1.1.1 The Market

Question 1

define mass markets

Answer 1

the market aimed at the general population

Question 2

define niche markets

Answer 2

a subset of the main market and addresses a specialist need

Question 3

name 2 characteristics of a mass market

Answer 3

• products are sold on a global scale easily
• a product is marketed to everyone the same
  e. g. one advert for everyone

Question 4

advantages of a mass market

Answer 4

• large sales, high revenue

- economies of scale (large scale production + lower unit costs)

Question 5

disadvantages of a mass market

Answer 5

• high competition
• homogenous products need to be differentiated through marketing
• high volume production may not keep up with demands/trend

Question 6

name 2 characteristics of niche markets

Answer 6

• subset of the main market

- caters to a segment of the market not met by others

Question 7

advantages of a niche market

Answer 7

• can charge premium price
• easy to target customers
• less competition
• small scale production=flexible=easy to supply for demand

Question 8

disadvantages of a niche market

Answer 8

• risky as demand varies
• higher unit costs
• no economies of scale

Question 9

define market size

Answer 9

total of all sales in the market

Question 10

define market share

Answer 10

% of the market that a business has

sales of business/total market sales x 100

Question 11

define a dynamic market

Answer 11

a market that is subject to rapid or continuous change

e.g. online retail and fashion

Question 12

advantages of online retailing

Answer 12

• shops open 24/7
• no need for shop premises or staff
• can rapidly grow
• flexible

Question 13

disadvantages of online retailing

Answer 13

• issues with sending back goods
• customers have security issues
• very competitive market
• IT skills are needed
• competitors can see info easily

Question 14

define business risk

Answer 14

the possibility of a business having lower profits than expected

Question 15

business risk is influenced by

r__ m______ costs, c________ , e________ c_______ , g________ L____

Answer 15

raw material costs, competition, economic climate, government laws

Question 16

business owners have a lack of job security, explain why.

Answer 16

• setting up a business takes time and money to get profits which is uncertain
• business failure may put the owner in financial trouble

Question 17

business owners have financial risk, explain why.

Answer 17

• an owner may risk their own finances

- if a business is highly geared (dependent on debt), interest rates can cause problems

Question 18

define uncertainty

Answer 18

when businesses are unable to predict external shocks or future events.
there is always a certain degree of uncertainty

Question 19

name 2 ways to reduce uncertainty

Answer 19

• fixed interest rates

- insurance