1.1.1 The Market

Question 1

Market

Answer 1

• buyers &sellers
• exchange goods/services
• exchange of money at a set price

Question 2

marketing

Answer 2

targeting product target market (promote/sell)
4Ps
-market research and advertising
connect with customer

Question 3

4 Ps

Answer 3

price
promotion
product
place (people)

Question 4

marketing strategy

Answer 4

plan of how you are going to achieve your marketing objective
SMART

Question 5

mass market

Answer 5

products or services which are targeted at whole market e.g mars bar

people: generic public, wider population, entire market
product: wide appeal, generic, low quality
promotion: mass media
price: competitive
production: high output, low cost EOS

Question 6

ADV of mass market

Answer 6

• wide TM = less risk
• EOS
• production = cheaper per unit
• large volume of sales (high revenue, invested into R&D

Question 7

DIS of mass market

Answer 7

1-competitive = differentiate
2-inflexible in production (demand changes) high volume
3-homogeneous (all same) = differentiate = market cost

Question 8

ADV of niche market

Answer 8

1-premium price - profit, competition
2-specific knowledge/skills - easier to target (loyalty)
3-small scale production (flexible/follow trend)

Question 9

DIS of niche market

Answer 9

• higher unit cost = No EOS
• risk of overdependence on single market/product
• risky no constant demand (vulnerable mkt changes)
• high skill staff

Question 10

market size

Answer 10

total value or volume of sales in market
can be measured in monetary terms (e.g. £20million)
or by amount sold (e.g. 1 million cars)

Question 11

market size formulae

Answer 11

number of units sold x price

Question 12

market share

Answer 12

proportion of total market sales a firm has

sales of one firm divided by total market sales x 100

Question 13

3 things market share influenced by

Answer 13

1-marketing focus
2-economic situation
3-competitors actions

Question 14

dynamic market

Answer 14

constantly changing,

seller respond to the changing needs of buyers improving existing or introducing new ones

Question 15

5 reasons why are markets dynamic

Answer 15

1-dynamic environment 
2-social trends 
3-changes in technology 
4-competitive environment 
5-consumer tastes 

adapt their marketing in respond to these changes, fails to keep up with trends = lose competitiveness

Question 16

other market

Answer 16

relatively slow moving e.g. confectionary

Question 17

stable market

Answer 17

pace of change slow,
market size & share fairly constant little variation price

(innovation: rare, may just consist of minor changes to existing products

Question 18

markets have changed/how they change

Answer 18

technological changes (rise of internet)

how: 
digital economy (affects consumer/producer) 
changes in consumer tastes/preferences (products wanted that meet specific needs (innovation)

Question 19

online retailing

Answer 19

process of buying & selling goods and services over the internet (e-commerce)

Question 20

4 ADVS and 3 DIS of impact of consumer of online retailing

Answer 20

ADV: 
1-convenient - breaks geographical location barrier 
2-range 
3-availability (new products/services) 
4-price transparency 

DIS:
1-intangible product
2-delivery issues
3-fraud

Question 21

4 ADVS and 4 DIS of impact of business of online retailing

Answer 21

ADV: 
1-24/7 
2-demand - wider TM 
3-rent payments (cheaper to run)
4-reach global market (fast for growth) 

DIS:
1-competitors (barriers to entry) 
2-increased delivery, storage costs 
3-may have to reduce price 
4-specialist to set up &maintain website

Question 22

digital economy

Answer 22

economy built on technologies (internet facilitates this use of technology)

Question 23

3 main areas of digital economy

Answer 23

1. supporting infrastructure
2. e-business
3. e-commerce

Question 24

government innovation

Answer 24

increasing legislation in an industry - alter way marker operates
(automobile market affected - laws reducing carbon emissions)

Question 25

Brand

Answer 25

product specific name, creation of an identity distinguishes that firm consumer have perception of what to expect trademark that cannot be copied -name, shape, symbol, colour, logo, images, celebrity endorsement -loyalty & repeat business adding value =higher prices

Question 26

3 Benefits of branding

Answer 26

1. brand extension (willing new products brand loyalty) 2. brand value 3. brand personality (take on persona, certain human characteristics)

Question 27

How do businesses respond to changes in market? | 3 ways

Answer 27

1. Offensive (increases sales/develop new markets) 2. Defensive (react to competition & maintain market share) 3. Mixture

Question 28

market growth

Answer 28

- percentage increase in size of market | - change in size of market divided by original size x100

Question 29

5 ways competition affects market | PORTERS 5 FORCES

Answer 29

1. price a business is able to charge (no of comp) 2. buying power of customer 3. selling power of supplier 4. availability of substitutes 5. willingness and ability of new firms to enter

Question 30

product innovation

Answer 30

- new technologies = possible create completely new products - increase sales / whole new markets = rapid growth -being innovative = growth

Question 31

process innovation

Answer 31

- using new technology to improve production methods - cost reduced without loss in quality - through distribution channel, stock control, supply chains

Question 32

situations where businesses may have to assess risk:

Answer 32

``` helf/safety new product by market research diversify use cost benefit analysis / benchmarking (match to the best) risk making business investment risk MR will pay off ```

Question 33

to reach equilibrium

Answer 33

D =S | excess supply when D

Question 34

risk

Answer 34

calculate probability/possibility that things will go wrong | calculated/weigh up

Question 35

uncertainty

Answer 35

unpredictable and uncontrollable events that affect business e.g. industrial action (strikes) ``` sales success for new product launch effect of launching price war against comp external events economic variables how governments may react to FDI ```

Question 36

strategies to minimise risk and uncertainty

Answer 36

1. sales forecasting techniques (JIC) 2. decision trees 3. liquidity "safe" working capital, acid test/current ration 4. market research 5. contingency plans/scenario plans 6. RISK= loyal customer base developed 7. broaden product portfolio

Question 37

uncertainty strategies

Answer 37

excess cash supplies decrease number of receivables and no of receivable days given increase payable days to suppliers diversify foster agility in decision making

Question 38

risk strategies

Answer 38

calculated & diversify risk increased returns = account for risk persistent

Question 39

niche market

Answer 39

small specific segment of mass (small target market)

Question 40

economies of scale

Answer 40

factors cause cost per unit to fall when firm operates at higher level of production

Question 41

unique selling point

Answer 41

consumer benefit no rival can match

Question 42

product differentiation

Answer 42

extent to which consumers perceive brand/product as different from others

Question 43

Issues with dynamic markets:

Answer 43

1. Online retailing 2. Markets changing (PESTLE) 3. Innovation/market growth 4. Adapt to changes

Question 44

Increased competition = various pressures….

Answer 44

1. Drive down costs 2. Maintain competitive prices 3. Develop innovative products 4. Maintain high quality

Question 45

ICT supports market research

Answer 45

1. Company website 2. Social media 3. Database technology