Booklet 5: Markets and Market Forces Flashcards
What is a market?
A market is essentially an environment where buyers and sellers exist to exchange goods and services.
What is a Consumer goods and services market?
A consumer market is one in which a business is selling its products to the general public, (e.g. vehicles, confectionery.)
What is a Capital good market?
A capital goods market is one in which tangible products are sold from one business to another business, which in turn uses the products to produce consumer goods (e.g. Equipment is sold to a construction company).
What is a labour market?
The labour market is characterised by the availability of job opportunites and workers.
What is a Mass Market?
A mass market is a large market where consumer wants and needs are not specific.
Advantages of Mass Marketing?
- The product appeals to the mass market (this should improve profit margins).
- More customers mean more revenue.
- A mass-market product can be advertised and marked more effectively.
Disadvantages of Mass Marketing?
- High fixed capital costs are incurred.
- It can be difficult to appeal directly to each individual customer because mass-market products are designed to suit all customers.
What is a Niche Market?
A Niche Market represents a small segment of the larger market on which a product or service is focused.
Advantages of a niche market?
- Fewer competitors- allows firms to charge higher prices.
- Lack of economies of scale allows small firms to compete more effectively.
- Limited demand suits a small firm.
Disadvantages of a niche market?
- Limits the amount of profit.- Fewer customers= less profit.
- Carry more risk- specialise in a certain area wiht nothing to fall back on.
- An increase in interest may be enough to attract larger firms into the market.
What is Market size?
Market size- calculated by adding together all sales reported by firms within a marketplace.
What is Market share?
Market share- represents the proportion of sales a business or product line has achieved (as a %).
What is Market Location?
Location- represents the geographical territory in which the business trades.
What is the Differentiation of products?
Differentation of products- the process a business undertakes to ensure that their product/ service is sufficiently diffirent from other products/ services in order to make it more appealing to customers in a specific target market.
What is the definition of Demand?
Demand- describes a consumer’s desire and willingness to pay a price for a specific good or service.