1.1 Flashcards
Define- mass market
Huge markets where the business sell to a general, non-specific audience
Niche market
A small segment of a larger market where specialist products and services are required
Whats the difference between Market size and market share
Market size can be represented by a total volume of products sold or value of product. On the other hand, market share represents the portion of a market controlled by a particular company or product.
Define - Dynamic markets
A market that is in a rapidly changing business enviroment
Define - competetive markets
A market consisting of a large number of firms producing identical products which means that no single consumer or producer has the power to influence the market
Whats the difference between risk and uncertaintity
Risks are factors that are not expected but can be quatified.
Uncerntainty - factors that cause a lack of certaintity of future events therefore being unable to predict what will happen to a business in terms of profit or growth
advantages + disadvantages of being in a niche market
advantages: less competition, clear focus (target particular customers), can often charge a higher price, Profit margins often higher, customers tend to be more loyal, Competetive advantage by created a USP
Disadvantages: Lack of ecconomies of scale, risk of over dependence on a single market or product, likely to attract competition if successful, vulnerable in market changes
Advantages and disadvantages of mass markets
Advantages: Make use of economies of scale, Mass marketing is straightforward as everyone is equally targeted, large volume of sales means high revenues which can be spent on RandD
Disadvantages: lots of competition, homogenous (similar) products need to be differentiated through marketing which is expensive, High volume production not flexible to demand changes.
Define + explain the difference between product and market orientation.
Product orientation is when a business focuses on their own internal factors before worrying about chanages in the market. Alternatively, market orientation is when a business places consumers views and behavioures first when making decisions.
Explain the difference between Primary and secondary research
Primary research is conducted by a business for the first time whereas secondary research is when a business uses research previously conducted from some other purpose.
Explain the difference between qualitative and quantitative market research
Qualitative market research is mostly opinion bases ‘why’ a consumer behaves a certain way whilst quantitative is factual often numerative data that aims to be statistically representative of the whole market.
Explain 3 ways ICT is used to support market research
Company websites gather data on consumer/browsers intrests
Social media offers info on consumers response to products
Data Technology- Vast quantities of data examined to present patterns that can explain how consumers actually behave.
Define market segmentation
When a business spilts the market into different segments to target a specific segment of consumers of whom will share similar wants and needs.
What is meant by the term market mapping?
The process of using a graph to plot competitors and their products to understand competitor behaviour and spot a gap in the market.
Explain the term competetive advantage
An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits + service to justify higher prices. Must be sustainable.
Define and explain product differentiation
What makes a businesses product or service stand out to your target audience. It is how a business ditinguishes itself from competitors
Not always the same as a USP
Examples of successful product differentiation include:
In 2014 Hyundai Cars in Singapore introduced a three year warranty on all new cars when the industry standard was one year
Green & Black use Fairtrade cocoa AND sugar in the production of their chocolate
What is added value?
The difference between the price that is charged to the customer and the cost required to create the product or service
Define Market growth
The rate at which a market’s size is increasing. This is usually expressed as a percentage per annum. Market growth comparisons are a primary barometer of the progress of a business.
3 pros and cons of online retailing
Pros
Shop always open
Shop can reach international markets
Low overheads as no need for a shop premesis
Cons
Many customers prefer buying in person
Issues with sending goods back may put customers off
Problems with fraud/spam/viruses
Chanages in Markets are due to.. (PESTEL)
Political- Changes in legislation
Economic - economic growth
Social- society changes/ demographic change
Technological - innovattive products
Envirmonental
Legal
What do businesses need to be to be able to adapt to market changes (4things)
Flexible
Conduct market research (be aware of changes in customer tastes/competition
Invest- product develeopment
Developing a niche market
Advantages and disadvantages of market oriented
Advantages
Meet customer needs
Be more competitive
Anticipate market changes
Adapt quickly to changes
Disadvantages
Continuous market research
Training employees
Competition may also be market orientated
Advantages and disadvantages of product orientation
Advantages-
Product sells itself
High quality
Focus of production capabilities
Disadvantages-
Competitors maybe market orientated and so meet needs better
High research and development costs
Missed opportunities
Define Marketing
The management process responsible for identifying, anticipating and satisfying customer requirements profitably.
Reasons branding is used
Differentiate your product from the competition
Create customer loyalty
Product recognition
Create brand image
Premium pricing
Add value
What is the degree of competition and why does competition occur
The number and strength of other businesses selling products or services within your market sector
Competition occurs when two or more organisations act independently to aim to supply a product at the same target market.
Define direct and indirect competition
Direct - The competitors who produce the same type of goods as their rivals and try to compete with them on the basis of price, quality ect
Indirect- Competitors who offer those goods and services to customers that can be used as a substitute thus cutting down the sales of other products.
How competition affects consumers
(high and low amount)
High comp-
Good value for money
Lots of choice
Low comp-
Low choice
High prices
How competion affects businesses
(high and low amount)
High comp-
Incentive to innovate and get better
Focus to become more efficient
Low comp-
Can dominate the market
Can set low prices
Pros and cons of primary research
pros
Directly relevant to business
Up-to-date info from the marketplace
Competitors dont have access to findings
Cons-
Time consuming and expensive
Results may be misleading if sample size is too small
Pros and cons of secondary research
Pros
Often no costs
Often quick and easy to collect
Wide range of secondary data is availabpe especially on internet
Cons
Data may be unreliable or not up-to-date
May not be relevant to business
Pros and cons of using ICT to carry out market research
Internet surveys more flexible than questionnaires
Higher response rate
Engage customers
Global reach of internet means its cheap and fast methord to reach wide audience
cons-
Participants need to be choses carefully if info is to be valid
Cannot always control who participates in the research
6 ways of segmenting a market
Demographic (eg gender)
Geographic
Behavioural, based on usage or attitude to product
Lifestyle
Physcographic (personality types)
Religion/ethnicity
6 categories of income for market segmentation
A- upper class
B- middle class
C1-lower middle class
C2- Skilled lower class
D-Working class
E- Unskilled/unemployed
4 pros and cons of market segmentation
Pros-
Easier to researcg the needs of segment
Design a product to meet needs
Focus advertisment to the segment
Identify a profitable segment
Cons-
Difficulty in identifying the most important segment for the business
Faliure to meet needs of customers not included in your segment
Will have to adapt to changes within that segment
Potentially limiting money to be made
4 purposes/ benefits of market mapping
Can help businesses make decisions about new or existing brands
Businesses can identify who their main competitors are and how similar/ different their brands are from their rivals
Can help reposition the brand
Can help identify gaps in the market
4ways to differentiate your business
Through reputation
Through customer service
Through value for money
Through product features
3 ways a business can add value
Design (differentiation advantage)
Production- achieving quality and efficiency adds value
Marketing - creating an image that makes the product more desirable (brand differentiation advantage)
3 benefits of adding value
Charge a higher price - increase profit
Protection against competitors offering lower prices
Customer loyalty
