1.1 Flashcards
Mass markets
Large market within a high sales volume, aimed at large groups
+ More customers, more well known
- More competitive market
Niche markets
Small section of the overall market that has certain specialised characteristics focusing on a more narrow section of market
+ Smaller target audience, easier to identify, advertise to
- Not as well known, recognised
Market share
Sales of one business as a percentage of the total sales in the market
Market size
Measured by total volume or value of sales in market
Determined by:
- Number of buyers
- Demand from customers
- Business’ profits
- Sales made by business
Calculated using index numbers
Brand
A name, sign, symbol, design or slogan linked to a particular product or service in order to differentiate from competition.
+ Reflects the benefits of a product or service and builds recognition and loyalty in customers
- Expensive process and is difficult to undo if the company’s direction changes
Risk
Things you CAN predict
- Probability that things may not go to plan
- Known and therefore can be predicted/acted on
Uncertainty
Things you CANNOT predict
- Unable to predict external shocks/future events
- Unknown, harder/impossible to judge
Online retailing
Dynamic market where products and services are sold online e.g. Asos
+ More discounts
+ No shop rent
+ Accessible to everyone
+Business needs less staff
- Don’t get product immediately
- Can’t physically try it on before buying
Innovation
Practical application of new inventions into marketable products/services
Invention
Formulation of new ideas for new products/services
Competition
The businesses that compete for a share of the market
+ Creates more productivity
+ Lower prices
+ Higher quality
+ More innovation/invention
- Decreases an individual companies market share
- Can force lower prices to stay competitive, decreasing profit margins for each sale or service
Product orientation
New technologies make it possible to create completely new products
Process orientation
Using new technology to improve production methods usually so costs are reduced
Market orientation
Identifying the needs and desires of consumers and creating products and services that satisfy them
Primary research
Collecting first hand, specific and tailored to the business e.g. focus group
+ Specific, tailored, in date, qualitative
- Expensive and time consuming
Secondary research
Finding data that already exists and is already been used e.g. print press/internet
+ Quick to access, isn’t expensive
- Isn’t specific, could be out of date, everyone can access
Dynamic market
- Constantly changing
- Sellers respond to changing needs of buyers by changing/creating new products
- Sellers respond to competitors changes in order to remain competitive
Stable market
- Pace is slow
- Market size/share fairly consistent with little variation in price
- Innovation is rare and may just consist of minor changes to existing products
Quantitive data
Numerical and statistical based on large samples e.g graph
+ Easy to analyse, easily compared
- Doesn’t explain why, may lack reliability
Qualitative data
Based opinions, attitudes and beliefs aims to understand customers
+ Insights into wants/needs, highlights issues
- Expensive to collect, based on opinions
Market segmentation
Process of splitting a business’ target market into different groups. Helps target products to the right customers
Types:
- Demographic (age/gender)
- Psychographic (class/personality)
- Geographic (population/area)
- Behavioural (attitude/occasion)
Purpose of market research
- Identify opportunities/gaps
- Insight into competition
- Reduces risks
- Identify customer wants/needs
Market mapping
Identifies how products/brands are perceived by customers relative to other products/brands in the market
+ Spot gaps in market
+ Useful for analysing competitors
+ Encourages use of market research
- Might get demand confused
- No guaranteed success
- May not be reliable
Competitive advantage
An advantage over competitors gained by offering consumers greater value
Product differentiation
Characteristics that make your product or service stand out to your target audience
USP
Unique selling point - differential factor enables business to distinguish itself from competitors in market
Adding value
Difference between what a business spends to produce its goods or services, and the price that customers are prepared to pay
Ways to add value:
- Build a brand
- Deliver excellent customer service
- Unique selling point (USP)
- Operate efficiently
Benefits
- Charge a higher price
- Point of difference with competitors
- Protection against competition price
- Focuses on target market segment
Product innovation
Businesses are focused on product itself and product efficiencies rather than customer needs
Market innovation
Businesses focus on customer wants and needs then design products accordingly
Cost/differentiation advantage
Cost: Business has skilled workforce and efficient operations to provide low cost value to customers
Differentiation: Resources are used by one business to create superior value for consumer
What is economies of scale?
Economies of scale mean that a business has lower unit costs because of its large size.
They can buy raw materials cheaply in bulk and also spread the high cost of marketing campaigns and overheads across larger scales
How markets change
Advances in technology and as a result of the changing tastes and preferences of customers.
Sampling
Sampling occurs when a business selects a sample of the population to save collecting data from everybody in that population
Sampling pros and cons
Pro: Sampling reduces cost as a business can choose a cross-section of the population instead of collecting data from everybody.
Con: Sampling may not accurately reflect the full target market if the sample is not chosen properly.
Purpose of market mapping
Market Mapping - Price vs Quality
Once businesses have segmented the market, they can use market mapping to identify a gap in the market by looking at what competitors offer.
Requirements a product must have to differentiate
- Capable of delivering what is important to customers
- Distinctive
- Not easily copied
- Affordable for the customers
- Profitable
