1.1.1 The Market Flashcards
What is a mass market?
This is the market that is aimed at the general population. E.g. regular toothpaste.
What is a niche market?
This is a subset of the main market and addresses a specialist need e.g. Sensodyne toothpaste for sensitive teeth.
Define homogenous
Adjective of the same kind; alike.
E.g. Different brands of yoghurt.
What are the advantages of operating in a mass market?
-Large scale production means economies of scale and lower average unit costs.
-Mass marketing is straightforward as everyone is targeted equally.
-Large volume of sales means high revenues.
-High revenues can be pumped into research and development (R&D).
What are the disadvantages of operating in a mass market?
-Lots of competition in mass markets.
-Homogenous products need to be differentiated through marketing which can be expensive.
-High volume production may not be flexible enough to keep up with changes in demand.
What are the pros of a niche market?
-Charge premium price
-Easier to target customers
-Small scale production can be flexible and follow trends
-Less competition than mass markets
What are the cons of a niche market?
-Very risky as demand may not be constant
-Higher unit costs so no economies of scale
-E.g. Tokyo old cameras
What is market size?
The size of the market is the TOTAL of all the producers in that market.
What are the 2 ways to measure market size?
1.) Volume of sales e.g. 91 million burgers sold every year.
2.) Value (total amount spent by customers) e.g. The UK burger bar market is estimated to be worth £3.28 billion in 2016.
What is market share?
This means the proportion (%) of a market that is taken by a business, product or brand.
What is the market share formula?
Sales of x / Total sales in whole market X 100
