Component 1 Booklet 3 Flashcards
What is economies of scale?
As the business grows the cost per unit falls
What are inferior goods?
A good that decreases in demand as a consumers income rises and rises in demand as consumer income falls
Example-Payday loans
What is Market Size?
The total number of sales of all businesses in the market
What is a Service Market?
It offers a service and is intangible therefore you can’t touch,taste,smell or see it you experience it instead
Example-insurance
What are normal goods
A good that increases in demand as consumer income rises and falls when consumer income decreases and price remains constant.
Example-Most every day goods-Chocolate
What are luxury goods?
Similar to normal goods but are expensive and often scarce.
Increases in demand as consumer income rises and decreases when it falls
Example-high end sports car
What are monopolies?
Key characteristics
- single producer/seller
- large barriers to entry
- 25% or more market share
- they were much more common 30 years ago than now as there used to only be really one gas supplier,telephone supplier etc
What is a Product Market?
This is tangible therefore you can see,taste,touch,smell it
And can be:
- consumer
- trade
- commodities
What is a trade market?
Sellers target their goods/services at other businesses
Example:Colleges buying stationary
What is a consumer market?
Sellers target goods/services at the end user(usually is the general public)
Example-The Cereal Market
What is a Mass Market?
Sellers target a whole market in the same way
Example-Cars
What is a Niche Market?
Sellers target a smaller segment of a larger market where customers have specific needs/wants
What is a global market?
Buyers are targeted by businesses based anywhere in the world(either via e commerce or direct selling)
What is a Local Market?
Buyers are targeted by locally based businesses usually based on where they live,work or socialise
Why is competition healthy to have within markets?
- drives up standards and quality
- keeps prices down for consumers
- gives the buyer a wider range of choice
- can force innovation
What is competition?
The level of rivalry between different sellers seeking the same buyers at the same time.
What is a Market?
Where buyers and sellers interact(directly or indirectly) to trade goods,services or money.
What is Oligopolistic Competition?
Key characteristics
- a few dominants in the market
- strong brand identity
- prices stable over long periods
- Barriers to entry exist
-many large industries are oligopolistic in nature.Example-Supermarkets or Department stores
What is Monopolistic Competition?
Key characteristics
- large number of small businesses in competition
- few barriers to entry
- products similar but still differentiate from each other
- each business tries to offer something different but are all essentially competing for the same customers.
What is Perfect Competition?
Key characteristics
- Large number of businesses competing
- No ones business is large enough to influence others
- no market leader/price maker
- no barriers to entry/exit
What is a seasonal market?
•Goods/services where there are large variations in sales based on the time of year
Example-Christmas
What are Market Trends?
Changes that have or are occurring in the market
Why is market share so important for a business?
- The greater the share the more likely the stability of the brands performance in a market place
- A product with a low share is vunrable to things like pricing policies of competitors,promotions by competitor firms and loyalty to stronger brands.
How can businesses work on increasing their market share?
- sell a wider range of products
- improve quality of products
- more promotional offers/advertising
- increase number of stores
- take over/merge with another company
- innovation(differentiate from competitors)
- strengthen customer relations.E.G:loyalty cards
How do you calculate market share?
Sales sold by company
_________________________ x100
total sales sold in market
What is Market Share?
- the proportion of the market that a company has
* The proportion of a total market value held by each company or product
What are demographic changes?
Demographic=age,gender,religion etc
Population demographic changes-
•ageing population or baby booms
What are technological changes?
•innovation,obsolete,fads(fazes)
Example-DVDs,mp3 players,vinyl
What are social changes?
•Change In trends,tastes and fashions
How do you calculate market size(per period)?
Number of units sold in market
X
Average selling price in market
What are economic changes?
•changes in disposable income
caused by:interest rates,inflation,exchange rates
What is Market Value?
- The total value of all sales in the market
* Measured In Pounds,Dollars and Euros
What is Market Growth?
•The extent of which a market is growing in size
How is Market Growth measured?
•measured by total value of spending and looking at growth/decline from previous year.
What is Market Volume?
The total number of products/services sold in a market
What is B2B and B2C?
•B2B is business to business.
For example-Trade Markets
•B2C is business to consumer
For example-Consumer Markets
What is differentiation?
A way of telling products apart(where products have slight differences)
What is homogenous?
There is no difference between the goods sold by one business or any other business
What is a price taker?
Businesses must accept the going price of the market place
What is a price maker?
Companies that have significant influence over prices charged for products/services
What are cartels?
An agreement amongst businesses to keep prices high
Example-Airline industry’s and supermarkets
What are some examples of consumer exploitation?
- false/misleading adverts
- cartels/collusion
- price fixing
- restricting competition
- unethical practises
- if a product/service does not fulfill its purpose.E:G-quality issues
What is Market Segmentation?
Dividing a market into sub groups with common features(needs/wants) so that specific products/services can be accurately targeted at each segment
What rules apply to market segmentation?
- all segments must have critical mass
- segments must be recognisable so they are different enough to make producing worthwhile
- must be targetable
What is critical mass?
You have to have a large enough segment to produce for therefore Got to have enough people in the market
What are the 3 types of market segmentation?
- Demographic
- Psychographic
- Geographic
What is Demographic Market Segmentation?
Segmented based on age,social class,gender,income
Example-Banks offer different accounts to different age groups
What is psychographic market segmentation?
Allows targeting of groups on personality and emotionally based behaviour-attitudes,opinions and lifestyles.
Example-Differentiating cars by emphasising different features-safety and capacity of family car.
What is Geographic Market Segmentation?
Segmented based on regions of the country-rural,urban,suburban.
Global marketing often requires different products for different countries
Example-Global brands such as McDonalds and Coca Cola require different ingredients in different countries
What are benefits of market segmentation?
- can enhance the profits for businesses
- more opportunity for business to grow-market expansion
- enables business to better match customer needs
- can enable a business to increase market share through more competitiveness
What is Target Audience?
Who your product is aimed at
