1.1.1 The Market

Question 1

what is a market?

Answer 1

any place where buyers and sellers can meet

Question 2

what is the aim of marketing?

Answer 2

to help identify, anticipate and satisfy consumer needs and wants profitably.

Question 3

what is market research?

Answer 3

the process of systematically gathering data from consumers to influence their decisions

Question 4

what is a mass market?

Answer 4

a market which is aimed at the general population and is large in scale, its types of products are more generalized

Question 5

benefits of a mass market

Answer 5

• have more customers
• benefit from economies of scale as they have low average costs with large scale production
• build a strong market presence
• lower prices mean greater affordability and higher sales volumes

Question 6

disadvantages of a mass market

Answer 6

• higher levels of competition
• low prices lead to lower profit margins
• products are similar, they need to differentiate through marketing which can be expensive

Question 7

what is a niche market?

Answer 7

a market that appeals to a smaller segment of a larger market, it serves customers with specific needs and wants

Question 8

advantages of a niche market

Answer 8

• less competition, more specific markets
• high prices mean higher profit margins
• customer loyalty

Question 9

disadvantages of a niche market

Answer 9

• lack of economies of scale - high average costs and small scale of production
• vulnerable to market changes- specific to one thing
• can attract competition if successful

Question 10

what is a brand?

Answer 10

a good or service that has something which is unique and recogniseable

Question 11

about a brand

Answer 11

it is more likely to grow if it is easily recognisable and distinctive
strong brands benefit from higher customer loyalty

Question 12

what is market size

Answer 12

a measure of the total available demand for competitors in a market

Question 13

about market size

Answer 13

• it indicates the potential sales for a firm
• measured in terms of annual sales or volume sold per year
• measured in volume (units) and value (sales)

Question 14

what is market growth?

Answer 14

it measures the rate of change of market size

Question 15

about market growth

Answer 15

• can be rising, falling or remaining stable
• this is a key indicator for existing and potential market entrants
• growth rate is calculated with value (market sales) or volume (units sold)

Question 16

what is market share?

Answer 16

the share of the total market that is owned by a particular business, product or brand usually measured by amount of sales against other competitors.

Question 17

what is a dynamic market?

Answer 17

markets that experience rapid and continuous change

Question 17

sales revenue equation

Answer 17

sales revenue= price x quantity sold

Question 18

what may cause a business to undergo change

Answer 18

-customers taste and preferences
-impact of technology on what customers buy and how they buy
-impact of new market entrants

Question 19

what is online retailing?

Answer 19

a dynamic market as it continues to change and develop for customers- selling products via the Internet

Question 20

benefits of online retailing

Answer 20

business costs are lower- no physical shop to maintain and less staff needed

customers can easily compare prices with other online firms

Question 21

drawbacks of online retailing

Answer 21

more competition for businesses

consumers cannot physically see the products before purchasing online

Question 22

what is innovation?

Answer 22

adapting and improving an existing production

Question 23

how does innovation help businesses?

Answer 23

it helps them to maintain or increase their competitiveness

Question 24

name some pressures for innovation

Answer 24

social changes increase the demand for innovation of current products to more advanced products

competition may increase a business’s focus on innovation, they seek to develop new products that will attract customers

Question 25

name some advantages of innovation

Answer 25

-allows businesses to improve products which increase market share, sales revenue and profit
-businesses can improve its processes, increasing efficiency and competitiveness
-they can develop a USP improving competitiveness and customer loyalty

Question 26

how does competition affect the market?
(3 points)

Answer 26

battle for market share
pricing
battle for competitive advantage

Question 27

what challenge do all businesses face?

Answer 27

to establish and sustain an edge over the competition
-competitive advantage

Question 28

what is competition?

Answer 28

rivalry among sellers, where each seller tries to increase sales, profits and market share by varying the marketing mix of price, product, place and promotion

Question 29

what are the two types of competition?

Answer 29

direct and indirect

Question 30

what is direct competition

Answer 30

where a business sells products that are similar and aimed at the same customer group

Question 31

what is indirect competition

Answer 31

where a business sells products that are different, but still competes for the same customers

Question 32

risk

Answer 32

factors that are not expected but can be quantitified, they can be assessed and managed

Question 33

uncertainty

Answer 33

being unsure of factors, they are unpredictable and uncontrollable events that affect business

Question 34

what is competitive advantage?

Answer 34

the ability of a business to add more value for its customers than its rivals and attain a position of relative advantage

Question 35

market growth equation

Answer 35

market growth %= change in size of market/ size of market in original year x 100

Question 36

sales growth equation

Answer 36

sales growth % = change in sales of product or business / sales of product or business in original year x 100

Question 37

sales volume

Answer 37

the quantity of goods and services produced by a particular business over a period of time

Question 37

sales value

Answer 37

the total sales revenue of a particular business over a period of time