Unit 2 1.5

• External factors


  Those that are not within your control, but are imposed from outside
• Major external factors


  • Marketing and advertising
  • Peer pressure
  • Trends, fashions and role models
• Marketing


  The activities associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. Marketing is everything a company does to acquire customers and maintain a relationship with them.
• Marketing can influence people in subtle ways
• Marketing can be subdivided into

  • Promotion
  • Public relations (PR)
• Promotion


  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.
• Advertising


  Used to inform and persuade: it informs customers that a product is available and tries to persuade them to buy that product. Advertising can carry both explicit and implicit messages.
• Advertising media


  • Television and radio (broadcast media)
  • Newspapers and magazines (print media)
  • Online (electronic and social media)
  • Cinema
  • Hoardings, posters and billboards (other media)
• Promotional activities


  • Product trials
  • Money-off coupons
  • Buy one, get one free offers
  • Customer competitions
  • Sponsoring teams or events
  • Offering special credit terms
• People should be careful when choosing a financial product as there is always a lot of 'small print' - terms and conditions that determine the amount of interest received on a savings account and the amount of interest and fees charged on a loan
• Public relations (PR)


  A specific part of promotion that is 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.
• PR activities

  • Product placement
  • Sponsorship
• PR activities cost money, but they contribute to the general reputation of a business and are not directly related to the brands that the business sells
• Peer pressure


  The influence of a person's peers (people in the same position as them) on their behaviour and choices
• Satisfying 'wants' due to peer pressure can be expensive and may involve saving or borrowing money
• Trends and role models


  Influence on financial priorities and decisions
• Trends affect the way in which people pay for goods and services, people's attitudes to saving, and how people view using credit
• Social networking sites are major influences on attitudes, revealing what other people - especially peers - are doing and what is, or is not, fashionable
• Role models


  Someone whom we look up to and try to be like
• Family members are very important role models, especially parents, older siblings and sometimes aunts and uncles
• Culture


  About norms - about behaviour and attitudes across social groups. It indicates what society considers to be acceptable and what is unacceptable.
• Modern societies have a culture of consumerism: there is a wide range of goods and services for people to buy, and their existence encourages people to need, want or aspire to own or use them
• In the UK, there is a strong culture of home ownership - people like to own the home they live in
• Home ownership is not the culture in all countries, for example in Germany renting a home is more the norm than buying