1.1.1 - The Market Flashcards
Define a Mass Market?
A mass market is the market aimed at the general population.
Define a Niche Market?
A niche market is a subset of the main market and addresses a specialist need.
Name characteristics of a Mass Market?
- A product is sold to all consumers in the same way.
- Many products can be sold on a global scale with just a few language tweaks.
Name the pros of a Mass Market?
- Large scale production means economies of scale and lower average unit costs.
- Mass marketing is straightforward as everyone is targeted.
- Large volume of sales means high revenues.
- High revenues can be pumped into research and development.
Name the cons of a Mass Market?
- Lots of competition.
- Homogenous products need to be differentiated through marketing which can be expensive.
- High volume production, not flexible to demand changes.
Name the pros of a Niche Market?
- Charge premium prices.
- Easier to target customers.
- Small scale production can be flexible and follow trends.
- Less competition than in mass markets.
Name the cons of a Niche Market?
- Very risky as demand may not be constant.
- Higher unit costs so no economies of scale.
Define market size and ways it is measured?
The size of the market is the TOTAL of all sales of all the producers in that market. Measured in two ways;
- Volume of sales; or quantity of products sold.
- Value; total amount spent by customers.
Define market share and how to calculate it?
This means the proportion (%) of a market that is taken by a business, product or brand. Calculated using;
- Sales of x / total sales in whole market x 100
Define a dynamic market?
A dynamic market is one that is subject to rapid or continuous changes.
Explain how online retailing is a dynamic market?
Online retailing is a dynamic market because it is constantly changing, developing, expanding and offering customers new products and new ways to shop.
- Shopper now make 51% of their purchases online.
Name the pros of online retailing?
- Shops are open round the clock so they don’t miss critical times when customers can shop e.g. evenings.
- Orders can be taken automatically without the need for staff.
- Shops can reach international markets easily.
- Low overheads, no need for a shop premises.
- Stock can be easily withdrawn or updated to keep up with dynamic market changes in taste.
- Easy to set up (e.g. eBay)
- Flexible - owner can be anywhere in the world.
- Opportunities for fast growth.
Name the cons of online retailing?
- Issues with sending goods back may put customers off.
- Issues with online security worries put off older customers not keen to share their bank details.
- Very competitive market, hard to drive traffic to sites.
- Owners need IT skills.
- Problems with fraud / spam / viruses
- Competitors can be aware of owners business model, prices, activity.
How does competition affect the market?
- More competition means a business needs to be very efficient.
- More competition means the business needs to listen to consumer needs and wants and constantly strive to meet those needs rather than being product orientated.
- More competition means a business must be less wasteful.
Define a business risk and ways its influenced?
A business risk is the possibility a business will have lower than anticipated profits or experience a loss rather than a profit.
- Influenced by; raw material costs, competition, the overall economic climate and government laws e.g. minimum wage.
- Different risks include; lack of job security and financial risks.
