(1.1) The Market Flashcards
What is market size (how is it estimated) and market share?
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
What is a market?
A place where buyers and sellers come together to buy and sell goods/ services in return for money
What is a dynamic market?
Markets that experience rapid or continuous changes
What are the different types of markets?
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)
What is marketing?
The process of identifying, anticipating and satisfying customers needs and wants profitably
What is a mass and niche market and there characteristics?
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
What is the difference between risk and uncertainty?
Risk - When the potential outcomes from a decision are known
Uncertainty - When none of the outcomes are known in advanced
How does competition impact customers?
Customers generally benefit from competition. They may have a wider range of products to choose from.
How does competition impact Businesses?
- 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
What should a business do to adapt in a (dynamic) market?
- Be flexible in the the way they operate
- Carry out market research
- Invest in new product development
- Make continuous improvements
- Develop a niche
What is the formula for market share?
(sales of a business / Total sales in the market) * 100
What is market research?
The process of gathering, presenting and analysing information about the market and consumption of goods and services
What is primary and secondary research and the advantages and disadvantages?
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
What is primary and secondary research used for?
- Identify and anticipate customers needs and wants
- Quantify likely demand
- Gain insight into customer behaviour
What are the limitations of market research?
- 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
What is product orientated and the advantages and disadvantages?
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
What is market orientation and the advantages and disadvantages?
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
What is a brand?
Characteristics that allows consumers to identify the goods and services of a business
What is a brand used for?
- Differentiate their product
- Create Customer Loyalty
- Develop an image
- Help with product recognition
- Charge premium prices
What is online retailing and the advantages and disadvantages for both businesses and customers?
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
How do markets change?
Size of market-
Nature of markets- Some markets are constantly changing
New Markets- advancements in technology can lead to new markets
What are the reasons why a market may grow?
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 -
What is market segmentation?
Dividing your target market into similar groups
What is market mapping and the advantages and disadvantages?
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
What is market positioning?
Factors a business may consider when positioning a product in market maps?
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)
Name the competitive advantages a business can have
Product design - Product quality - Promotion - Customer service - Delivery times - Economies of scale - Flexibility - Ethical stance - Focusing on a particular market segment-
What is the purpose of product differentiation?
To gain a competitive edge over their competitors. In competitive markets firms will try to make their product unique
What is the 5 reasons for product differentiation?
Flexible pricing- Recognition - Extend product range - Brand development - Overcome competition -
What is adding value?
Extra features that may be offered by the business
What is the purpose of product differentiation?
- Have flexible pricing
- Recognition
- Out compete competitors
What are the advantages of using social media for market research?
- 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
How is ICT used to support market research?
Company website - Create online service
Social Networking -
Database - Storing users info
