1.1.1 The Market Flashcards
Examples of markets
- Consumer good markets - where products such as food, cosmetics and magazines are sold
- market for services - This can include services for individuals such as hairdressing or business services, such as auditing
- the housing market where people buy some and let property
- commodity markets were raw materials such as oil, copper wheat and coffee are traded
- financial markets were currencies and financial products are traded.
What does the market involve ?
-Identifying the needs and wants of consumers
- design products that meet these needs
- understanding the threats from competitors.
What is market size?
The total volume of a given market
What is market share equation
Sales of a business/ Total sales in the market x 100
Why might branding be used?
- Differentiates the product from those of rivals
- create customer loyalty,
- help product, recognition
- develop an image
What is a dynamic market?
A dynamic market is one that is in a rapidly changing business environment.
Advantages of a dynamic market
Dynamic marketing involves changing your marketing approach or strategies depending on your customers’ behavior. This responsiveness can help you adjust your marketing activity and possibly increase engagement and sales, leading to higher revenue and profit.
What is a disadvantage of a dynamic market?
Dynamic pricing can reduce brand loyalty, increase competition and has the potential to lead to price wars. A key disadvantage of dynamic pricing is that it can alienate customers if they discover they’ve been paying higher prices for the same product as someone else.
Advantages of online retailing?
- It is easier to gather personal information from customers so that they can be targeted with other products and offers in the future .
- Selling costs such as sales staff, rent and other store overheads can be avoided.
- Marketing cost will be lower
- online retailers can reach more customers.
- open 24/7
Disadvantage of online retailing
Some negatives of online retail include: Website costs - planning, designing, creating, hosting, securing and maintaining a professional e-commerce website isn’t cheap, especially if you expect large and growing sales volumes.
How does the market change?
- The size of markets - the size of some markets can remain quite stable over a period of time.
- The nature of markets - Many markets are in a state of flux. This means that the structure and nature of the market is subject to constant change. For example, in many markets products are constantly updated modified and re-launched.
- New markets - One big source of new markets is from the development of emerging economies. These include (BRIC) Brazil, Russia, India and China countries and other developing nations, such as Mexico, Thailand, Indonesia, and some South American countries.
Why does a Market grow (EISCD)
- Economic growth. Global living standards tend to rise over time. This means that the worlds population has more money to spend as a result of businesses can supply more of the output to growing global market.
- Innovation. Businesses can grow their markets through the process of innovation. They can create new ones and needs and meet them with new products.
- Social changes. Changes in society can have a big impact on markets. For example, the decline in the number of marriages an increase in the proportion of watching women and the growth in the number of one parent families have increased the market size for childcare and housing.
- Changes in legislation. New laws can affect markets. For example, environmental legislation has helped to foster growth in the renewable energies.
- Demographic changes - Changes in the structure of the population can affect the size of markets. In most countries, the population is aging. This will have a lot of markets to grow because populations get bigger. But there will be also an increase in markets for healthcare and care homes
How does a business adapt to change (FMI)
- Flexibility- Businesses need to be prepared for change one way is to develop a culture of flexibility within an organisation.
- Market research- Businesses must keep in touch with development in the market. One way to do this is to undertake regular market research.
- Investment - There is businesses that invest in new product development I likely to survive for longer in the market.
How does competition affect a business
- lowering prices
- making their products appear different to those of rivals
- offering better quality products
- using more powerful, attractive advertising operations,
-offering ‘extras ‘such as high-quality customer service
How does competition affect a consumer ?
Consumers would generally benefit from competition in markets. In markets where that a lot of businesses competing with each other, there will be more choice. Most people enjoy having more choice because it makes their life more interesting.
