1.1 Dynamic and Stable markets

Question 1

What is a dynamic market?

Answer 1

A market that is subject to rapid and fundamental change over a short period of time.

Question 2

What is a stable market?

Answer 2

One in which the pace of change is slow, market size and market share are fairly consistent with little variation in price. Innovation is rare and may just consist of minor changes to existing products.

Question 3

What is an example of a dynamic market?

Answer 3

Fashion and Technology

Question 4

What is an example of a niche market?

Answer 4

Stationary and Cereal

Question 5

What causes a dynamic market to change?

Answer 5

Changes in technology
Changes in consumer wants/needs
New competitors
Changes in income -> what people can afford + economic environment
Supply -> any changes may mean they have to switch to alternatives

Question 6

A market can change in size how many in 3 ways what are they?

Answer 6

They can grow, stay the same and decline.

Question 7

Give examples of growing markets.

Answer 7

Electric cars, technology, second hand clothing, vegan/ vegetarian food

Question 8

Give examples of markets that are staying the same size.

Answer 8

Cereal, stationary, sweets

Question 9

Give examples of declining markets

Answer 9

Petrol/ Diesel cars, physical books, newspaper.

Question 10

What is the nature of a market.

Answer 10

Where markets are currently at e.g films used to be on CDs or VHS now they are on streaming service.

Question 11

What are new markets?

Answer 11

Markets that are emerging or in the future, such as AI and hydrogen fuel.

Question 12

What are some benefits of operating in a Dynamic Market?

Answer 12

Encourages constant innovations, as they need to constantly produce new products to appeal to more people.
The pressure also forces firms to improve.
If a firm moves quick enough they can get a first mover advantage.

Question 13

What are some of the drawbacks of operating in a dynamic market?

Answer 13

Constant need to invest into R+D which can create an opportunity cost as the money could have been spent elsewhere
Constantly need to invest into things like market research
If a firm fails to adapt fast enough they may loose competitiveness
Could lead to a lot of wasted resources

Question 14

How can a firm be more flexible to adapt to new trends?

Answer 14

Buy machinary that can produce multiple things
Train your staff to produce multiple things
Gain flexable workers (part time) to adapt to changes in demand

Question 15

What could a firm invest into to help itself in a dynamic market?

Answer 15

R+D to develop new products
New Machinery to make sure supply matches demand and produce multiple products
Train staff to improve efficiency
Market research to keep up to date with trends

Question 15

Why would developing a niche be beneficial in a dynamic market?

Answer 15

Can give the firm a USP
Can build closer relationships with customers -> loyalty

Question 15

Why would a firm advertise more in a dynamic market?

Answer 15

To stay relevant and remind customers of your products and make sure they know its benefits

Question 16

Why must a firm in a dynamic market conduct market research?

Answer 16

To keep up with changes such as tends, competition, legislation, supply and income.