1.1 Flashcards
what is a market
the group of individuals and organizations that make up the pool of customers
what is market size
the total value of a market in terms of money spent or number of products
what is market growth
the % change in the size of a market compared to the previous year
how do you calculate % change
(difference/original) X100
what is a mass market
market that is aimed at the general population
what is a niche market
subset if the main market that addresses a specialist need
what is a dynamic market
one that is subject to rapid or continuous changes in supply & demand
list 5 reasons markets change
economic growth
trends
technology
competition
nature of product (luxary)
state the 3 ways firms compete
price
product range
customer service
what is offensive marketing
trying to increase sales or develop new markets
what is defensive marketing
reacting to competition & trying to maintain market share
what is innovation
improving a product which already exists
what are the advantages of innovation
gain a competitive advantage
add value so a higher price can be charged
encourages people to switch brand loyalty
what are the disadvantages of innovation
high research and development costs
high risk of failure
existing products may be cannibalised
disruption to business operations
what is online retailing
selling items through the internet
what are the advantages of online retailing
open 24/7
reach international markets easily
low overhead (no rent costs)
stock can easily be withdrawn or updated
flexible for customers and the business
what are the disadvantages of online retailing
high number of returns
issues with online security
very competitive market
hard to drive traffic to sites
owners need IT skills
competitors can easily see competition
what are risks of having a business
insufficient demand due to poor market research or saturated market
external shocks such as economic factors
poor execution due to poor management
what are rewards of having a business
increased sales
profits and growth
return on investment
customer loyalty
brand recognition
what are calculated risks
a risk which has been carefully considered and the costs and benefits have been weighed up
what is a business plan
a plan created to assess new ideas, set business goals and find a strategy
how can a business reduce risk financially
raise finance from investors
manage cash flow
avoid bankruptcy
how can a business reduce risk managerially
recruit experienced staff
motivate workers
effective communication
how can a business reduce risk through marketing
target customers effectively
forecast sales
develop a promotion strategy
how can a business reduce risk operationally
invest money effectively
manage supplies
manage overheads and costs
define uncertainty
when a business doesn’t know what is likely to happen in the future and can not measure and predict outcomes
identify 2 ways to reduce risk when starting a business
have a detailed business plan
match your business idea to available finance
identify 2 ways to reduce risk when expanding a business
finance growth without taking on debt
carry out detailed research on new opportunities
identify 2 ways to reduce risk when expanding internationally
research the legal, political and economic situation
select the most appropriate methos to enter the international market
what is big data
the process of collecting and analysing large data sets from traditional and digital sources to identify trends and patterns that can be used in decision making
what are the limitations to big data
- data is unstructured and difficult to analyse
- a lot of the data is very recent making it hard to see long term trends
- customers may be concerned about privacy and not allow data to be collected
- loss and theft of data will damage a businesses reputation
state 5 ways businesses use big data
- location
- retail e-commerce data
- user interactions
- target specific customers
- innovate
what is sampling
involves selecting a way to ask for information from a representative group of customers
what are the problems with sampling
- careful sample selection is needed to ensure results are truly representative
- bias
- margin of error
how are customers bias in market research
- people wanting to agree and be positive to look nice
- answering questions in the way they think is socially acceptable
- answers are given that the survey is looking for (leading questions)
- confirmation bias, people want to agree with those around them
what is market orientation
decisions taken based around information about customer needs and wants rather than what the business thinks is right for the customer
what is product orientation
the business develops a product based on what they are good at making rather than what the customer wants
what is quantitative data
number and statistics
can create graphs
find trends
what is qualitative data
opinions and in depth reviews
hard to analyse
state some examples of primary research
questionnaires
interviews
observation
loyalty cards
focus groups
test marketing
state some examples of secondary research
annual reports
internal data
government sources
trade journals
market research companies
what is brand extension
innovating/changing some elements of a product in order to extent the product life cycle
what is market mapping
illustrates the range of positions that a product can take based on 2 dimensions that are important to customers (e.g. price and quality)
what are the advantages and disadvantages of market mapping
+/ spots gaps in the market
useful to analyse competitors
encourages market research
-/ gaps in the market doesn’t mean demand
dependent on reliability of market research
