1.1.1 - The Market Flashcards
Def of a market
A market exists where buyers and sellers meet in order to exchange goods or services
Def of mass market
The attempt to create products or services which are targeted at the while market
Def of niche market
The attempt to create products of services which are targeted towards a specific segment of a whole market
3 Benefits of mass marketing
- huge potential number of customers
- higher production levels allow for economies of scale (lower production costs)
- can use mass media advertising
3 Benefits of niche marketing
- meeting customer needs precisely allows higher prices to be charged
- higher profit margins
- easier to enter for firms with limited financial resources
2 weaknesses of mass markets
- lots of competition
- high volume product therefore not flexible to demand changes
2 weaknesses of niche markets
- risky, no guarantee of constant demand
- higher unit costs, no EOS
Characteristics of mass market
Generic products which are broadly similar in form and function
Characteristics of niche market
Specialist products and services required. Changes in consumer preferences can be rapid
Market size and share of mass markets
Huge markets which large firms can operate successfully event though their market share may be low
Market size and share of niche markets
Smaller markets means smaller firms will achieve higher shares of their niche than mass market
Brands in mass market
Huge brands can develop with the name/ logo representing key point of differentiation
Brands in niche market
Differentiation more likely achieved through product features and functions
Formula for market size
Number of units sold X price
Formula for market share
(Sales of one firm/ total market sales) X 100
Def of dynamic market
A market that is constantly changing
4 reasons why markets are dynamic
- social trends
- changes in technology
- competitive environment
- consumer tastes
Why is online retailing important for retailers
- online rivals steel sales
- consumers are able to buy item anywhere and collect from local store
Why do markets change
External factors (PESTLE) Political, environmental, social, technological, legal and economic
Def of innovation
Developing new products and services that offer features that no rivals offer
How does innovation lead to market growth
After one business is innovative, other companies are forced to be innovative too in order to keep on pace with rivals to benefit from leading change in the market
How to businesses adapt to change
Market research and understanding of general trends helping to adapt products to customer needs
Is adapting to change easy?
No, impact on marketing, people, finance and operations
Changes in production methods, finding new suppliers and redeploying workers
Def of degree of competition
Is the number of firms that exist within a market, businesses must be able to adapt to these changes in the market
