1.1.1 The Market Flashcards
Definition of a Market
Any place buyers and sellers can meet
Definition of a Mass Market
Products that are aimed at a broad majority
Definition of a Niche Market
Products that are aimed at a minority of a subset
3 Advantages of a Mass Market
-Larger customer base
-Low average unit cost
-High production levels
3 Disadvantages of a Mass Market
-Less unique products
-Hard to enter, Saturated Market, High Competition
-Low prices = smaller profit margin
3 Advantages of a Niche Market
-High prices = high profit margin
-Meets needs of customers , Brand loyalty
-Less competitive, Lower barriers of entry
3 Disadvantages of a Niche Market
-Higher average costs
-Lower sales volume, Less revenue
-Vulnerable to market changes, Competition catching on
Definition of Market Size
Total sales in a market calculated by volume (physical quantity) or value (total spent by consumer)
Formula of Sales Volume
No. Products Sold
Sales Revenue / Selling Price
Formula of Sales Revenue
Selling Price * No. Product Sold
Definition of Market Share
The portion of a market that is controlled by a company
Formula of Market Share
(Business Sales / Market Sales) * 100
Formula of Market Growth
((New - Old) / Old ) * 100
Definition of a Brand
A name, image or logo that helps a product stand out in a market
3 Advantages of a Brand
-Builds customer loyalty
-Charge a premium price
-Has a perceived quality
3 Disadvantages of a Brand
-High advertising costs
-Easily tarnish reputation
-Loyalty fickle in a mass or dynamic market
Definition of a Dynamic Market
A market that is subject to rapid or continuous changes
4 Key areas in Dynamic Markets
-Online retailing
-How markets change
-Adapting to change
-Innovation and market growth
Definition of Online Retailing
Selling a product online via the internet
6 Advantages of Online Retailing
-24/7 Trading
-Cheaper than physical store
-Data Collection
-Offers can be offered
-Consumers can compare easily
-Consumers can read reviews
6 Disadvantages of Online Retailing
-High IT costs
-Dominated by known brands
-High competition
-Lack of social/personal contact
-Consumers may want to see product
-Consumers may find returns harder
What does PESTLE stand for
Political, Economical, Social, Technological, Legal, Environmental
3 Examples of Political
-Government Stability
-Tax regulations
-Trade restriction
4 Examples of Economical
-Inflation
-Recession
-Unemployment
-Boom
Examples of Social
-Education
-Demographics
-Health
-Ethics
Examples of Technological
-Research and Development
-Production methods
-Quality
-Communication
Examples of Legal
-Taxation
-H&S
-Advertising restrictions
-Employment laws
4 Examples of Environmental
-Infrastructure
-Energy
-Transportation
-Air/Pollution
5 ways to adapt to Change
-Meeting customer needs through research
-Invest in staff and training
-Invest in R+D, products and processes
-Innovate for first mover advantage
-Become sustainable / eco friendly
Definition of Product Innovation
Adaptation or improvement of products through adding value, improved technology or better materials
Definition of Process Innovation
Adaptation or improvement of processes such as just-in-time stock or production processes
Definition of Competition
When two or more businesses provide goods to the same target market
Difference between Direct and Indirect Competition
Direct - Using same product
Indirect - Different product that could substitute
3 reasons why competition benefits consumers
-Lower prices
-Better quality products
-Better customer service
3 reasons why competition benefits businesses
-Need to lower costs
-Need to differentiate
-Need to maintain quality
Definition of Risk
A potential threat to a businesses success
Definition of Uncertainty
A problem that has an outcome to difficult to predict (normally external)
3 examples of Risk
-Loss of key staff
-Cyber threats
-Technical failures
4 examples of Uncertainty
-Recession
-Natural Disaster
-Interest Rates
-Brexit
