Competition. Flashcards
What is direct competition?
When two or more businesses sell similar products to the same groups - the UK supermarkets.
What is indirect competition?
When two or more businesses sell different products, but are competing for the same customers. Eg Indian and Chinese takeways.
How does competition affect business decisions regarding the Marketing mix? (Product - 1st P.)
Products are similar in a competitive market so a business must ensure it’s good quality/ better than the alternatives. This means there is high innovation in these markets to create products with a unique appeal.
How does competition affect business decisions regarding the Marketing mix? (Promotion - 2nd P.)
Businesses have to try hard to be noticed over competitors. Thus there is usually a lot of promotion and ad campaigns to inform customers about their products. Businesses will often go to great lengths to strengthen their brand.
How does competition affect business decisions regarding the Marketing mix? (Price - 3rd P.)
Businesses often use competitive pricing where products are extremely similar as marginally cheaper products will theoretically be more in demand assuming the product is very similar. May use other strategies, but competitive markets tend to have cheaper products.
How does competition affect Place (4th P)
Businesses have to make it as easy as possible for consumers to access their products in competitive markets - thus most are online as well as on the highstreet.
How does being in a competitive market often affect the nature of leadership?
Many competitive mass markets are dominated by a few huge businesses. In order to compete with the massive budgets of competitors, many new/smaller businesses may need investors (share/venture) to raise capital to compete - thus most businesses are limited companies in mass markets to compete.
Even big companies may have to go public to compete.
- A new company could be a franchise to compete - can use brand name and reputation to suceed.
What are risks and uncertainties businesses face in markets?
All business activity has a degree of risk, businesses will usually consider the probabilities of different outcomes and can adapt/mitigate to minimise risks which makes them controllable.
- Uncertainties are unexpected events most businesses will face. Firms cannot accurately predict when they will happen or their outcomes - but usually affect entire markets as opposed to businesses.
