1.1.1.The Market

Question 1

What is a mass market?

Answer 1

Products aimed at a broad market segment. Production on large scale.
- Products less unique due to broader audience
- Low av. costs due to large scale production which allows economies of scale(lower production costs)
- Low prices=more affordable=greater sales
-Low prices lead to lower profit margin

1.Huge potential no. Of customers
2.use of lass media advertising

Question 2

What is a niche market?

Answer 2

-Products are aimed at a subset of larger market. Production on a smaller scale
-Products=more specialised and unique
-High av. costs due to small scale of production.Don’t benefit from economies of scale
-High prices=less affordable=lower sales
-High prices allows business to earn higher profit margin
-Differentiation through product features/functions

Question 3

Market size?

Answer 3

-Size of market can be measured by sales vol. or sales value.
-Revenue=Price X Quantity Sold

Question 4

Market share?

Answer 4

-How much of the market a business has control over as a %
-Market Share= Business sales/Total market sales X 100

Question 5

Brands?

Answer 5

-Brands add value by making products more desirable
- Added value- Increase prices that consumer is willing to pay
-Brands influence position of business within its market
-Stong brands more likely to be able to charge higher prices
-Perceived quality of strong brands products is better

Question 6

Dynamic Markets?

Answer 6

• A market that is subject to rapid or continuous change. Need to adapt to remain competitive and survive. ie.phones
  -Those with monopoly power(Amazon) might not face same dynamic pressures.

1.Online retailing? Small businesses use e-commerce to keep overheads low+prices competitive.
+ves:
-Access to more consumers (internationally)
-Enables longer trading hours due to 24/7
-Cheaper to run as it lowers fixed and variable costs
-Can collect data by tracking consumer behaviour which helps primary research
-Consumer freedom as they can shop whenever
-Consumers can receive offers that they are more likely to benefit from.

-ves:
-High costs for web development, promotion, maintenance etc
-Dominated by larger businesses
-High levels of competition=expensive to stand out
-Lack of personal contact with customers.
-Consumers may find it difficult to get desired customer service
-May be difficult to return

2.How markets change?
-Consumer tastes and preferences
-Demograohics (Older customers with different wants and needs)
-Amount of competition
-Changing legislations
-Technology
-Environment(car industry-Exhaust fumes etc)

3.Innovation and market growth?
-Product innovation involves adapting or improving existing products
-Process innovation involves adapting existing processes ie.JIT stock control
Market growth caused by:
-Increasing population sizes
-Increasing incomes=Increased demand
-Changing tastes and preferences

4.Adapting to change?
-Creating flexible business structure
-Meeting customer needs (Communicating with customers and doing research)
- Invest in staff training, new products and processes
-Innovate to gain the first mover advantage

Question 7

How competition affects the market?

Answer 7

-Direct competition occurs when business is targeting customers with same product as competitor
-Indirect competition occurs when a firm sells different products but compete with each other for the income ie. Theatres and cinemas
- Benefits customers as businesses offer lower prices, bette quality products am provide better customer service
- Absence of competition reduces incentives for businesses to innovate, be efficient or offer lower prices

Increased competition creates various pressures:
1. Need to drive down costs
2. Need to maintain competitive prices
3. Need to develop innovative products/services
4. Need to maintain high quality products/services

Question 8

Risk and uncertainty?

Answer 8

1.Risk is potential threat to business success internally or externally. Quantifiable
-Tech failures, cyber security threat, loss of key staff, currency fluctuations.

2.Uncertainty is when outcomes are difficult to predict ie. Rivals, reactions of consumers/retailers, unexpected events like currency or economic downturns

-Market research can help reduce risk by eliminating uncertainties which leads to reduction in risk