1.1/1.2 Flashcards
Market
Buyers and sellers trade a particular type of product in a particular place
Mass market
Aimed at a large group of buyers . Wide appeal of different segments
Niche market
Aimed at smaller, more specific group of buyers. Specialised products
Benefits and drawback of mass market
+ more consumers to sell to
+higher sales volume
+ economies of scale
-Need a lot of capital to create sales volume
-need large production process set up
- may need to spend more on branding
Benefits and drawbacks of a niche market
+ less competition
+ specialised products may suit customer needs more
+ Charge higher prices
- more risky
-smaller number and narrow range of customers
-changes in the market can lead to sales being lost quickly 7
Market size
Total value of sales in a market over a certain time period
Or total number of consumers
Market share
The proportion of the total market a Business holds
Total sales of business / total sales in the market
Brand
Clear and obvious logo or statement that is recognisable.
Dynamic market
Change and evolve rapidly
Benefits of online Retailing
- business costs are lower as no need to have a physical shop
-available 24/7 - easy to compare prices
Limitations of online retailing
Some consumers like to see products before they buy them (can tackle this buy including free returns)
- need to ensure customers personal details are protected which can be expensive to maintain and can damage reputation if not done properly
Direct competition
When two or more businesses sell similar products that appeal to the same group of people by many competing businesses.
Indirect competition
When two or more businesses sell products that are different but are competing for the same customers
Product 4ps
- firms need ensure their product is at a good quality
- is distinctive
-Unique appeal/USP
Promotion 4ps
- lots of promotional campaigns to get their products noticed
-Informs consumers about business’s products
-Branding methods e.g celebrities
pricing 4ps
-firms in competitive markets often use competitive pricing strategies
- selling a product cheaper than rivals
-prices are cheaper in competitive markets
Place 4ps
-easy to access
-e.g online apps
Risk
Probabilities of different outcomes are known
Uncertainty
Unexpected events- they could happen but hard to predict when
Product orientation
Product is designed based on the performance, design and quality of product not the consumers wants and needs
Market orientation
Product is designed based on consumer tastes and preferences
-based on demand for a product so can charge higher prices as they are meeting customer needs more
Market research
The collection and analysis of market information.
Importance of market research
- finds out customer needs and wants and anticipate future needs
-predict how much demand there will be
-learn about consumer behaviour e.g online or in person shopping
-what price consumers will pay
-identify competitors
Examples of primary and secondary research
Primary- focus groups, surveys, interviews
Secondary- government publications, internet sources, market reports
Benefits and drawbacks of primary research
-specific
-exclusive to the business competitors cannot benefit
- labour intensive
-expensive
-slow
Benefits and drawbacks of secondary research
+easier
+faster
+cheaper
-not specific
-out of date
Use of technology for market research
-range of websites : conduct short surveys on them or analyse the activities of people using the site e.g how many times have they revisited the website
- loyalty cards sends info back to data base about consumer preferences
Segmentation
Dividing the market into groups of buyers
Different ways to segment the market
Demographic e.g age , geographic , income, behavioural e.g amount of use, lifestyle, hobbies
Benefits of market mapping
- shows closest competitors
-spot gaps in the market
Limitations of market mapping
- too simplistic
-opinions can be biased
Competitive advantage
A condition which allows a firm to generate more sales or to be more profitable than its rivals.
Ways to gain a competitive advantage
- lower costs, enables businesses to charge lower prices
-product innovation, be first in the market
-advertising
-product differentiation
-reliability and quality
-customer service
-convenience
Added value
Price product sold for - cost to make the product
Factors that affect demand
Substitutes- demand for a brand can be changed by a price of a substitute
Complementary goods
Consumer income
Fashion, consumer tastes
Advertising and branding
Demographics- population changes
Seasonal changes
External shocks
Factors that affect supply
Costs of production
Indirect taxes
Subsidies- increase supply
New tech- increase supply
Weather conditions
External shocks
Which way does the rise in demand shift the line?
To the right
Which way does a fall in demand shift the demand line ?
To the left
Which way does a rise in supply shift the supply line ?
To the right
Which way does a fall in supply shift the supply line ?
To the left
Price elasticity of demand (eq)
%change in quantity demanded / %change in price
What if the price elasticity is above 1 ?
The product is elastic
What if the PED is below 1?
The product is inelastic
Factors affecting price elasticity
- Necessity- milk etc are inelastic
-loyalty to a product makes a product less elastic - time- product becomes more elastic over time as internet makes it easy to find alternatives
-proportion of income
Income elasticity (eq)
% change in quantity demanded / change in income
