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Flashcards · 9609 · A Level Topic 8

Marketing (A Level) flashcards

18 cards on A Level Topic 8, subtopics 8.1 to 8.2. Pick a subtopic or study them all.

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8.1 Marketing analysis

Price elasticity of demand (PED): formula and meaning
PED = % change in quantity demanded ÷ % change in price. Size above 1: elastic (quantity reacts more than proportionately). Below 1: inelastic. Equal to 1: unitary (revenue unchanged).
Price is cut from £10 to £9 and quantity rises from 200 to 250. Calculate PED and the effect on revenue.
Price −10%, quantity +25%. PED = 25 ÷ −10 = −2.5: elastic. Revenue rises from £2,000 to £2,250.
PED and revenue: what happens when price rises?
Inelastic demand: a price rise increases revenue (a price cut lowers it). Elastic demand: a price rise lowers revenue (a price cut raises it).
Income elasticity of demand (YED): formula and interpretation
YED = % change in quantity demanded ÷ % change in income. Above 0: normal good (above 1, demand grows faster than income). Below 0: inferior good (demand falls as income rises).
Promotional elasticity of demand (PromED): formula and example (promotion spending +20%, sales +3%)
PromED = % change in quantity demanded ÷ % change in promotional spending. 3 ÷ 20 = +0.15: promotion has a weak effect.
Limitations of elasticity in decision-making
Based on past data; assumes other factors stay constant; differs at different prices and sizes of change; depends on data quality; short- and long-run responses differ; rivals may react. Profit also depends on costs, not just revenue.
Stages of new product development
Idea generation, screening, concept and business analysis, development (prototypes, R&D), testing (trials or test marketing), launch.
Research and development (R&D): for and against
For: new products and longer life cycles, possible patent protection, competitive advantage. Against: high cost, uncertain results, long payback, hard for small firms to afford.
Four-period centred moving average: method
Add four consecutive quarters (moving total); add pairs of consecutive totals; divide by 8 to get the centred trend. Seasonal variation = actual − trend. Forecast = projected trend + average seasonal variation.
Moving totals 210 and 218; actual sales 47; projected trend 56. Find the centred average, the seasonal variation and the forecast.
Centred moving average = (210 + 218) ÷ 8 = 53.5. Seasonal variation = 47 − 53.5 = −6.5. Forecast = 56 − 6.5 = 49.5.
Moving average vs qualitative sales forecasting
Moving average: based on past sales; suits a stable, seasonal pattern; assumes the past repeats. Qualitative (expert or sales force opinion, consumer panels, test marketing): suits a new product or sudden change; subjective.

8.2 Marketing strategy

The contents of a marketing plan
Objectives, resources, research and the marketing mix. The mix is only one part of the plan.
Sales £2.4m in a £30m market. Target: 10% share after one year, with market growth of 4%. Find the target sales and the increase needed.
New market = 30 × 1.04 = £31.2m. Target sales = 10% × 31.2 = £3.12m. Increase = £0.72m, which is 0.72 ÷ 2.4 = 30% on current sales.
A coordinated marketing strategy must be consistent with which three things?
The business (objectives, finance, image), the product (and its life-cycle stage) and the market (target segment and competitors). All four Ps must send one message to one target group.
IT vs AI in marketing
IT collects, stores and moves data (databases, e-commerce, online adverts). AI analyses it and acts on it (personal recommendations, automatic price changes, demand forecasts, chatbots). Risks: set-up cost, poor data, privacy, loss of personal contact.
Pan-global marketing vs local differences
Pan-global: the same product, brand and message worldwide; scale economies and a consistent brand, but may ignore local tastes and rules. Local differences: the mix adapted per market; better fit, but higher cost and a weaker global brand.
Methods of entering an overseas market: cost, control and risk
Exporting via an agent: low, low, low. Licensing or franchising: low to medium. Joint venture: medium cost, shared control, medium risk. Own subsidiary: high, high, high.
Market A scores 3, 4, 5 on criteria weighted 40, 35, 25. Calculate its weighted score.
(3 × 40) + (4 × 35) + (5 × 25) = 120 + 140 + 125 = 385. The result depends on the weights chosen.

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