1.1.1 The market Flashcards
what is a mass market?
the largest part of the market that is aimed at the general population
what is a niche market?
a smaller segment of a larger market, where customers have specific needs and wants
what is the formula for market share?
market share =
(company’s total sales / total industry sales) x 100
what are benefits of mass markets?
-wider customer base
-lower risk
-EOS (lower unit costs)
what are the drawbacks of mass markets?
-high competiton
-without USP it can be difficult to survive
the benefits of niche markets are…?
-less competition
-can often charge a higher price
-customers are more loyal
the drawbacks of niche markets are…?
-lack of EOS
-likely to attract competition
-vulnerable to market changes
a dynamic market is…?
a market that is subject to rapid or continuous change
what are key sources of change?
-customer tastes and preferences
-impact of technology on what customers buy and how they buy
-impact of new market entrents
what factors affect markets?
-technology
-demographics
-competition
-economy
-ethics
-environment
-social
online retailing is…?
process of buying and selling goods and services over the internet
benefits of online retailing…?
-shops are always open
(customers can shop in the evening)
-orders can be made without the need for staff
-stock can easily be withdrawn or updated to keep up with dynamic market
-can reach international markets easily
drawbacks of online retailing…?
-issues with sending goods back may put customers off
-issues with online security worries may put off older customers and those not keen to share their bank details
-very competitive market
(hard to drive traffic to sites)
-owners need IT skills
invention is…?
the formulation of new ideas for products or processes
innovation is…?
the practical application of new inventions into marketable products and services
what is product innovation?
launching new or improved products onto the market
what is process innovation?
finding better or more efficient ways of producing existing products, or delivering existing services
benefits of product innovation…?
-first mover advantage
-added value
-enhanced reputation
-higher prices and profitabilty
benefits of process innovation…?
-reduced costs
-improved quality
-higher profits
drawbacks of product innovation…?
-financial risk
(heavy R&D investment, no guarantee of success)
-competition
(can attract competitors who may try replicate the product)
-cannibalization
drawbacks of process innovation…?
-high initial investment costs
-employee resistance
(hesitant to adopt new processes, fear of job losses)
how does competition affects the market?
-battle for competitive advantage
-pricing
-buying power for the customer
-selling power of suppliers
-availability of substitutes
-willingness and abilities of new firms to enter a new market
what is risk?
the possibility a business will have lower than anticipated profits or experience a loss rather than taking a profit
(influenced by raw material costs, competition, the overall economic climate, government laws -> minimum wage)
what is uncertainty?
occurs when businesses are unable to predict external shocks or future events
