topic 8 key words

Question 1

Brand extension

Answer 1

Where new products launched by a business can benefit from the positive reputation associated with the business’s
existing brands.

Question 2

Brand loyalty

Answer 2

Continuing to buy a particular product or buy from a particular business even if new and better products are being
introduced by competitors.

Question 3

Customer-led
approach

Answer 3

Where a provider finds out what people need or want and then designs a product to satisfy this need.

Question 4

Customer retention

Answer 4

Activities undertaken to persuade existing customers to stay with a business.

Question 5

Direct selling

Answer 5

Sales that are arranged directly between the customer and the provider without the intervention of a financial adviser.

Question 6

Loss leader

Answer 6

A product offered by a business at a price that is below what it costs the business to produce it; the aim is to attract
customers, who then purchase other products on which the business does earn a profit.

Question 7

Pareto principle

Answer 7

A principle which states that, in many situations, 80% of the effects arise from 20% of the causes. Also known as the
80:20 rule.

Question 8

Peer-to-peer (P2P)
lenders

Answer 8

Online marketplaces that enable people to lend to and borrow from each other without using a traditional financial institution such as a bank or building society.

Question 9

Price sensitivity

Answer 9

The degree to which the price of a product affects a consumer’s decision to buy it.

Question 10

Product
differentiation

Answer 10

The methods providers use to make one product different from and more attractive than others that perform a similar
function.

Question 11

Promotion

Answer 11

Paid-for marketing activities, including advertising. It includes all activities that aim to communicate with people, inform them of goods and services, and persuade them to buy.

Question 12

Public relations (PR)

Answer 12

A specific aspect of promotion known as ‘below the line’ expenditure. It is advertising that is not paid for directly but which keeps a business’s product in the public eye. It is the
part of promotion in which the entire message is implicit.

Question 13

Relationship
marketing

Answer 13

An approach that is centred on building a long-term relationship with customers

Question 14

Sales literature

Answer 14

Information such as brochures and leaflets, created by a provider’s marketing department.

Question 15

Transactional selling

Answer 15

An approach to finding and keeping customers that centres on the product rather than the customer.