1.1

Question 1

Mass markets

Answer 1

products with wide appeal aimed at large groups of buyers.
Higher sales volume
More likely to benefit from economies of scale so cheaper production.
Effective branding important
Large market size and small market shares

Question 2

Niche markets

Answer 2

specialised product with particular requirements and aimed at specific group.
Smaller number of products to narrower customer base
More risky - if market changes e.g. trends, sales drop.
Less competition so can charge higher prices.
More loyal customer base
Small market size and large market shares

Question 3

Market size

Answer 3

total value of sales in a market over a time period. Can be measured by
Volume of sales or quantity of products sold
Total amount spent by consumers

Question 4

Market share

Answer 4

proportion of total market business holds. Shown as a percentage
Sales of product/ total sales in the whole market x100

Question 5

Branding

Answer 5

clear logo, name and statement to add value and differentiate from competitors. Encourages customers to buy products so affects the market share a business has.
Important in mass markets,lots of competition.

Question 6

Competition affects operations

Answer 6

Product - needs to be good quality and distinctive
Promotion - campaigns and advertisements, branding
Pricing - as low as possible.
Place - easy access for customers and online sale.

direct competition - when two or more businesses sell similar products that appeal to same group of customers

Indirect competition - products that are different but competing for same customers.

Question 7

Dynamic markets

Answer 7

subject to rapid and continuous change
Customer preferences - changes in trends or tech advances.
Innovation - new products or processes
Ways of shopping e.g. online
Competitors enter or leave the market
Changes in legislation - tax so product alterations.

Businesses adapt by changing existing products, developing new products, cutting costs in order to lower prices. Innovation, creating flexibility and investment in staff training e.g. multi skilling

Question 8

Online retailing - advantages

Answer 8

Business costs lower as no need for physical shop or hire of staff. Allows charge of lower prices and more profit. - low overheads
Customers can order at any time from anywhere. increases sales.
Customers can compare prices easily between different businesses.
Stock withdrawn and added easily.

Question 9

Online retailing - disadvantages

Answer 9

More competition for businesses
Some consumers like to see product before buying and access to staff - customer service
Maintenance of security is expensive.
Competitors can access business model easily

Question 10

Risk and uncertainty

Answer 10

Risk - probabilities of outcomes often known. Businesses can consider and make decisions about whether to take the risk - they are controllable

Uncertainties - unexpected events. Difficult to predict and usually external such as competitor actions

Question 11

Risk

Answer 11

influenced by raw material cost, competition, economic climate and gov laws
Job insecurity - if failure, owner may not be able to meet own financial bills or assets
Financial risk - investment could be lost. If business highly geared, may have difficulty with rising interest rates.

Question 12

Uncertainty

Answer 12

unknown events e.g. pandemic. Can affect spending decisions and employees. Concern over future orders due to change in international markets. Households may save more than spend to shock markets.

Question 13

Product orientation

Answer 13

focused on design, quality and performance of the product rather than what consumers really want.
New and innovative products
Limited customer knowledge
Little competition in the market

Question 14

Market orientation

Answer 14

focused on sale of products to match customer preferences. Invests a lot into market research and based on customer feedback so less risky and more accurate demand predictions.

Question 15

types of data

Answer 15

Quantitative - numerical statistics facts and figures with fixed and predetermined answers statistical so quicker and easier to analyse.

Qualitative - based on opinions of consumers. Open questions about feeling and not restricted. Informative and more flexible.

Question 16

Market research

Answer 16

collection and analysis of info. Effective for a business in order to make decisions about operations to reduce risks involved.
Understand customer behaviour for marketing.
Work out how much customers are prepared to pay
Identification of competitors for improvement.
Prediction of demand so can controls supply
Reduction of risks and environmental factors that could affect the market e.g. social, legal, economic, political and technological.
Understand customer needs and wants.

Question 17

Primary market research

Answer 17

new data and can be collected by
Questionnaires or surveys
Observation of consumer behaviour
Customer interviews or focus groups
Test marketing - launch on a small scale (region) and measure response before launching elsewhere.

Used to find out customer opinions on new product or advert. Data is specific for the purpose its needed for and exclusive to the business who did the research so won’t benefit competitors.
Can be labour intensive, expensive and slow.
Small sample size and subject to bias

Question 18

Secondary market research

Answer 18

using data already available.
Government sources e.g. demographic info
Trade publications - info on competitor activity, specific industry news about trends
Market reports
Internet sources - competitor websites
Newspapers, magazines, TV, radio

Much easier, faster and cheaper but could have errors or be out of date. Can give an initial understanding of a market but not specific.

Question 19

Bias

Answer 19

to increase accuracy of market research, bias should be avoided e.g. interviewer bias, biased qs or respondent bias.

Question 20

sample size

Answer 20

using samples of people to test keeps costs down and saves time and resources. Sample needs to have similar proportions of people in terms of age, income, gender etc.
Size needs to be large enough to have statistically valid data that can be used for decision making.

Question 21

Market segmentation

Answer 21

dividing market into groups of buyers who share characteristics and needs. Allows a business to target marketing towards specific groups and new product development.

Question 22

Segments of a market

Answer 22

Demographic - age, gender and socio economic class different needs and wants
Geographic - city, county, country. Multinational companies need to target for range or cultures, lifestyles and climates.
Income - how much disposable income
Behavioural and lifestyle - hobbies and interests, family situations, attitudes and perceptions.

Question 23

Technology

Answer 23

market research is easier, cheaper and quicker. Access to a lot more information and can reach wider consumer sample.
Websites - conduct surveys or analysis of consumers e.g. times of website use, what visitors click on and competitor websites. .
Social networks - post content to connect with customers. Analysis of customer demographics, post surveys, track trends.
Business databases - data from loyalty schemes to collect customer data. Can see preferences and target promotions. Can also use other databases to see info about market trends, businesses, consumers.

Question 24

Market position

Answer 24

how consumers perceive a brand or product compared to competitor’s products

Question 26

Market mapping

Answer 26

compares features of products or brands e.g. low price or high price, low quality or high quality, mass or niche market.
Market mapping reveals gaps in the market which can be analysed and filled by start up or existing businesses. They are market orientated

Shows a business’s closest competitors and help to plan a marketing strategy to attract customers.

If sales are declining, might use a map to see how customers view the product and might try to reposition it. - shows desirable features from popular brands

Show price customers expect to pay - helps with pricing strategy

Question 27

disadvantages of market mapping

Answer 27

Can be too simplified - lots of factors involved
Positions on market map usually based on opinions - may be biased due to different views e.g. quality.

Question 28

adding value

Answer 28

increasing the difference between the cost of making the product and the price the customer pays to increase profit margins

ADDED VALUE = PRICE PRODUCT IS SOLD FOR - COST OF MAKING THE PRODUCT

Can be achieved by increasing selling price or reducing costs of production to gain a competitive advantage.
Strategies include strong branding, good customer service etc - encourages customers to pay a higher price = added value.

Question 29

Competitive advantage

Answer 29

a condition which allows a firm to generate more sales or profit than its competitors. A firm needs to differentiate from its competitors through factors
- Good customer service - important before, during and after product is purchased. Staff should be polite, efficient and knowledgeable. This builds a loyal customer base who are more likely to make repeat purchases.
- Convenience - buyers want an easy and quick experience.
- Lower costs - lower production costs means a business can charge lower prices to make more sales and higher profit margin
- Product innovation - can aim to introduce new functions for an existing product or create a new, unique one.
- Advertising and marketing - attracts buyers as creation of strong brand image e.g. logos or packaging.
- Product differentiation - products distinguishable from competitors and have a unique selling point
- Reliability and quality - good reputation enables acceptable charge of higher prices to generate more sales.