3.2 Understanding Markets and Customers (AQA A Level Business): Flashcards

False.

Quantitative data is based on numbers; qualitative data gathers descriptions and feelings.

True.

It helps a firm spot needs before rivals and target products where they work best, boosting competitiveness.

Sales or cost figures, market share, or ratings (e.g. rate our service 1–10).

Primary research gathers new information directly from consumers in the target market, using methods like surveys and interviews.

Surveys, observation, interviews, test marketing, and focus groups (any three).

A large amount of data can be collected quickly, especially with online tools.

A free-form discussion led by a specialist to gather detailed feedback on the marketing mix, usually 12–15 people.

It is focused on the business's needs, not available to rivals, and up-to-date.

The sample may be too small/unrepresentative, bias can occur, and hiring an agency is expensive.

Sampling means getting opinions from a selected group of people to find out about the market as a whole.

The larger the sample, the more likely results reflect the market as a whole.

A method where every member of the population has an equal chance of selection, which should avoid bias.

Random selection from subgroups of the population (e.g. by age, gender, income), making results highly relevant.

Selecting a sample in specific proportions of each group of the population to obtain a representative sample.

In general, the larger the sample size, the more likely results will reflect the market as a whole.

A drawback of random sampling is that the sample may not be representative of the market.

False.

Quota sampling is not random, so there is some risk of bias; random sampling avoids selection bias.

True.

Test marketing provides free samples to gauge response before a full launch, allowing adjustments.

Participants may be reluctant to share true opinions, and rewards make them more expensive than surveys.

Secondary research involves the collection, compilation and analysis of data that already exists.

Government publications, academic institutions, industry associations, marketing research reports, financial reports, and media sources (any three).

Mintel — a leading private supplier of marketing research information.

It is already available (quicker to collect), often free or cheap, and suits small businesses.

It was collected for other purposes (may lack relevance or be inaccurate), specialist data is expensive, and it may be out of date.

Secondary research is usually quicker to collect than primary research, saving time.

Secondary information may be out of date, especially in dynamic markets.

It is often free or cheap, so it suits firms lacking a large marketing budget or expertise.

False.

That's primary research; secondary research uses data that already exists.

Reports and statistics from national governments or trading blocs such as the EU.

True.

Buying market-specific secondary data from specialist companies (e.g. Mintel) can be expensive.

Two variables (e.g. sales and advertising) to see if there is any correlation between them.

How a whole is divided into different elements (e.g. total sales split by product type).

A correlation exists where there is a relationship or connection between two variables.

As one variable increases, so does the other — the line of best fit slopes upwards.

As one variable increases, the other decreases — the line of best fit slopes downwards.

Correlation does not always indicate a relationship or causation between two variables.

Extrapolation assumes that what happened in the past will continue in the future, using the line of best fit to make predictions.

A line of best fit can be identified and causation has been determined.

The confidence level is the amount of certainty a business can have that its research results are accurate.

If the same survey were repeated 20 times, the results would be the same on 19 occasions.

The confidence interval is the range of values possible for a given confidence level.

A firm can narrow a confidence interval by surveying more people — bigger samples shrink the interval.

It turns marketing guesses into facts — informing the product, price, promotion and place.

False.

Correlation shows a link, not causation — a business must research whether a real relationship exists.

True.

Extrapolation projects a past trend (line of best fit) forward to make predictions.

Data that are independent of each other, such as sales per store.

PED measures how responsive demand for a product is to a change in price.

PED = %change in quantity demanded ÷ %change in price.

Because of the inverse relationship between price and quantity — a price rise means quantity demanded falls.

% change = ((new value − old value) ÷ old value) × 100.

−0.8 × 20% = −16% (demand falls by 16%).

Demand is price elastic — more responsive; a 1% price change gives a more than 1% change in demand.

Demand is price inelastic — less responsive; a 1% price change gives a less than 1% change in demand.

Revenue increases — customers largely stay, so a higher price means higher revenue.

Luxury products such as cars and foreign holidays tend to have price elastic demand.

YED measures how responsive demand for a product is to a change in income.

YED = %change in quantity demanded ÷ %change in income.

−40% ÷ −10% = 4.

A normal good — demand rises as income rises (e.g. cars, foreign holidays).

An inferior good — demand rises as income falls (e.g. public transport, own-label goods).

A good with a YED between 0 and 1 is a necessity, such as bread or milk.

If demand is inelastic, raise price to lift revenue; if elastic, cut price / discount to raise sales volume.

False.

For elastic demand, a price rise reduces revenue (demand falls more than proportionally).

True.

As wages fall, demand for inferior goods rises while demand for luxury goods falls.