1.1.1 The Market Flashcards
Market
- buyers &sellers
- exchange goods/services
- exchange of money at a set price
marketing
targeting product target market (promote/sell)
4Ps
-market research and advertising
connect with customer
4 Ps
price
promotion
product
place (people)
marketing strategy
plan of how you are going to achieve your marketing objective
SMART
mass market
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
ADV of mass market
- wide TM = less risk
- EOS
- production = cheaper per unit
- large volume of sales (high revenue, invested into R&D
DIS of mass market
1-competitive = differentiate
2-inflexible in production (demand changes) high volume
3-homogeneous (all same) = differentiate = market cost
ADV of niche market
1-premium price - profit, competition
2-specific knowledge/skills - easier to target (loyalty)
3-small scale production (flexible/follow trend)
DIS of niche market
- higher unit cost = No EOS
- risk of overdependence on single market/product
- risky no constant demand (vulnerable mkt changes)
- high skill staff
market size
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)
market size formulae
number of units sold x price
market share
proportion of total market sales a firm has
sales of one firm divided by total market sales x 100
3 things market share influenced by
1-marketing focus
2-economic situation
3-competitors actions
dynamic market
constantly changing,
seller respond to the changing needs of buyers improving existing or introducing new ones
5 reasons why are markets dynamic
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
other market
relatively slow moving e.g. confectionary
stable market
pace of change slow,
market size & share fairly constant little variation price
(innovation: rare, may just consist of minor changes to existing products
markets have changed/how they change
technological changes (rise of internet)
how: digital economy (affects consumer/producer) changes in consumer tastes/preferences (products wanted that meet specific needs (innovation)
online retailing
process of buying & selling goods and services over the internet (e-commerce)
4 ADVS and 3 DIS of impact of consumer of online retailing
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
4 ADVS and 4 DIS of impact of business of online retailing
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
digital economy
economy built on technologies (internet facilitates this use of technology)
3 main areas of digital economy
- supporting infrastructure
- e-business
- e-commerce
government innovation
increasing legislation in an industry - alter way marker operates
(automobile market affected - laws reducing carbon emissions)
Brand
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
3 Benefits of branding
- brand extension (willing new products brand loyalty)
- brand value
- brand personality (take on persona, certain human characteristics)
How do businesses respond to changes in market?
3 ways
- Offensive (increases sales/develop new markets)
- Defensive (react to competition & maintain market share)
- Mixture
market growth
- percentage increase in size of market
- change in size of market divided by original size x100
5 ways competition affects market
PORTERS 5 FORCES
- price a business is able to charge (no of comp)
- buying power of customer
- selling power of supplier
- availability of substitutes
- willingness and ability of new firms to enter
product innovation
- new technologies = possible create completely new products
- increase sales / whole new markets = rapid growth
-being innovative = growth
process innovation
- using new technology to improve production methods
- cost reduced without loss in quality
- through distribution channel, stock control, supply chains
situations where businesses may have to assess risk:
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
to reach equilibrium
D =S
excess supply when D
risk
calculate probability/possibility that things will go wrong
calculated/weigh up
uncertainty
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
strategies to minimise risk and uncertainty
- sales forecasting techniques (JIC)
- decision trees
- liquidity “safe” working capital, acid test/current ration
- market research
- contingency plans/scenario plans
- RISK= loyal customer base developed
- broaden product portfolio
uncertainty strategies
excess cash supplies
decrease number of receivables and no of receivable days given increase payable days to suppliers
diversify
foster agility in decision making
risk strategies
calculated & diversify risk
increased returns = account for risk
persistent
niche market
small specific segment of mass (small target market)
economies of scale
factors cause cost per unit to fall when firm operates at higher level of production
unique selling point
consumer benefit no rival can match
product differentiation
extent to which consumers perceive brand/product as different from others
Issues with dynamic markets:
- Online retailing
- Markets changing (PESTLE)
- Innovation/market growth
- Adapt to changes
Increased competition = various pressures….
- Drive down costs
- Maintain competitive prices
- Develop innovative products
- Maintain high quality
ICT supports market research
- Company website
- Social media
- Database technology
