1.1.1 The market Flashcards
What is a market?
Any place where buyers and sellers can meet to exchange products and services.
What is the aim of marketing?
To help identify, anticipate and satisfy consumer needs and wants profitably.
What is a need?
Something that is considered essential, e.g. shelter or food.
What is a want?
A desire which is non-essential, even if consumers consider them to be essential, e.g. Nike trainers.
What is market research?
The process of systematically gathering data from consumers which can be used to influence business decisions.
What is a mass market?
A market that is aimed at the general population.
Mass marketing occurs when businesses sell their products to most of the available market.
Production usually happens on a large scale.
What is a niche market?
A market that is aimed at a subset of the larger market, e.g. gluten free products.
Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market.
Production usually happens on a small scale.
What are the characteristics of a mass market?
- Products are less unique as they are aimed at broad market segments.
- Low average costs due to economies of scale.
- Low prices lead to greater affordability and higher sales volumes.
- Low prices lead to lower profit margins.
What are the characteristics of a niche market?
- Products are more specialised and unique as they are aimed at narrow market segments.
- High average costs due to small scale production (they do not benefit from economies of scale).
- High prices make products less affordable and lead to lower sales volumes.
- High prices can allow businesses to earn higher profit margins.
How can the size of a market be measured?
Through sales volume or sales value.
What is sales volume?
The number of products sold.
What is the formula for sales revenue?
price x quantity sold
What is a brand?
A name, image, or logo which helps one product/service stand out from its competitors.
- Branding is one of the key ways businesses achieve product differentiation.
- Brands are unique and protected by law.
- Brands add value, often making the product/service more desirable to customers.
How can brands influence the position of the business within a market?
- Businesses operating in mass markets use branding to stand out from the competition.
- Businesses operating in niche markets use branding to communicate their offering to a small, well defined group of consumers.
- Strong brands are more likely to be able to charge higher prices for their products than weaker brands.
- The perceived quality of a strong brands product is better than that of weaker brands.
What is a dynamic market?
A market that is subject to rapid or continuous changes.
What are the advantages of online retailing for firms and consumers?
- Provides the business with access to more consumers, including internationally.
- Enables longer trading hours as the business is open 24/7.
- Cheaper to run as it lowers fixed and variable costs compared to bricks and mortar retailers.
- Businesses can collect data by tracking consumer behaviour, which helps with primary market research.
- Consumers can receive offers that they are more likely to benefit from.
- Consumers can shop at a time that suits them.
What are the disadvantages of online retailing for firms and consumers?
- There may be high costs of website development, maintenance, and promotion.
- Online retailing is dominated by well-known large businesses.
- High levels of competition mean that it will be expensive to make a website stand out.
- There is a lack of personal contact with customers.
- Consumers may find it difficult to get the desired level of customer service.
- Consumers may find it difficult to return unwanted products.
- Online purchasing opens consumers up to credit card fraud.
What changes can cause markets to be dynamic?
- Changing consumer tastes and preferences.
- Changing demographics.
- The amount of competition
- Changing legislation.
What is market growth?
The measurement of the change in the entire market, expressed as a percentage of the original size.
What can cause market growth?
- Increasing population sizes can increase demand in certain markets.
- Increasing incomes can increase demand in certain markets.
- Changing tastes and preferences can cause the market to grow.
What are some strategies to adapt to market change?
- Create flexible business structures.
- Meet customer needs by carrying out market research and communicating with customers.
- Invest in staff training, new products and processes.
- Innovate so as to gain the first mover advantage.
What is direct competition?
It occurs when a business is targeting customers with the same product as a competitor.
What is indirect competition?
It occurs when firms sell different products but compete with each other for the customers disposable income.
How can competition benefit the customer?
- Businesses offer lower prices.
- Businesses produce better quality products.
- Businesses provide better customer service.
