1.1.1 : The Market Flashcards
What is niche marketing ?
Where a business targets a smaller segment of a larger market , where customers have specific needs and wants
What is mass marketing ?
Where the business sells into the largest part of the market where there are many similar products offered by competitors
What are the aims of mass marketing ?
Create products with universal appeal
Aim for leadership of he largest market segment
Build strong brands that are associated with the underlying product
Exploit economies of scale to arm high profits
What are the advantages of targeting a niche market ?
Less competition
Clear focus build up specialist skill and knowledge
An often charge a higher price
Profit margins often higher
Customers tend to be loyal
What are the disadvantages of targeting a niche market ?
Lack of economies of scale
Risk of over dependence on a single product or market
Likely to attract competition if successful
Vulnerable too market changes
What are the advantages of targeting a mass market?
Market domination potential
More chance of economies of scale
What are the disadvantages of targeting a mass market?
There is risk of environmental impact
Labour exploitation
Monopoly power
What does market size indicate ?
Indicates the potential sales for a firm
What does market growth indicate ?
A key indicator for existing and potential market entrants
What does market share indicate ?
Explains how the overall market is split between the existing competitors
Good indicator of competitive advantage
What are key sources of changes to a market ?
Customers tastes and preferences
Impact of technology on what customers and buys
Impact of new market entrants
What is the difference between invention and innovation ?
Invention - formulation of new ideas for products or processes
Innovation - tactical application of new inventions into marketable products or services
What types of innovation is there ?
Product innovation - launching new or improved products onto the market
Process innovation - finding better or more efficient ways of producing existing products
What are the benefits of product innovation ?
Higher prices and profitability
Added value
Opportunity to yield early customer loyalty
Increased market share
What are the benefits of process innovation ?
Reduced costs
Improved quality
More responsive customer service
Greater flexibility
Higher profits
What is competitive advantage ?
The ability of a business to add more value for its customers than its rivals and attain a position of relative advantage
A situation where a business has an advantage over its competitors by being able to offer better value, quality and/or service
