1.1.1 - The Market Flashcards
Consumer goods markets
Where products such as food, cosmetics and magazines are sold
Markets for services
I.e. individual services (e.g. hairdressing), or business services (e.g. auditing)
Housing market
Where people buy, sell, and let property
Commodity markets
Where raw materials (e.g. oil, copper, wheat, coffee) are traded
Financial markets
Where currencies and financial products are traded
According to the Charted Institute of Marketing, marketing is the management process responsible for…
…Identifying, anticipating, and satisfying customer requirements profitably.
Marketing invloves… (1)
identifying needs and wants of customers
Marketing invloves… (2)
designing products which meet customer needs
Marketing involves… (3)
understanding threats from competitors
Marketing involves.. (4)
informing customers about products
Marketing involves… (5)
charging the ‘right’ price
Marketing involves… (6)
persuading customers to buy products
Marketing involves… (7)
making products available in convenient locations
MASS MARKET
a very large market in which products with mass appeal are targeted
Mass market advantage chain
Huge number of customers, many products sold
↓
Businesses produce large quantities at lower unit cost by exploiting economies of scale
↓
Higher sales & higher profits
Mass market disadvantage chain
A lot of competition in mass market
↓
Businesses may spend a lot of money on marketing (high cost)
NICHE MARKET
a smaller market, usually within a large market or industry
often goes untouched by large companies
Niche market involves…
selling to a small customer group, sometimes with specific needs
Small firms can…
often survive by supplying niche markets
If a large business joins a niche market they may…
find it easy to overrun a smaller rival
Niche market disadvantage ‘chain’
Businesses which rely on a single niche market are vulnerable, as they are not spreading their risk.
↓
If they lose grip in their chosen market, they may collapse because they don’t have other back-up products or markets.
Market size can be…
estimated or calculated by the total sales of all businesses in the market
Volume is…
Physical quantity of products which are produced and sold
MARKET SHARE
Proportion of total sales in a particular market for which one or more businesses or brands are responsible.
How is market share expressed?
As a percentage
it can be calculated using value or volume
What is the calculation for market share?
(Sales of a business/Total sales in market) x 100
Why might the measurement of market share be important? (4)
It might indicate a business which is a market leader
↓.
This could influence other companies with smaller market shares to follow the leader or influence the leader to maintain its position.
It may influence the strategies or objectives of a business.
It may be an indication of the success or failure of a business or strategy.
BRAND NAME
A feature (e.g. name, term, sign, symbol, design) which allows consumers to identify the goods and services of a business and to differentiate them from those of competitors.
Branding might be used to… (1)
Differentiate product from those of rivals
Branding might be used to… (2)
Create customer loyalty
Branding might be used to… (3)
Help product recognition
Branding might be used to… (4)
Develop an image
Branding might be used to… (5)
Charge a premium price when a brand becomes strong
Businesses need to be able to… in Dynamic markets
Adapt
Online retailing or e-tailing
The retailing of goods online
E-commerce
conducting business transactions online
Benefits of retailing (1) Retailers can market their goods to people who…
prefer to shop from home or find it difficult to get to traditional shops
Online retailing is easier…
to gather personal information from customers so they can be targeted with other future products and offers
Selling costs such as…can be avoided
sales staff, rent, and other store overheads
These savings…
May be enormous which allows online retailers to charge lower prices
Marketing costs will be…
lower. (e. g. sending 1000 people an email vs 1000 news etters by post
Online retailers can reach…
more customers. (e.g. single highstreet store vs a global website with a large product range.
An online retailer is open…
24/7. Few stores can match such versatile and lengthy opening hours
Online retailers can be more…
flexible and easy to update. (e. g. it’s easy to promote a ‘deal of the day’ on a website home page without need for excessive printing material.
Factors for growth in the packaging market include (1)
increasing urbanisation
Factors for growth in the packaging market include (2)
investment in construction and housing
Factors for growth in the packaging market include (3)
development of retail chains
Factors for growth in the packaging market include (4)
expanding cosmetics and health care sectors in emerging economics
Markets in flux means…
their structure and nature is subject to constant change {dynamic?}
One big source of new markets is from development of…
emerging economies (e. g. BRIC - Brazil, Russia, India, China) + others
Growth in existing and new markets may occur due to E…(1) {Chain}
Economic growth
Global living standards rise > World has more disposable income > Businesses can supply more output to growing global markets.
+ market for more expensive goods will grow
Growth in existing and new markets may occur due to I… (2)
A lot of I… emerges through
Innovation.
Businesses can create new needs and wants and meet them with products.
Technical research and development
S… C… affecting market growth
E.g. Decline in number of marriages and growth in number of one parent families increased market size for childcare and housing.
Changes in….affecting market growth.
Legislation.
E.g Environmental legislation helped growth in renewable energies and green goods
D… C… affecting market growth
Demographic Changes.
(Changes in market structure)
In most countries populations are ageing.
This will help markets grow, as populations will rise.
If businesses do not adapt to change, they risk losing….
Or at worst could…
Market share.
Collapse
(E.g. Tesco losing market share to the cheaper alternatives of Aldi and Lidl in 2014)
If businesses have F… o… it will be a lot easier to adapt to market changes.
Flexible operations.
Businesses must undertake regular…M…R…if they desire to stay up-to-date with changing customer needs and wants.
Communicating with…c…and p…customers should be an ongoing process.
Market Research.
Current and potential cusotmers.
Businesses which I…in new product development are likely to survive for longer in the market
INVEST!
Advantage of INVESTMENT in new product development
A unique new version of a product could rejuvenate sales and help win a larger share of the market.
Disadvantage of INVESTMENT in new product development.
+ Potentially greater disadvantage!
Expenditure on research and development is costly.
HOWEVER, failure to innovate could carry a greater cost.
2 example advantages of CONTINUOUS IMPROVEMENT (a)
-Cont. Improvement in efficiency → Costs will be lower and prices can be held or reduced.
-Cont. Improvement in customer service → Customers are more likely to return
-
2 advantages of CONTINUOUS IMPROVEMENT (b)
- If new ideas are encouraged → They may gain competitive edge
- Culture of continuous improvement → Helps businesses be more adaptable in the market
If a market is in decline and a business is unable to diversify, they may survive by developing a…
Niche.
When is a niche strategy appropriate?
When groups of loyal customers can be served profitably.
[Context of Competition]
Which methods will businesses use to attract customers? (a)
Lowering prices.
a
[Context of Competition]
Which methods will businesses use to attract customers? (b)
Making products appear different to those of rivals
b
[Context of Competition]
Which methods will businesses use to attract customers? (c)
Offering better quality products
c
[Context of Competition]
Which methods will businesses use to attract customers? (d)
Using more powerful or attractive advertising or promotions.
d
[Context of Competition]
Which methods will businesses use to attract customers? (e)
Offering ‘extras’, such as high quality customer service.
What are the two ways a business may try to maximise profit potential in a competitive market?
- Purchasing rivals
- Putting obstacles in the way of rivals (to a certain legal degree)
A role of governments in markets is to…
ensure that competition exists.
This prevents consumers being exploited.
Risk and…U…are not the same
Uncertainty
Generally, businesses do not like U…because
However…
Uncertainty. - Because makes decision-making more difficult, particularly when making investments for the future.
However, its consequences aren’t always negative.
(E.g. new technology provides new opportunities.)
