test 2 Flashcards
what is market segmentation?
The process of subdividing a market into identifiable segments or subgroups having similar needs, wants or characteristics and providing them with goods or services that meet their needs and wants
income elasticity of demand equation
PED= percentage change in quantity demand/
percentage change in price
what is income elasticity of demand ?
measures the responsiveness of demand to a change in a variable (income)
what is price elastic?
price elastic when a price change (e.g. a fall in the price due to a special offer) leads to a more than proportional change in demand (1+)
what is price inelastic?
price inelastic when a price change leads to a less than proportional change in demand (0-1)
what is break-even?
the point where a business is not making a profit or a loss
what is the formula for break-even?
total revenue=total costs (TR=TC) or
fixed costs/contribution per unit
how do you calculate contribution per unit (CPU)?
selling price per unit- variable costs per unit
what is an oligopoly?
a few businesses dominate the market due to their size, capital available, brand loyalty and their respective market shares but only a few dominate the market.
* Each business tends to have differentiated products with a strong brand identity.
* Brand loyalty is encouraged by the use of heavy advertising and promotion.
* Prices can be stable for long periods, although short price wars do occur.
* Some barriers to entry do exist: for example, high start-up costs in relation to manufacturing
what is market research?
the process of collecting information and data about a businesses customers, the marketplace and the activities of competitors within that marketplace
what is the intention of market research?
gather evidence that can enable the marketing and production decisions to be made in a more scientific way than otherwise be possible
what is market oriented marketing?
the business identifies the needs and desires of consumers and then creates products to satisfy them - “give the people what they want”
what is product orientated marketing?
the business develops products based on what its good at doing, rather than what the customer wants - “give the people what we have”
what is asset-led marketing?
uses product strengths such as the name and brand image to market both new and existing products - “give the people what we want, because we can” (apple)
what is a business plan?
a statement that outlines the way in which a business will attempt to achieve its objectives - giving a clear idea of its operation and direction
