1.1 Flashcards
What is a dynamic market
A dynamic market is one that is subject to rapid and continuous change in a short period of time
Market share formula
Market share = sales of a business/total sales in market x100
How to adapt in dynamic market?
- Flexibility eg workforce
- Market research
- New tech, ppl and products
ADV of dynamic market
- Forces innovation= opportunity to explot new revenue streams
- Reduces inefficiency as being complacent = failure= decreased market share
DIS of dynamic market
- Can increase costs if a firms is focusing on development of many projects
- If firm cant keep up = reduce market share or failure as they wont adapt to needs of customers
Define niche and mass market
Niche market- small segment of mass market for consumers with specific needs and wants
Mass market- main segment of market that attracts a large number of customers
ADV of niche market
- Lower competition= reduced cost on advertising
- better meet customer needs= higher levels of customer satisfaction= build brand loyalty = able to charge higher prices so higher profits
- Higher prices for goods= higher profit margins
DIS of niche market
- Limited growth due to small customer base
- Relevancy in market as not large segment of market
- Higher cost per unit as in niche you compete on quality
ADV of mass market
- Larger scale production = EOS = lower cost per unit
- Brand awareness unlike niche
- High opportunity for increased profits and revenue
- Growth not limited
DIS of mass market
- High competition= spend large sum of money on advertising and promotion
- Higher costs eg advertising, capital, machinery
- Low prices of products due to them being standardised= maybe higher breakeven point
- Avoid segment= less able to meet every customer needs= less added value= lower prices and lower profits
Characteristics of mass market
- Appeal to large population of market
- Potential for high revenue and profit
- High competition
- Large scale production
Niche market characteristics
- Appeal to smaller segment of market
- High cost of production due to unit costs
- Premium priced
- Produced in small quantities
Competitive advantage definition and ways to achieve
Competitive advantage- set of unique features of a business and its products that are perceived as superior to competition
Innovation,add value,market segmentation,differentiation
Differentiation definition
process of making products unique from competitors products
Also differentiation= USP= increased demand for its products= increase brand loyalty = premium price
Ways to differentiate
- USP
- Brand
- Customer service
- Lower price
Product orientated and market orientated definition
Product orientated- focused on production efficiencies and product itself eg product features
Market orientated- focused on consumer needs, understanding customers and developing products meeting their needs eg customer attitudes
Market segmentation definition
Market segmentation- process of dividing customers within a market into distinguishable groups based on their characteristics and needs
= allows for better positioning and customer targeting= brand loyalty as needs are satisfied
Market map definition and facts
- A tool to see where a product or service sits compared to competitors
- Helps identify gap in market
- Comparing similarities/differences of different products = useful
- Increased understanding of competition
EVAL
- Only considers 2 factors= not accurate as customers more complexed
- gap in market= no guarantee for sucess= may be low demand for that area
Qualitative and quantitative data definition
Qualitative- data expressed as opinions and has descriptive information and is non-numerical
Quantitative data- set of numerical data that can be quantified
Secondary market research definition
Secondary market research- research that is already available and is conducted by another organisation/ individual
eg gov reports, market reports, newspapers
ADV of secondary market research
- Easily accessible and goods starting point
- Fast and less time consuming
- Better for quantitative data
- cheap
DIS of secondary market research
- Some data is free but some reports can be expensive
- Not up to data or reliable
- Not tailored for needs of firm
- Available to competitors
Primary research definition and ADV
Primary research is data collected first hand eg focus groups, questionnaires, interviews
ADV of primary
- Specific to needs of business
- Up-to-date and reliable
- Better for qualitative data
- Good for follow up questions = eg insight on products
DIS of primary research
- Time consuming and expensive
- Hard to get big enough sample size
Difference between risk and uncertainty
Risk- entrepreneurs committing resources eg money that could be lost. Or when you can predict the chance of an outcome
Uncertainty= businesses operate in an ever changing environment and are subjected to changing external factors eg social factors.Or when you cannot predict the chance of an outcome
Adding value definition and ways to add value
Adding value- process of turning factor inputs into something that will sell for more than it costs
Ways to add value
- USP
- Branding
- Customer service
- Packaging
Define markers and brand
Markets - place where buyers and sellers come together to exchange goods/services
Brand- logo/design that distinguishes a firm from competition
Adv of market segmentation
-Better meet customer needs= increased brand loyalty= repeat customers= decreases price sensitive customers= increased prices = increased revenues and profits
Dis of market segmentation
-Higher cost eg for R&D , production and more raw materials needed, and marketing
-increased product range = less able to exploit economies of scale
Adv of adding value
-product/service stands out from rivals=competitive advantage = increased chance of repeat purchase
-charge higher prices eg through better design= customer less price sensitive= charge higher prices=larger profit per unit= lower breakeven output= higher MOS= decreased risk
- increased market share
Impact of more comp
Impact of more comp
-decrease prices= fall in revenue
-increase marketing to retain customers
-increase quality= increased cost
-increased customer service= increased training cost
Impact of less comp
-higher sales as customers have less options
- increased prices=increased profits= investment in new capital =increased efficiency = EOS techincal = decreased cost per unit
