Competitive Evnoirmemt Flashcards
Market and competition
Market - exists where there are buyers and sellers allowing them to exchange info.
Competition- when business try to sell same product to attract same customers, compete for customers.
Different types of competitions in the market
,Monopoly- the only business providing the product - little or no competition, high prices
Few businesses - may be large businesses - supermarkets, competition can be intense but not always, prices may be low. Compete using - price, advertising, new products
Many businesses
Uncertainty
This exists when a business do not have suffeciemt information about a specific circumstance.
Risk
Possibility of something going wrong but it can be measured.
Wh all businesses face uncertainty
Most situations - lack on information. Economy - many unaware of future economic events and the effects they have on market.
Competitors and uncertainty - competitors action uneasy to predict. Eg price reductions, launch of something
Risks businesses face
Change in the law,
loss of key supplier
, disasters and accidents - preventing production,
new products developed,
bad publicity and
not attracting enough customers
Ways to minimize risk
Planning ahead - contingency plans to deal with risks such as flood or sudden rise in price of raw materials.
Sell different products to a range of markets. Less likely suffer major fall in sales for all products at same time.
Prepare employees for change through timing - training help employees overcome risk of bad publicity from errors.
Entrepreneur reducing the risk they face by:
Seeking advice - experts can help identify risk and develop ways to OC
Plan thoroughly- identify risks
Employ the right people - skills they need to build successful business.
What is a monopoly?
A market which is dominated by one seller or producer, occurring legally if a firm has a market share of 25%.
Monopolies can dictate prices, making competition difficult.
What characterizes a competitive market?
A situation where multiple businesses compete for the same customers.
This competition can influence pricing, quality, and customer service.
Name five factors that can improve competitiveness.
- Price
- Quality
- After sales service
- Location
- Unique Selling Point (USP)
Other factors include delivery and branding.
How can selecting the right price improve competitiveness?
It can attract customers through lower prices or promotional pricing.
Pricing strategies are crucial in competitive markets.
Why is higher quality important in relation to luxury goods?
It is often the most important factor that sets a product apart from the competition.
Luxury consumers typically prioritize quality over price.
What is important about after sales care for products like cars?
The features of the warranty and whether a courtesy car is available are critical.
Good after sales service can enhance customer satisfaction.
Why do businesses selling convenience goods benefit from location?
Being very close to their customer increases accessibility and sales.
Proximity can significantly influence purchasing decisions.
What is a Unique Selling Point (USP)?
A feature of the product or service that is unique to the business.
A strong USP can justify higher prices and attract more customers.
How can a range of delivery options increase customer numbers?
By adding convenience through options like Click and Collect and home delivery.
Reducing wait time and travel improves customer experience.
What role does branding play in customer appeal?
The design and reputation of a brand can significantly increase its appeal.
Brands like Apple exemplify successful branding strategies.
True or False: Monopolies typically lead to lower prices for consumers.
False.
Monopolies can dictate prices, often leading to higher costs for consumers.
