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A-LEVEL BUSINESS Paper 1 > 1.1.1 Markets > Flashcards

1.1.1 Markets Flashcards

1
Q

What is a market?

A

Anywhere where buyers and sellers meet e.g Westfield

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2
Q

Define ‘market research’?

A
  • The process of systematically gathering data from consumers which can be used to influence the business decisions
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3
Q

What is market size?

A
  • The total sales value or sales volume in a given market
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4
Q

What is a mass market?

A
    • Where products are aimed at the largest (broadest) part of the market

Production usually happens on a large scale

Mass marketing occurs when businesses sell their products to most of the avalibale market

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5
Q

What is a niche market?

A
  • Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

Production usually happens on a small scale

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6
Q

What are the characteristics of a mass market?

A
  • Products are less unique as aimed at broader market segments
  • Low average costs due to large scale of production- benefit from economies of scale
  • Low prices lead to greater affordibility & higher sales volume
  • Low prices lead to lower profit margins

e.g. Primark

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7
Q

What are the characteristics of a niche market?

A
  • Products more specialised & unique as aimed at narrow market segments
  • High average costs due to small scale production
  • High prices make products less affordable & lead to lower sales volume
  • High prices can allow business to earn higher profit margin

e.g. Louis Vuitton

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8
Q

What can the size of a market be measure through?

A
  • Sales volume or sales value
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9
Q

What is sales volume?

A
  • The number of products sold
    (i.e physical amount of products being sold)
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10
Q

What is sales revenue?

A

Price X Quantity sold
(i.e the financial value of the units sold)

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11
Q

How can you calculate market share?

A

Sales of a business/Total sales in the market X100

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12
Q

What is a brand?

A
    • A name, image or logo which helps one product/service stand out from it’s competitors

Branding is one of the key ways businesses achieve product differentiation

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13
Q

Define ‘product differentiation’.

A
  • The process of distinguishing a product or service from competitors products in the market
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14
Q

Why are brands so good?

A
    • Brands add value, often making product/service more desirable to consumers
  • Businesses operating in mass markets use brands to stand out from competitors
  • Brands influence the position of a business within its market- stong brands are able to charge higher prices than weaker brands
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15
Q

What is meant by a business ‘adding value’?

A
  • The process by which firms increase the price that the consumer is willing to pay
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16
Q

What is meant by a dynamic market?

A
  • A market that is a subject to rapid or continuous changes

e.g. the mobile phone market- landline-Iphone 15

17
Q

What are the 4 areas to consider when examining dynamic markets?

A
  • Online retailing
  • How markets change
  • Innovation and market growth
  • Adapting to change
18
Q

What is online retailing?

A
  • Selling products via the internet
19
Q

What are the advantages & disadvanatages of online retailing?

A
  • Advantages:
  • Provides business access to more consumers, including internationally
  • Enables longer trading hours as the business is open 24/7
  • Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers
  • Businesses can collect data by tracking consumer behaviour which helps with primary market research

Disadvantages:
* May be high costs for website development, maintenance, and promotion
* High levels of competition mean that it will be expensive to make a website stand out
* There is a lack of personal contact with customers

20
Q

What changes cause markets to change & become dynamic?

A
    • Changing consumer tastes and preferences
  • Changing demographics
  • Amount of competition e.g. international trade means larger market sizes but also more competition
  • Changing legislation
21
Q

Innovation and market growth

What does product innovation involve?

A
  • The adaptation or improvement of existing products
    e.g. improved camera on new iphone
22
Q

Innovation and market growth

What does process innovation involve?

A
  • the adaptation or improvement of existing processes
    e.g. just in time stock control
23
Q

Innovation and market growth

What is market growth?

A
  • Measurement of the change in the entire market, expressed as a percentage of original size
24
Q

Innovation and market growth

What can market growth be caused by?

A
    • Increasing population sizes can increase demand in certain markets
  • Increasing incomes can increase demand in certain markets
  • Changing tastes and preferences can cause the market to grow
    e.g. the growth in the electric car market
25
Q

Adapting to change

What strategies are there to adapt to change?

A
    • Meet customer needs, by carrying out market research and communicating with customers
  • Invest in staff training, new products and processes
  • Innovate so as to gain the first mover advantage
26
Q

When does competition occur?

A
  • When at least 2 businesses are providing good/services to the same target market
27
Q

What is direct & indirect competition?

A
  • Direct competition-Occurs when businesses are targeting the same customers with the same product as a competitor e.g. iphone
  • Indirect competition-When firms sell different products but compete with each other for the customer disposable income e.g. cinema & theatre companies
28
Q

How can competition beneift a customer?

A
  • Businesses offer lower prices
  • Businesses produce better quality products
  • Businesses provide better customer service
29
Q

What is the difference between risk & uncertainty?

A
  • Risks can be calculated & prepared for
    Uncertainties cannot as they are unexpected events

e.g. of risk- loss of staff e.g of uncertainty-will energy prices rise?

A-LEVEL BUSINESS Paper 1 (32 decks)

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