plenty of money
stars
high market growht and high market share
in growth phase and have most potential
however, competiors liekly to take advanatge so need good mrketing
dogs
low market share and low makret growth
pretty much a lost
no growth
may vene be sold off in end
adv of boston matrix
way of showing where businesses postioned withing a makret
what is a business to business marketing strategy
where a busienss sells to another businenss somethig of theirs e.g givig hosptial new gloves
bsuiness to consumer makring strategy
sellign of a business product to consumer e.g ready meals to shoppers in supermarkets
customer loyalty
having good customer service, lead to good relaitonships with customers meanign repeated purchases
salespeaople should make customerrs feel happy
impornt for large products e.g car house
need info and imporrant on functionality before buying it
ways of keeping customers loyalty
loyalty cards for repeated puracases
e.g starbucks collect points fo ecah visot
saver schemes-customers collect points basd on how mmuch they sppedn
e.f TESCOS CLUBCARD
what doesz it mean when it says cutomers are an asset to a business
means they have value to a business
product life cycyle stages
development
intorduction
growth
maturity
decline
devlopment stage of product life cycyle