1.1 - The Market

Question 1

Mass market definition

Answer 1

Aimed at the general population

Question 2

Niche market definition

Answer 2

Small specialised section of the market where customers have specific needs/wants

Question 3

Advantages of mass market (3)

Answer 3

• economies of scales and lower average unit cost
• Straight forward as everyone gets targeted the same
• larger volume of sales means high revenue

Question 4

Disadvantages of mass market (3)

Answer 4

• lots of competition
• homogenous products need to be differentiated through market which is expensive
• high volume production is not flexible

Question 5

Advantages of niche market (4)

Answer 5

• charge premium price
• easier to target audience
• flexible to demand
• less competion

Question 6

Disadvantages of niche market (2)

Answer 6

• risky as demand can change

- high unit cost so no economies of scales

Question 7

What are the two ways market size is calculated?

Answer 7

• VALUE = total amount spent by customers buying products

- VOLUME = the physical quantity of products produced and sold

Question 8

What is market share?

Answer 8

The proportion f a particular market held by a business, product or brand (always a percentage)

Question 9

Equation for market share

Answer 9

Sales/total sales in whole market x100

Question 10

What is a brand?

Answer 10

A name, logo, sign, symbol, etc that allows consumers to identify the goods and services of a business. It enables products to be distinguished from others. It’s particularly important in the mass market.

Question 11

Brand benefits (5)

Answer 11

• differentiate from competitors
• customer loyalty
• product recognition
• develop an image
• charge a premium price

Question 12

Dynamic market definition

Answer 12

A market that is subject to rapid/continual change.

Question 13

Advantages of online retailing (6)

Answer 13

• market to individuals
• gather personal info easier
• costs of sales staff, rent, overheads can be avoided
• reach more customers
• 24/7
• greater flexibility e.g. flash sales

Question 14

Disadvantages of online retailing (6)

Answer 14

• only 71% prefer shopping online so missing a large proportion
• issues with returns can put people off
• online security puts people off
• very competitive
• owners need IT skills
• problems with frauds/scams/viruses

Question 15

Market growth reasons (5)

Answer 15

• economic growth
• Innovation
• social changes
• changes in legislation
• demographic