1.1.2 The market Flashcards
Competition
The rivalry among sellers trying to achieve goals such as increasing profits, market share, and sales volume
Competitive market
When there are many rivals selling similar products
Dynamic market
A market that is subject to rapid/continuous change.
Innovation
The creation, development and implementation of a new product, process or service.
market growth
An increase in demand/sales for a particular product or service
Mass market
The largest part of the market, where there are many similar products
+More customers
+Potential for EOS
-More competition
-Need for competitive pricing
Niche market
It is a smaller segment of a larger market where consumers have specific needs and wants.
+Less competition
+Can charge higher prices
-less customers
-No EOS
Sale volume
The quantity of a good or service sold within a period of time. Calculation Sales revenue/selling price
Impact of competition
-Drive innovation
-Increases customer choices
-Battle for competitive advantage
Factors effecting demand
-Price of complementary good
-Income levels
-Seasonality
-Trends
4 factors to dynamic markets
- Online retailing
- How markets change
- Innovation and market growth
- Adapting to change
Online retailing pros and cons
+Business can access more customers
+Longer trading hours, open 24/7
+Cheaper to run, lower fixed & variable costs
-High cost for website development
-Lack of personal contact with the customer
- Dominated by large businesses
How markets change in a dynamic market
-Change in customer tastes and preferences
-Change in demographics
-Amount of competition
-Changing legislation
innovation in products and processes
-Product innovation=improvement of existing products, e.g. improved cameras on laptops
-Process innovation=improvement of existing processes e.g. just in time stock control
Market growth
-Measurement of change in the entire market as a percentage of the original size
-The business market share doesn’t increase if the entire market grows
caused by numerous factors:
-Increasing population sizes increase demand
-Increasing incomes
-Changing tastes and preferences cause the market to grow
Adapting to change
-Adapting to market changes allows businesses to thrive in dynamic markets
Strategies to adapt to change include:
-Create flexible business structures
-Meet customer needs through market research
-Invest in staff training, new products
-Innovate to gain the first-mover advantage
