103 markets Flashcards
what is a market
-a market is a place where buyers and sellers meet to exchange goods and services
-this can be virtual
what is competition
competition refers to the number of businesses in a market and how they Interact with each other eg.the number of supermarkets
what is a local/ global market
-local:-selling goods and services in a specific area eg. England
-global:- selling goods and services oversees/worldwide
what is a mass/ niche business
-mass:- where a business sells to the whole market and markets the product to all the consumers in the same way
-niche:- when a business targets a small segment of the overall market that has very specific needs and wants
what is a trade (b2b) market
- where a business sells goods to other business
- business to business
- operate before the product reaches the consumer eg.selling and supplying to distributors ext
what is a consumer (b2c) market
- made up of the general public who purchase the product for their own consumption -B2C (business to consumer)
what is a profit market/ service market
-product market eg. for physical tangible products
-service market eg. telecommunications services, hospitality ext
what is a seasonal market
markets that have seasonal variations eg,ice cream
(+) & (-) of niche markets
(+) possible to build strong customer loyalty
-lower levels of competition-only one section of the market is targeted
(-) potentially lower profits as the market is smaller
-changing customer tastes could make the niche disappear
(+) & (-) of mass markets
(+) more potential sales - targeting the whole market
less risky- more customers to target
(-) more competition-product hard to personalise
need to be able to operate on a larger scale meaning costs could be very high
what is market size
the total number of sale in a market as a whole
what is a market share
the proportion of total sales in a market made by one business
market share= sales of a business
——————————- x 100
total market sales
why is market share important
-it can be used as an indicator of performance for a business in relation to its competitors
-high market share is important to a business as:
-> can lead to a competitive advantage, help attract new shareholders, increases profitability
what are market trends
these are changes and developments in the buying and selling of products and services in a market
what is market segmentation
the process of subdividing a market into different subgroups of customers who have similar characteristics , needs or wants , and proving them with goods or services that meet their needs and wants
how are markets segmented
-demographic:-age , social class ,gender,income eg.banks offer different accounts to different ages
-psychographic-:targeting of groups on personality (attitudes, options, lifestyles) eg.cars-some pay want safety and capacity for the family car
-geographic:-rural , urban , global marketing often requires different products for different counties eg.McDonalds/ Coca Cola - need different ingredients in different counties
(+) of segmentation to a business and its customers
-attracts new customers - new demand - revenue
-target advertising at specific groups reduces costs/ time
-better at meeting customer needs and wants- repeat purchases - competitive advantage
(-) of market segmentation to a business and its customers
-targeting one market is risky-change in customer tastes could lead to business loosing all sales
-number of sales limited by segment size, if too small, business can’t make profit
-market research will need to be carried out-expensive/ time consuming
benefits of segmentation to customers
-can receive a product close to expectations
-make them feel like they’re getting value for their money
-because marketing is segmented- customer is aware of new features of a product
describe monopoly
-one firm dominates the market (100% of the market place ‘pure monopoly’
- they are price makers-have more power to influence the price of products as consumers have little choice to accept it even if it is high
- no close product or substitutes
- barriers to entry impossible
describe oligopoly
-few business dominate the market
- very few substitutes
-very difficult to enter
- important for businesses to differentiate and compete on advertising, quality ext- brand loyalty
describe monopolistic competition
-lots of small business in competition with each other-no firm dominates
-products are similar but slightly differentiated from each other-little branding
(+) few barriers to entry
(-) limited control over prices- accept the ‘going rate’-if charged more they would loose too much business
describe perfect competition
-large number of business- no firm dominates
-products are identical-no product differentiation
(+)low barriers to entry
(-)all buyers and sellers have perfect information about each other-no influence on price-if firm asks for higher price than another firm-customer would buy from competitor-product is identical
how are consumers protected from exploitation from businesses
-laws protect consumers from- poor quality goods that aren’t fit for purpose or match the description given, business misleading them about price
-trading standards department-checks business are complying with trading laws, trading offices visits businesses-see if goods are correctly priced, described ext
why do consumers need protection from exploitation from business
-product sold may not meet description or substandard
-mislead about full price - not overcharged
-need protection when buying goods online-goods may not arrive or be as described
explain what is meant by demand
-the quantity of a product that consumers are able and willing to purchase at various prices over a period of time
-the lower the price , more customers want to buy , more is demanded
(look at the demand curve)
explain what is meant by supply
-the quantity of a product that producers are willing and able to provide at different market prices over a period of time
-higher the price , the more they want to supply, as the more profit they’re likely to make
(look at supply curve)
explain what is meant by market equilibrium price
where the demand curve and supply curve intersect - at this price all that is supplied to the market is bought (look at the diagram)
how does demand affect equilibrium price diagram
-If demand increases, then the demand curve will shift outwards or to the right; if demand falls, then demand will shift inwards or to the left.
factors that lead to a change in the quantity supplied
-weather -good/bad can increase/decease demand
-new technology-speed up production/increase supply - supply curve shift to the right
-changes in business costs-if costs fall-more can be supplied at the same price-more supply
factors that lead to a change in quantity demanaded
income:-when income goes up, our ability to purchase increases, and this causes an outward shift in the demand curve - income falls-decreases demand (expert for inferior goods)
-changes in tastes and fashion
-changes in population
what does price elasticity of demand show
price elasticity of demand shows how sensitive demand is to a change in price
define price elastic/inelastic
-price elastic:- when a price change eg.fall in price due to special offer leads to a MORE than proportional change in demand (demand changes by a larger percentage than price)
-price inelastic:- when a price changes leads to a LESS than proportional change in demand (demand changes by a smaller percentage than price)
price elasticity of demand equation
PED= percentage change in quantity demanded
————————————————————
percentage change in price
PED equation interpretation
0-1 price inelastic
1+ price elastic
-ignore the minus sign interpret the number only
what does income elasticity of demand show
how sensitive demand is to change in customers income (YED)
YED equation
YED= percentage change in quantity demanded
—————————————————————-
percentage change in income
define income elastic/inesastic
-elastic:- when a change in consumers’ income results in a MORE than proportional change in demand
-inelastic:- when a change in consumer’s incomes results in a LESS than proportional change in demand
interpretation of YED equation
0-1 income Inelastic
1+ income elastic
+ normal good
- inferior good
what is an inferior good
goods which people tend to buy less of as they have more income- because certain products are in demand when people have less money but as they get better off they would switch to a more expensive product
what are normal goods
good where people earn more money they will buy more of these goods
what are luxury goods
as income rises , demand rises but more significantly
