Edexcel- The Market 1.1 Flashcards
Sales volume
Number of units sold
Sales value
Revenue generated from products
Market size
Sales over a period of time
Market share
Proportion of total market
Market share formula
Sales business/ total market shares x 100
Brand
Value and experience customer has with a product or service
Brand loyalty
Product or service which will get repeat business
Brand loyalty benefits
Customer loyalty
Business can charge higher prices
Retailers will want to stock brands
Mass markets pros
Large sales so high revenue
Economies of scale
Everyone can be equally targeted
Mass market cons
Lots of competition
Products need to be differentiated
Lower profit margins
Niche market pros
Charge premium prices
Easier to target consumers
Less competition
Niche market cons
Demand is not constant
No economies of scale
Difficult to target audiences as smaller
Dynamic markets
Markets which are constantly changing
Why do dynamic markets change
Online retailing
How markets change
Innovation and market growth
Innovation
Putting a new idea into action
Product innovation
Launching new products
Process innovation
Finding better and efficient ways of producing existing products
Benefits of product innovation
Added value
Build early customer loyalty
Enhanced reputation
Benefits of process innovation
Reduced costs
Improved quality
Higher profits
How competition affects market
Battle for market share
Pricing
Battle for competitive advantage
Competitive advantage
Business has advantages over competitors
Risk
Possibility things will go wrong
Unpredictable
Uncontrollable events that affect business
Online retailing
Selling products via the internet
Advantages to online retailing
Provides businesses access to more consumers
Cheaper to run as lower fixed and variable costs
Consumers can shop at times that suit them
Disadvantages to online retailing
High costs for website development, maintenance and promotion
More competitors
Difficult to provide good customer service
How may markets change?
Changing consumer tastes and preferences
Changing demographics
Changing legislation
Market growth
Measurement of change in entire market expressed as percentage of original size
Adapting to change
Create flexible business structures
Meet customer needs
Invest in staff training
Why competition positively affects competitiors?
Businesses offer lower prices
Businesses provide better quality products
Businesses provide better customer service
How is the absence of competitors negative?
Reduce incentives for businesses to innovate
May have to offer higher prices to consumers
Example of a risk
Currency fluctuations
Example of an uncertainty
Interest rates
