1A.1 Flashcards
What is a niche market
Subset of the main market and addresses a specialist need. e.g toothpaste for sensitive teeth
What is a mass market
The market aimed at a general population. e.g regular toothpaste
What are homogenous products
Similar products that compete in a market. e.g. different brands of yoghurt
Mass market characteristics
A product is marketed to all consumers in the same way. Consumers are not brand loyal in this market, they choose a car based on features and price.
Example of a mass market
The car market is an example of a mass market.
Advantages of operating in a mass-market
-Large scale production means economies of scale and lower average unit costs.
-Mass marketing is straightforward as everyone is equally targeted.
-Large volumes of sales means high rev
Disadvantages of operating in a mass market
-Lots of competition
-Homogenous products need to be differentiated through marketing which can be expensive.
-High volume productions may not be flexible enough to keep up with changes in demand.
Example of a niche market
Super cars, ferrari.
Benefits of operating in a niche market
-Charge premium price
-Small scale production can be flexible and follow trends.
-Less competition
Drawbacks of operating in a niche market
-Very risky as demand may not be constant.
-Higher unit costs, so no economies of scale.
-smaller market size, so fewer potential customers.
What is the market size
The total of all sales of all the producers in that market.
What is a dynamic market
One that is subject to rapid continuous changes.
Example of a dynamic market
Online retailing is a dynamic market because it is constantly changing, developing, expanding and offering customers new products and new ways to shop.
Advantages of online retailing
-Cheaper for retailer.
-Open 24/7
- Dont have to pay shop workers salarys
-Can sell to a wider number of customers
-orders taken automatically
-flexible, owner can be anywhere in the world.
Disadvantages of online retailing
-issues with sending goods back
-Problems with fraud
-very competitive market.
How do competitive markets benefit consumers
More competition means a business needs to be very efficient, more competition means the business needs to listen to consumers needs and wants and constantly strive to meet those needs rather than being product orientated.
What is risk
The possibility of a business will have lower than anticipated profits or experience a loss rather than taking a profit.
How does risk link to job security
When a person starts a business they leave behind a secure job, meaning they may suffer from stress. The risk of business failure means the owner may not be able to pay bills. e.g mortgage.
What is uncertainty
When business are unable to predict external shocks or future events.
Uncertainty affect on households
Households face with uncertainty may spend less and save. If company is take over by another, employees may feel uncertain if next years pay will be lower and may save.
