Revision lesson 1 - paper 1 Flashcards
What is the formula for market share
(Sales of x / Total market sales) x 100
What is the formula for % change
(New - old) / old x 100
How do you calculate market size
Total value of all sales of the product
What is the formula for PED
% change in QD / % change in price
What is the formula for YED
% change in QD / % change in income
What does it mean if PED is >1
Elastic: change in price causes larger change in demand
What does it mean if PED is <1
Inelastic: change in price causes smaller change in demand
What happens to revenue on a price elastic product
Increases with a price cut
What happens to revenue on a price inelastic product
Increases with a price increase
What is a product that has a YED between 0 and +1
Necessity
What is a product that has a YED of >+1
Luxury
What is a product that has a YED of <0
Inferior good
What are some factors that can influence PED of a product
Brand strength, habit, availability of substitutes, time
What is product orientation
Emphasis on product, e.g design, quality
What is market orientation
Emphasis on consumer needs e.g McDonalds
What is primary research with 2 examples
New info collected for the first time, e.g questionnaires and interviews
What is secondary research with 2 examples
Already existing research, e.g internet, government data
What are 2 pros of primary research
Up to date, specific to the business
What are 2 cons of primary research
Expensive, time consuming
What are 2 pros of secondary research
Cheaper, quicker to collect
What are 2 cons of secondary research
May be out of date, not relevant to the business
What is quantitative data
Data can be analysed using graphs and numbers
What is qualitative data
Collected via focus groups to give feelings and opinions
What is an advantage of quantitative research
Easier and quicker to analyse
What is a disadvantage of quantitative research
Doesn’t tell you what the customer really thinks
What is an advantage of qualitative research
Gives more detailed information
What is a disadvantage of qualitative research
Can be open to interpretation and hard to analyse
What are reasons to carry out market research
Demand in the market, consumer behaviour, competitors, prices, wants of consumers, spot gaps in the market
What is the definition of added value
Difference between cost and selling price
Define market segmentation
Identifiable group of individuals (or part of a market) where consumers share one characteristic or need
What are the 5 main segments in a market
Demographic, geographic, behavioural, psychographic, religion/ethnicity
What is the demographic segment of a market
E.g gender, class
What is the geographic segment of a market
E.g Scotland, Wales
What is the behavioural segment of a market
Based on usage or attitude to product e.g occasional, luxury
What is the psychographic segment of a market
E.g personality types, good with money
What is the religion/ethnicity segment of a market
E.g Halal, kosher foods
What are 4 benefits of market segmentation
Easier to research needs
Design a product to meet specific needs
Focus advertising to that segment
Identify a profitable segment
What are 4 limitations of market segmentation
Difficult to identify the most important segment
Failure to meet needs of other customers
Adapting to changes in that segment
Limiting profits
