(1.1) The Market

Question 1

What is market size (how is it estimated) and market share?

Answer 1

Market size can be estimated by either the market value (total amount spent) or volume (physical products sold)

Market Share - the proportion of a particular market held by a business

Question 2

What is a market?

Answer 2

A place where buyers and sellers come together to buy and sell goods/ services in return for money

Question 3

What is a dynamic market?

Answer 3

Markets that experience rapid or continuous changes

Question 4

What are the different types of markets?

Answer 4

Consumer Goods Market - Eg food, clothes, magazines
Market for services - Eg services for individuals
The housing market - Eg buying and selling property
Commodity Markets - Eg where raw materials are traded (oil, copper, coffee)
Financial Markets - Eg where currencies and financial products are traded (stock market)

Question 5

What is marketing?

Answer 5

The process of identifying, anticipating and satisfying customers needs and wants profitably

Question 6

What is a mass and niche market and there characteristics?

Answer 6

Mass : A large market where the most popular products are targeted

• Sells goods to all consumers and markets them in the same way
• Large number of customers
• Businesses can exploit economies of scale

Niche - A smaller market within a larger market

• Markets in a different way to mass marketing
• Sells to small customer group
• Easier to focus on the needs of the customers
• Can charge premium prices if competition is low

Question 7

What is the difference between risk and uncertainty?

Answer 7

Risk - When the potential outcomes from a decision are known

Uncertainty - When none of the outcomes are known in advanced

Question 8

How does competition impact customers?

Answer 8

Customers generally benefit from competition. They may have a wider range of products to choose from.

Question 9

How does competition impact Businesses?

Answer 9

• Provide lower prices
• Provide better marketing
• Businesses start to listen to customers
• Forces the business to produce higher quality goods/ services
• A business may becomes less wasteful

Question 10

What should a business do to adapt in a (dynamic) market?

Answer 10

• Be flexible in the the way they operate
• Carry out market research
• Invest in new product development
• Make continuous improvements
• Develop a niche

Question 11

What is the formula for market share?

Answer 11

(sales of a business / Total sales in the market) * 100

Question 12

What is market research?

Answer 12

The process of gathering, presenting and analysing information about the market and consumption of goods and services

Question 13

What is primary and secondary research and the advantages and disadvantages?

Answer 13

Primary - Research collected first hand
+Up to date and reliable
+Better if you want to collect qualitative data

• Time consuming
• Difficult to conduct a large sample size

Secondary - Research that already exists
+Fast
+Often better if you want to collect quantitative data

• Can be expensive
• Not always up to date or tailored to the business

Question 14

What is primary and secondary research used for?

Answer 14

• Identify and anticipate customers needs and wants
• Quantify likely demand
• Gain insight into customer behaviour

Question 15

What are the limitations of market research?

Answer 15

• Can be costly
• Time consuming
• Human behaviour can be unpredictable
• Questions/ interviewer may have misleading questions
• The sample size may not be an accurate representation of the whole population

Question 16

What is product orientated and the advantages and disadvantages?

Answer 16

When the product is the businesses main priority. They develop products based on what they’re good and and not what the customers want.

+Allows the business to focus on the products quality
+Economies of scales can develop more easily

Question 17

What is market orientation and the advantages and disadvantages?

Answer 17

When the customer is the businesses main priority. They develop products based on what customers want.

+Increased customer satisfaction and loyalty
+Increased sales revenue

• Lack of innovation as the business would be focused on reacting to market trends
• Customers desires can change rapidly

Question 18

What is a brand?

Answer 18

Characteristics that allows consumers to identify the goods and services of a business

Question 19

What is a brand used for?

Answer 19

• Differentiate their product
• Create Customer Loyalty
• Develop an image
• Help with product recognition
• Charge premium prices

Question 20

What is online retailing and the advantages and disadvantages for both businesses and customers?

Answer 20

Having businesses transactions online through buying and selling goods/services

Businesses
\+Lower overheads
\+Reach a wider market
-Website crashes
-Highly competitive
-Less trust from consumers 

Customers
\+Fast/ convenient
\+Often cheaper
-Cant test the product before buying
-chipping times

Question 21

How do markets change?

Answer 21

Size of market-
Nature of markets- Some markets are constantly changing
New Markets- advancements in technology can lead to new markets

Question 22

What are the reasons why a market may grow?

Answer 22

Economic Growth - Global living standards tend to rise overtime
Innovation - Innovation can grow a market
Social Changes -
Changes in legislation - Laws can affect markets
Demographic Changes -

Question 23

What is market segmentation?

Answer 23

Dividing your target market into similar groups

Question 24

What is market mapping and the advantages and disadvantages?

Answer 24

A technique used to understand how products/ businesses are viewed relative to competitors based on two characteristics

+Helps decide if a business should join a market (gap in the market/opportunity)
+Can compare businesses
+Helps better understand competitors
+Understand customers perspectives

• Only based on two variables
• Perceptions of customers are complex and may not fit the model
• Stakeholders may have a different view of where the business is

Question 25

What is market positioning?

Factors a business may consider when positioning a product in market maps?

Answer 25

Factors a business may consider when positioning a product in market maps

• Attributes of the product
• The Origin of the product
• The reputation of the business (The classification of the product)

Question 26

Name the competitive advantages a business can have

Answer 26

Product design - 
Product quality -
Promotion - 
Customer service - 
Delivery times - 
Economies of scale - 
Flexibility - 
Ethical stance - 
Focusing on a particular market segment-

Question 27

What is the purpose of product differentiation?

Answer 27

To gain a competitive edge over their competitors. In competitive markets firms will try to make their product unique

Question 28

What is the 5 reasons for product differentiation?

Answer 28

Flexible pricing-
Recognition - 
Extend product range - 
Brand development - 
Overcome competition -

Question 29

What is adding value?

Answer 29

Extra features that may be offered by the business

Question 30

What is the purpose of product differentiation?

Answer 30

• Have flexible pricing
• Recognition
• Out compete competitors

Question 31

What are the advantages of using social media for market research?

Answer 31

• Can reach millions of people around the world
• Allows specific groups of people to be targeted
• Free or relatively low cost
• Data can be collected fast
• Takes little IT skills

Question 32

How is ICT used to support market research?

Answer 32

Company website - Create online service
Social Networking -
Database - Storing users info