1.1.1 The Market

Question 1

Mass market

Answer 1

The attempt to create products or services which is targeted at the whole market eg mars bars

Question 2

Advantages of mass markets

Answer 2

Large scale production - EOS

• large volume of sales - wide customer base
• less risk focused at large market

Question 3

Disadvantages of mass market

Answer 3

Homogenous (all same products) need to be differentiated which has huge marketing costs

• lots of competition
• high volume product therefore not flexible to demand changes

Question 4

Nice market

Answer 4

The attempt to create products or services which is targeted toward a specific segment of a market eg hotel chocolate

Question 5

Advantages of niche market

Answer 5

• charge premium price, higher profit margins
• specific knowledge, smaller customer base easier to target
• small scale production able to follow trends

Question 6

Disadvantage of niche market

Answer 6

• higher unit costs, no EOS
• risk of over dependence on single market
• very risky as no guarantee of constant demand

Question 7

Market size

Answer 7

This is the total value or volume of sales in the market

Question 8

Formula of market size

Answer 8

Number of units sold X price

Question 9

Market share

Answer 9

This is the proportion of total market sales that a firm has

Question 10

Market share formula

Answer 10

Sales of one firm/ total market sales X 100

Question 11

Dynamic market

Answer 11

A market that is constantly changing. Sellers respond to the changing needs of buyers by improving existing products and services or introducing new ones

Question 12

Why are markers dynamic

Answer 12

Social trends, changes in technology, competitive environment, consumer tastes

Question 13

Stable market

Answer 13

A market in which the pace of chnsge is slow, market size and share are fairly constant with little variation in price, innovation is rare and consists of minor changes

Question 14

Markets

Answer 14

Any place that buyers and sellers will come together to exchange goods or services, there will normally be an exchange if money

Question 15

Marketing

Answer 15

The department tasked with targeting the right products for the right target market using the right combination of price, promotion and place

Question 16

Brand

Answer 16

A product produced by one business using a specific name

Question 17

What does branding involve

Answer 17

The creation of an identity for the business that distinguished that firm and its products from other firms

Question 18

Benefits to a business of building a brand

Answer 18

• brand extension
• brand value
• brand personality

Question 19

What is brand extension

Answer 19

Loyal consumer more likely to buy products from recognised brand name

Question 20

What is brand value

Answer 20

Brand name adds value to a product eg Nike

Question 21

Brand personality

Answer 21

Brands take on a persona of their own

Question 22

Benefits of branding

Answer 22

• encourages customer loyalty leading to repeat purchasing and word of mouth recognition
• companies able to charge higher prices
• greater consumer awareness
• increased sales and market share

Question 23

Weakness of branding

Answer 23

• high costs associated with promotion in order to gain brand recognition in first place
• constant promotion in necessary to maintain the brand
• a single bad event may affect all the brands products

Question 24

What is meant by degree of competition

Answer 24

Is the number of firms that exist within a market. Business’s much be able to adapt to these changes in the market

Question 25

What are the 2 degrees of competition

Answer 25

Offensive and defensive

Question 26

Offensive competition

Answer 26

Try to increase sales or develop new markets

Question 27

Defensive competition

Answer 27

React to the competition and try to maintain their market share

Question 28

When does product innovation occur

Answer 28

When new technologies make it possible to create completely new products

Question 29

What does process innovation mean

Answer 29

Means using new technologies to improve production methods so that costs are reduced without a loss in quantity. This could be through distribution channels, stock control systems and supply chains