1.1 The market

Question 1

what is a mass market
advantages
disadvantages

Answer 1

= products and services that are advertised in the same way at the same time to the same people
+ lower average costs - economies of sales
+ higher revenues
+ wider target market
- more competition
- homogeneous products need to be differentiated
- low flexibility

Question 2

what is a niche market
advantages
disadvantages

Answer 2

= market that caters to specific consumer demands
\+ charge a premium price
\+less competition
\+ high revenues
- inconsistent demand 
- higher unit costs

Question 3

what is market share and how is it calculated

Answer 3

% of a market that a business owns

= sales of x / total sales x 100

Question 4

what should marketing objectives be in order to be effective

Answer 4

• be quantifiable
• measurable
• set within a time frame

P - profitable
O - offensive - attacking market and leading
I - integrated - flow through the company
S - strategic - analysing
E - effective execution

Question 5

what is a market strategy

Answer 5

= medium to long term plan for meeting market objectives through the marketing mix

Question 6

what are reasons for effective marketing

Answer 6

• help to meet consumer needs
• potentially increase market share
• attract more customers

Question 7

what are characteristics of effective marketing

Answer 7

• identify target market
• focused market research
• focus advertising
• segment markets

Question 8

what are 4 key factors to dynamic markets

Answer 8

• online retailing
• how markets change
• innovation and market growth
• adapting to change

Question 9

how does competition affect the market

Answer 9

• makes it hard to charge higher prices - competitive pricing, predatory
• usually improves customer service model
• more innovative and creative

Question 10

what is market orientation

Answer 10

= take into account the wants and needs of the customer before making a decision
= puts the customer at the heart of the decision

Question 11

what is product orientation

any negatives?

Answer 11

= leads managers to focus on what the firm does best = internal efficiency before customer preference
= will lead firm to 2 approaches:
- HARD SELL = large sales force, individual targets, low salaries
- CUTTING COSTS & PRICES = without any loss of profit margin

• doesn’t take into account changing customer needs
• lose focus on reliability

Question 12

primary research

• advantages
• disadvantages
• methods

Answer 12

= process of gathering information directly from people within your target market
= surveys, questionnaires, focus groups, interviews

\+ aim questions directly to objectives
\+ up to date information
\+ assess psychological factors of consumer
- expensive 
- risk of bias
- may not be able to use all data

Question 13

secondary research

• advantages
• disadvantages
• methods

Answer 13

= utilising data that already exists
= internet, annual records, government data

\+ often obtained without a cost
\+ good overview of market
\+ usually based on large markets 
- not updated regularly
- not specific to objectives
- time consuming

Question 14

qualitative research

- 2 main forms

Answer 14

= research about the attitudes, motivations and buying habits of consumers
= doesn’t produce statistics

GROUP DISCUSSIONS
= free ranging talks within a group
= may reveal a problem or opportunity the company hadn’t anticipated
= reveal customer psychology

DEPTH INTERVIEWS
= informal and in-depth interviews with consumer
= same function as group discussions but avoids risk of group opinion swaying individual

Question 15

quantitative research

• 3 key aspects
• limitations

Answer 15

= questions on a large set of sample size to provide statistically valid and accurate data
KEY ASPECTS
- sampling - typical to the whole population
- unbiased - open and closed questions
- validity - accurate results

• findings might not be meaningful
• sample size - too small doesn’t cater for everyone, too big has lots of variation
• sample bias

Question 16

Use of technology to support market research

Answer 16

websites

• target home page
• could be bias
• automated responses

social media

• interactive - fuller understanding
• consumer and brand
• cost effective
• wide spread

Question 17

what is market segmentation

Answer 17

= finding ways to divide a market to identify untapped opportunities such as age, gender, location
= acknowledgement from companies that no one is the same
= increased customer satisfaction

Question 18

what is market mapping

Answer 18

= when companies need to decide where they want to position the brand in relation to customer perception and competitors
= carried out in 2 stages:
- identify key features within market
- place every brand on grid revealing gaps in market

Question 19

what is a competitive advantage

Answer 19

= companies ability to generate large than average turnover due to advantage they have in the market
- cost advantage
- differentiated advantage 
= premier price 
= brand loyalty

Question 20

what is product differentiation

Answer 20

= how a business differentiates their products from competition - reputation, service, value
= unique selling point
can be created by:
- unique design
- unique function
- unique taste
- ergonomic factors (make it more efficient)

Question 21

what is the purpose of differentiation

Answer 21

• enables business to increase prices if costs go up
• higher differentiation = lower price elasticity
• insulates product from competitive markets

Question 22

what is added value

- advantages?

Answer 22

= difference between price that is charge to customer and costs of input required to create the product
- can be through design, production or marketing
+ can charge a premium price
+ customer loyalty
+ protection against competition