1.1 - The Market

Question 1

What is a Mass Market?

Answer 1

The market that’s aimed at the general population

e.g. regular toothpaste

Question 2

What are some Mass Market characteristics?

Answer 2

• products can be sold on a global scale with just a few language tweaks
• product is sold to all consumers in the same way
  e. g. Coca Cola, one advert made to appeal to everyone

Question 3

What are 3 advantages to Mass Markets?

Answer 3

• Large volumes of sales means HIGH REVENUE
• Mass marketing is straight forward as everyone is equally targeted
• Large scale promotion means economies of scale ( when unit costs fall as output rises ) and low average unit costs

Question 4

What are some Disadvantages to Mass Markets

Answer 4

• Lots of Competition
• Homogeneous products ( ones that are the same ) need to be differentiated through marketing which can be expensive
• High volume production may not be flexible enough to keep up with changes in demand

Question 5

What is a Niche Market?

Answer 5

A subset of the main market and addresses a specialist need

e.g. sensodyne toothpaste for sensitive teeth

Question 6

What is 1 Characteristics of Niche Market?

Answer 6

• a particular segment of the market that’s not being met by other providers

Question 7

What is a Niche Market example?

Answer 7

Supercars

Question 8

What are 3 Advantages to Niche Market?

Answer 8

• Less competition than Mass Markets
• Charge premium price
• Easier to target customers

Question 9

What are 2 Disadvantages to Niche Markets

Answer 9

• Very risky as demand many not be constant
• High unit costs so no economies of scale ( when unit costs fall as output rises )

Question 10

What is Market Size?

Answer 10

The TOTAL of all sales of all the producers in the market

Question 11

What are 2 ways Market Size can be measured?

Answer 11

• through VALUE
• through VOLUME OF SALES

Question 12

What is Market Share?

Answer 12

The proportion ( % ) of a market that’s taken by a business

Question 13

What is the formula to calculate Market Share?

Answer 13

Sales of x / Total sales in whole market X100

Question 14

What is a Dynamic Market?

Answer 14

One that is subject to a rapid or continuous changes

Question 15

What are 2 examples of a Dynamic Market?

Answer 15

Shoe Market

• tastes in fashion change rapidly
• products are made to satisfy new needs

Online Retailing
- constantly changing, developing, expanding and offering customers new products and new ways to shop

Question 16

What are 4 advantages to Online Retailing?

Answer 16

• Open all hours, don’t miss critical shopping times
• Orders can be taken automatically without the need for staff
• Shop can reach international markets easily
• Flexible, owner can be anywhere in the world

Question 17

What are 4 Disadvantages to Online Retailing?

Answer 17

• Owners need IT skills
• Issues with online security worries put off older customers and those not keen to share their bank details
• Very competitive market
• Customers can be aware of owners business model

Question 18

What are 3 ways very competitive markets benefit the consumer?

Answer 18

• More competition means a business needs to be very efficient
• More competition means the business needs to listen to consumer needs and wants and constantly strive to meet those needs rather than being product orientated
• More competition means a business must be less wasteful

Question 19

What is a Business Risk?

Answer 19

The possibility a business will have lower than anticipated profits or experience a loss rather than taking profit.

When you CAN PREDICT the chance of an outcome in the future

Could lead to a lack of job security

Question 20

What can a Business Risk be influenced by?

Answer 20

Raw materials
Costs
Competition 
Overall economic change 
Government Laws

Question 21

What is Uncertainty?

Answer 21

When a business are UNABLE TO PREDICT external shocks or future events