1.1 Flashcards
niche market
a subset of the main market that targets a specialist need
mass market
market aimed at the general population
benefits of a mass market
- large scale production, economies of scale and lower averag unit costs
- large volume of sales = high revenue
drawbacks of a mass market
- lots of competition
- homogenous products need to be differentiatd
- high production volume not flexible to demand changes
benefits of a niche market
- charge premium prices
- easier to target customers with high differentiated products
- small scale production can be flexible to follow trends
- less competition
drawbacks of a niche market
-very risky as demand may not be constant
- high unit costs as no economies of scale
- limited potential for sales growth
branding
a feature of a business or product thats recognised by customers and distinguishes it from competition
Benefits of branding
- brand loyalty
- brand extension (customers of an established brand are more likely to try new products from the same brand)
- brand value
- brand personality
What is market size and how is it calculated
the overall size of the market
Volume of sales
What is market growth and how is it calculated
% change in size of the market or sales of a firm within a market
new-old/old x100
What is market share and how is it calculated
% of a market that is taken by a business/product
sales of x/total sales in a market x100
Dynamic market
one thats subject to rapid and continual change and can be due to:
- consumer preferences
- impact of tech
- competition
Online retailing
Business that only exists online
Benefits of online retailing
- lower overheads
- more accessible as open 24/7
- easier to take global
- no need for staff to take orders
- stock can be easily withdrawn or updated
- easy to set up
- opurtunities for fast growth
Drawbacks of online retailing
- returns are 2x rate of physical stores
- very competitive prices
- issues with online security put off older customers
- very competitive market
- owners need IT skills
What is process inovation
making operations of a business more efficient and faster
What is process innovation
developing new products
Innovation
new ideas that can be used in production or turned into products
benefits of innovation
- development of a USP leads to competitive advantage
- ability to charge premium prices due to better quality
- improves efficiency of process
- reputation as being innovative
Drawbacks of innovation
heavy time and resource commitment with no guarantee of success
What is direct competition
when 2 ormore businesses sell similar products that appeal to the same group
What is indirect competition
when 2 or more businesses sell different products but are competing
What is risk
When the potential outcomes of a descision are known
What is uncertainty
The market in which businesses operate are subject to external influences
What is market orientation
the most important factor when providing products is the consumer
Benefits of market orientation
- less returns
- better reputation
-meet customer expectations - create barriers to entry
- easy to adapt to dynamic markets
Drawbacks of market orientation
- expensive
-time consuming - may focus on aspects that arent important to customers
What is product orientation
When the product is the most important factor when providing products for a market
Benefits of product orientation
- internal efficiency
- lower production costs
Drawbacks of product orientation
- Hard sell: employ people to convince customers they should buy the product
- more vulnerable to customers
What is market research
process of gathering data on consumers/ the market
primary market research (+ examples)
original data gathered by the researcher first hand
observations, questionnaires, focus groups, test marketing
secondary market research (+ examples)
Data that already exists and has been prevously collected for a different purpose
goverment departments, google, trade associations, market research
benefits of primary market research
- specific to research objectives
- kept private
- more detailed insights
Drawbacks of of primary market research
- time consuming
- costly to obtain
- risk of survey bias
- sampling may not be representative
benefits of secondary market research
- free and easy to obtain
- good source of market insights
- quick to access and use
drawbacks of secondary market research
- quickly become out of date
- not tailored to business needs
- specialists reports often expensive
Quantitative data
numerical data e.g. graphs, statistics and data
Qualititative data
Detail rich data e.g. interviews, focus groups and observations
Benefits of quantitative data
- easy to analyse
- provides insights into relevent trends
- easy to compare
Benefits of qualitative data
- focuses on understanding customer needs
- can highlight issues that need addressing
Drawbacks of quantitative data
- focuses on data rather than explaining why
- desnt show causation or reason
- may lack reliability if sample isnt valid
Drawbacks of qualitative data
- expensive to collect or analyse
- based around opinions
What is market segmentation
An identifiable group of individuals where consumers share one characteristic or need
Examples of types of segmentation
- income segmentation
-geographical - demographic
- behavioural
benefits of market segmentation
- focus resources on parts of a market where the business can succeed
- allows business to grow in fast moving segments
-helps new product development
drawbacks of market segmentation
- can be imprecise
- doesnt gurantee you can reach customers in it
