AP®︎ Business with Personal Finance: Unit 2 Flashcards

All activities a business undertakes to identify customers’ problems, needs, and wants and to promote, sell, and deliver products that address them

The four marketing elements a business coordinates: product, price, place, and promotion

Information about customers’ characteristics, preferences, behavior, purchases, and interactions with a business

Measurable qualities describing a population, such as age, sex, race, ethnicity, income, and location

Cognitive and behavioral factors such as interests, activities, values, and lifestyles

Ways of gathering customer information, including subscriber lists, online accounts, tracking tools, social media monitoring, surveys, interviews, and purchased data

Aggregating potential customers into market segments based on shared demographic and psychographic characteristics

A group of potential customers who share characteristics, needs, wants, or purchasing behaviors

The buyers most likely to purchase a particular product because of their wants, needs, and preferences

A fictional, evidence-based description of a sample target customer incorporating demographic and psychographic data plus wants, needs, and preferences

Target marketing helps a business tailor its product and promotion to likely buyers, use resources efficiently, and improve sales and customer relationships

The strategy and systems a business uses to manage customer data and interactions in order to acquire, satisfy, and retain customers

Methods such as personalized service, rewards programs, and feedback opportunities that strengthen customer satisfaction and loyalty

Average cost to gain a new customer: marketing, advertising, and sales acquisition costs ÷ number of new customers acquired

The estimated amount a unique customer will spend on the business’s products over time, often estimated as purchase amount × frequency × relationship duration

Customers’ repeated preference for and purchase of a particular brand

Protecting customers’ personal information and collecting, storing, using, and sharing it only in transparent, authorized, and responsible ways

Unauthorized access to or disclosure of stored data

Identity theft uses another person’s identifying information to impersonate them, while fraud uses intentional deception for financial or other gain

Customer data can expose a business and its customers to privacy infringement, data breaches, identity theft, and fraud

A need is something considered necessary or important, while a want is a preferred way to satisfy a need or improve one’s circumstances

Products that compete to meet the same or similar consumer need or want

Characteristics such as quality, design, reliability, convenience, or service that distinguish a product from its rivals

Systematically identify the need and criteria, gather information, compare alternatives, and select the best fit

Making repeated purchases through habit or a simple rule with little comparison, saving time and mental effort

Individual characteristics and circumstances, such as age, income, budget, occupation, and lifestyle, that shape needs, wants, and affordability

Internal attitudes and thought processes, including values, beliefs, perceptions, learning, and motivations, that shape willingness to buy

Influences from peers, family, status, cultural norms, and media that shape what consumers consider acceptable or desirable

Temporary, context-specific conditions such as store design, timing, and product availability that encourage or discourage buying

A consumer’s typical purchasing routine, including when, how often, and how much the consumer buys

Laws intended to help consumers avoid fraudulent or unsafe products through standards, disclosures, warnings, or remedies

An alternative product or method that addresses the same or a similar need or want

Technology and innovation change product access, information search, payment, delivery, and the timing, frequency, or quantity of purchases

Seven psychological tendencies that cause people to comply with requests and that marketers use to motivate purchases

The rarer or more limited an item seems, the more people tend to want it

People tend to follow authority figures, so relevant expertise, credentials, or professional status can make a recommendation persuasive

People tend to follow social-group norms and treat others’ behavior or approval as evidence that a choice is appropriate

People are more likely to be influenced by individuals they like or to whom they relate

People feel obligated to return something when they receive something of value

People tend to act in ways that align with their self-image, prior commitments, and past behavior

People are more likely to be influenced by those they perceive as members of the same group

The process of collecting detailed information about markets, products, and customer behavior to guide marketing decisions

Numerical data that can be measured and analyzed, often answering how many, how much, or how often

Descriptive, non-numerical data recorded in words or images, often answering why or how

The extent to which a product creates customer value by achieving problem-solution fit

A product meaningfully addresses a problem, need, or want experienced by its intended customer

The business can produce and provide the product within its available resources, technology, expertise, and time

The product has the potential to be profitable in its market

Research a business conducts to collect new, first-hand evidence for its particular question or hypothesis

Gathering and interpreting quantitative or qualitative information already collected and published by external sources

Political, economic, social, technological, environmental, and legal external factors that can affect a business or market

The total scale of a defined market, measured in sales dollars or total customers for a specified place, group, category, and time

Patterns and directions of change in a market’s customers, products, sales, competition, or conditions over time

The portion of total market sales accounted for by a business or product, measured consistently by revenue, units, or customers

A specific, testable assumption about a customer, product, or market

A standardized set of questions given to a sample, usually to collect a large amount of quantitative data reflecting a population's views

A guided discussion with a small number of selected participants used to collect in-depth qualitative evidence

An in-depth conversation between a researcher and one participant used to collect detailed qualitative evidence

A research method that changes a condition and measures the resulting behavior, ideally while holding other important conditions constant

Watching and recording customer behavior in a natural environment without deliberately changing conditions

An experiment that compares authentic customer responses to two viable alternatives that differ in the feature being tested

The smaller group from which data is collected; it should be sufficiently large and appropriately populated to reflect the population

The number of people, observations, or data points included in a sample

A biased question leads respondents toward a favored answer or assumption, while an unbiased question uses neutral phrasing

A chart using separate rectangular bars to compare individual data points or categories

A chart whose bars compare totals while sections within each bar show the subcategories composing those totals

A graph connecting data points in chronological order to show the direction and pace of a trend over time

A circular chart showing mutually exclusive parts of a whole, with all slices totaling 100 percent

The process of creating or improving a product through research and iteration

Ideation, validation, design, messaging, production, and launch, typically in that order

Generating ideas for new or improved products through market research, R&D, and brainstorming

Testing a product idea with potential customers to determine whether the problem, solution, and demand are sufficient

A basic but usable product with the minimum features needed to test key market assumptions with potential customers

The condition in which customer demand for a product is sufficient to generate profit

Sourcing inputs, refining prototypes, estimating costs, and determining the product’s functionality, user experience, and attributes

A preliminary model used to explore or test whether and how a product design works

Creating the product’s overall marketing strategy, including its value proposition and positioning

An explanation of whom a product serves, what problem or need it addresses, and how it is superior to alternatives

A strategy for influencing how potential customers perceive a product relative to rivals and substitutes

Building the product, incorporating design feedback, establishing production and supply-chain processes, and matching output to demand

Taking orders, distributing the final product, and beginning marketing to the target segment

The process of developing an identity for a business or product to distinguish it, raise awareness, and generate loyalty

The identity of a business or product, conveyed through a name, idea, term, symbol, design, or combination of elements

A name, term, symbol, design, or combination used in commerce to legally identify the source of goods or services and protect brand identity

A product that places less emphasis on a distinctive brand identity and is commonly associated with cost savings

The stages a product passes through as demand changes over time: introduction, growth, maturity, and decline

The product-life-cycle stage with a new launch and typically low sales and revenue; marketing emphasizes awareness and initial demand

The stage when sales and revenue grow at an increasing rate and competitors enter; marketing emphasizes differentiation, quality, brand promotion, and advertising

The stage when sales and revenue flatten in a saturated market; marketing emphasizes loyalty, differentiation, lower prices, and innovation

The stage when sales and revenue fall as customers choose rivals or substitutes; businesses cut costs, redesign, narrow focus, or discontinue the product

A way of determining how much to charge for a product

The costs attributed to producing and distributing one unit of a good or service

Price minus per-unit cost: per-unit profit = price − per-unit cost

Setting price primarily according to the product’s perceived value or worth to the customer

Setting price primarily in relation to rival products’ prices, whether at, below, or above them

A policy of lowering a product’s price to equal a qualifying lower price offered by a competitor

The additional amount customers are willing to pay for a product compared with a similar rival or generic product

Setting price by adding the desired per-unit profit to per-unit cost: price = per-unit cost + desired per-unit profit

Using a low initial price, possibly below per-unit cost, to gain customers and market share quickly with the intention of raising it later

A business’s ability to raise prices without risking a substantial loss of market share

How responsive the quantity customers buy is to a change in price

Elastic demand is relatively responsive to price changes; inelastic demand is relatively unresponsive to them

An agreement among competitors to set prices rather than make independent pricing decisions; illegal in the U.S. and many other countries

Sharply raising a product’s price when its demand has increased because of a crisis, a practice illegal in many jurisdictions

Charging different customer segments different prices for the same product; it is illegal when based on protected status

Where and how customers access, purchase, and receive a product

The route, including all required individuals and businesses, through which a finished product reaches the final customer; the final stage of the supply chain

A channel whose final customer is an individual or household buying for personal use

A channel whose customer is an organization buying for operations, resale, or use as an input

A channel connecting the producer directly to the customer without a sales intermediary; it provides greater control but may be costly to establish, limited in reach, and demanding of sales and distribution expertise

A channel containing one or more intermediaries between the producer and customer; partners can provide expertise, reduce costs, and expand access, but the producer gives up some control and revenue and may have difficulty obtaining channel access

A business or individual positioned between a producer and customer that helps sell, distribute, or deliver products

An intermediary that obtains products from producers and supplies them to other businesses, often holding inventory, transporting goods, and providing network access

An intermediary that sells products to final consumers through stores, websites, or other consumer-facing outlets

A coordinated effort to promote a product to potential customers using all or some tools in the promotional mix

The five customer-communication tools: media advertising, personal selling, sales promotion, direct marketing, and public relations

A paid or placed message delivered to a large audience in substantially the same form at the same time

Individualized, two-way interaction used to provide detailed product information, demonstrations, and answers tailored to a potential customer

A short presentation that conveys a product’s value proposition in an effort to complete a sale

A temporary incentive, such as a discount or coupon, intended to accelerate purchasing decisions or reduce unsold inventory

Communication of a targeted message directly to selected potential customers, such as through brochures, flyers, or targeted email

Communication intended to create or maintain a favorable public image rather than advance a specific sale

The use of the internet and digital technologies, including websites, email, social media, and mobile apps, to connect with and serve customers

Traditional marketing uses offline media such as print, broadcast, and physical mail, while digital marketing uses internet-connected technologies and platforms

A large volume of information about how customers respond to marketing communications and which factors make them more likely to buy