1. The market Flashcards
marketing
the management process responsible for identifying, anticipating, and satisfying customer requirements profitably
marketing involves
- identifying the needs and wants of consumers
- designing products that meet these needs
- understanding the threat posed by competitors
- telling customers about products
- charging the right price
- persuading customers to buy products
- making products available in convenient locations.
MASS MARKET
A very large market in which products with mass appeal are targeted
NICHE MARKET
A smaller market, usually within a large market or industry where customers have specific needs and want.
MASS MARKET ADVANTAGES
- business can produce large quantities —> exploiting economies of scale –> lower unit cost –> higher profits
- consumers can get low prices to satisfy their needs —-> higher sales
MASS MARKET LIMITATIONS
- a lot of competition –> business may spend a lot of money of marketing —> may reduce profits
- potential for high price wars due to low differentiation –> low loyalty from customers –> price becomes the basis of competition –> low-profit margin
- no differentiation –> customers may value factors other than price
NICHE MARKET ADVANTAGES
- may avoid competition –> a lot easier to focus on the needs & wants of customers —> loyal customers —> may be able to charge premium prices
- Inelastic demand, customers are less sensitive to price increases because business specialises in products that satisfy specific needs —> high loyalty (customer) as business meet and satisfy specific wants and needs —> customer satisfaction –> higher profit margins
NICHE MARKET DISADVANTAGES
- business may become vulnerable because they do not have products or markets as a back-up –> business may collapse if trends change or demand decreases
- Low economies of scale –> because fewer customers and demands are specific —> cost of production may be high
how is market size calculated?
- value - the total amount spent by customers buying products.
- volume- the physical quantity of products that are produced and sold.
market share
the proportion of a particular market that is held by a business, a product, a brand or a number of businesses or products.
market share formula
sales of a business/ total sales in the market x 100
Why might measuring market share be important?
- It might indicate a business that is a market leader. –> This could influence other companies to follow the leader or influence the leader to maintain its position or it might influence the strategy or objectives of a business.
- it may be an indication of the success or failure of a business or its strategy
PURPOSE OF BRANDING
- differentiate the product from those of rivals
- create customer loyalty
- help product recognition
- develop an image
- charge a premium price when the brand becomes strong.
dynamic markets
markets which are likely to change over a period of time
What must businesses do in dynamic markets?
Businesses need to adapt to changes in the dynamic markets in order to survive in the long term otherwise failure to adapt will lead to the collapse of a business.
