jan mock : paper 1 Flashcards
what is a market?
- any place that buyers and sellers come together to exchange goods/ services
what is a mass market?
-the attempt to create products/ services which are targeted at a whole market
what is a niche market?
the attempt to create products or services aimed at a specific segment of a market.
what are characteristics of mass markets?
- aimed at entire market
- wide-appeal product
- competitive pricing
- usually low cost per unit
- economies of scale
what are characterises of niche markets?
more specific TM
- high quality
- usually higher cost per unit
- charge higher price/ premium pricing
- hard to achieve EOS
what is market size?
the total value/ volume of sales in the market
can be measured I either volume or value
how do you calculate market size?
value =number of units sold x price
volume= total revenue/ total sales
what is market share?
the proportion of total market sales that one firm has
how do you calculate market share?
sales of one firm/ total market sales x100
what is a dynamic market?
a market that is constantly changing due to factors such as:
- social trends
- technology changes
- consumer tastes
what is a static/ stable market?
- change is slow and minimal
- little innovation required
what is online retailing?
- process of buying and selling producers on the internet (e-commerce)
what is a brand?
- the creation of a brands identity
- adds value to the product/ service
how does competition affect a market?
- influence on pricing (competitive pricing)
- buying power of customer]
- selling power of supplier
what is the degree of competition?
the number of firms that exist within the market
how can business adapt to change?
offensive- try to increase sales/ develop new markets
defensive- react to competition/ try maintain market share
what is market growth?
- the percentage increase or decrease in the size of a market
how do you calculate market growth?
year 2- year 1/ year 1 x100
what is risk?
the chance of something going wrong
what is uncertainty?
when a business is unaware of the outcome of something
what is an opportunity cost?
the cost of missing out on the next best alternative when making a decision
eg. open a new store or franchise
what is a trade off?
a negative consequence of a choice made by a business
eg. buying a cheap top the consequence is poor quality
how do you calculate percentage change?
new-old/ old x100
what is a businesses product portfolio?
the range of products that a business sells
what is the Boston matrix?
a tool used to analyse a products market share and growth within a market
what are the 4 quadrants in Boston matrix?
- cash cow
- rising star
- problem child/ ?
- dog
what is a dog in boston matrix?
- low market share, low market growth (divesting)
- poor profits
- in decline stage of PLC
- try improve/ get rid of
what is a rising star in boston matrix?
- high market share, high market growth (holding)
- high sales turnover/ revenue
- high competition
- needs lots of promotion
what is a cash cow in boston matrix?
-high market share, low market growth (milking)
- established products
- maturity stage of PLC
- little promotion needed
- less competition threat
what is a problem child in boston matrix?
-low market share, high market growth (building)
- low sales revenue
- low demand
- lots of competition
what are some advantages of a DOG in Boston matrix?
- huge potential growth
- can use extension strategies to extend PLC
what are some disadvantages of a DOG in Boston matrix?
- poor position in market
- significant investment required
- no guarantee of success
- lots of risk involved
what are some advantages of a RISING STAR in Boston matrix?
- rapid growth
- potential to turn into a cash cow
what are some disadvantages of a RISING STAR in Boston matrix?
- risk of competition entering
- lots of investment/ promotion needed
what are some advantages of a CASH COW in
Boston matrix?
- less investment needed as already established
- generates lots of income
- less threat of competition/ new entrants
what are some disadvantages of a CASH COW in Boston matrix?
- risk of entering decline stage in PLC
- no room for growth
what are some advantages of a PROBLEM CHILD in Boston matrix?
- huge growth potential
- they have high market growth so could be demand
what are some disadvantages of a PROBLEM CHILD in Boston matrix?
- high maintenance/ investment
- low income generated
- low demand
- lots of competition as market is growing
what are some advantages of the Boston matrix as a tool?
- helps with allocation of resources
- aids decision making
- assess timings of when to launch/withdraw product
what are some disadvantages of the Boston matrix as a tool?
- may be subjective
- oversimplified
- only looks at 2 variables (market growth and share)
what is B2B marketing ?
the process of selling products/services to another business eg. costco
what is B2C marketing ?
selling directly to customers who buy their products for personal use
what are some advantages of using B2B marketing?
- usually more revenue per order
- reduced advertising costs
- can tailor more easily as specific target market
- benefit from economies of scale (EOS)
what are some disadvantages of using B2B marketing?
- can be time consuming to build relationship
- more difficult to setup
- harder to stand out as B2B brands not as well known
- smaller target market so limited sales
what are some advantages of using B2C marketing?
- larger target market so increased sales
- more avenues to grow
- easier to diversify due to brand awareness
- B2C brands are more well known and so have increased loyalty
what are some disadvantages of using B2C marketing?
- heavy competition
- high advertising/ marketing costs
- smaller order quantities(smaller revenue per order)
what is the product life cycle (PLC) ?
a model that shows the lifespan of a products sales from launch to being taken off the market
what are the stages of PLC?
- Research and development (R+D)
- launch
- growth
- maturity/ saturation
- decline
what is an extension strategy?
the ways in which a business can modify a product to appeal to more customers and maintain sells.
eg. promotion and product modification
what are some characteristics of marketing within a mass market?
- more advertising needed as more competitive
- need to promote a USP
- generic advertising not tailored
what are some characteristics of marketing within a niche market?
- specialist promotion strategy
- not as constant promotion as less competative
what is market mapping?
a plotting grid of where products/ brands sit in relation to 2 variables against competitors (eg. price and quality)
what is market positioning?
how individual products/ brands are seen in relation to competitors
what are some advantages of market mapping?
can help businesses to identify a gap in the market
visually interpreted/ easy to understand
-can influence decision making
what are some disadvantages of market mapping?
- subjective tool
- oversimplifies the market as only looks at 2 variables
- difficult to plot all brands/competitors in market
what is a competitive advantage?
an advantage gained over competitors by offering customers greater value
what are some examples of how a firm can achieve a competitive advantage?
- customer service
- value for money
- brand name
what is product differentiation?
the extent to which consumers perceive your brand as being different from competitors
what is the purpose of product differentiation?
- helps gain competitive advantage
- allows you to charge a higher price if not many substitutes
what is added value?
the difference between the value of the finished good and the cost to produce
what is a global marketing strategy?
the adaptation of a marketing strategy to target all markets on a worldwide scale
what are advantages of global marketing ?
- economies of scale
- consistent brand image
- customer loyalty
what are disadvantages of global marketing ?
-conflict of differences/ culture
-competition
costly
what does globalisation mean?
the process where businesses/ economies become more interconnected through global networks of trade
what are some advantages of glocalisation?
- greater chance of attracting local customers
- help gain competitive advantage
- can lead to lower barriers to entry
what are some disadvantages of glocalisation?
- may already be saturated market
- increased R+D cost
- risk off damaging brand image if too heavily done
what is an EPG model?
framework that can be used to consider marketing approaches used by global firms.
what is a businesses home nation?
where the business originated
what is a businesses host nation?
where target market of business is based
what are the 3 approaches to global marketing?
- ethnocentricity
- geocentric
- polycentricity
what are the 3 approaches to global marketing?
- ethnocentricity (domestic)
- geocentric (international)
- polycentricity (mixture)
what is the ethnocentricity approach to global marketing ?
where promotion of product is undertaken based on beliefs of home nation and is presented to the host nation
what are some characteristics of ethnocentricity approach to global marketing?
- can be restrictive on marketing
- make not make sales in host country
- decision making is centralised in home nation
- ignores local culture of host nation
what are some characteristics of the geocentric approach to global marketing ?
- marketing focuses of business benefit
- recognises global differences
- aim is to build success and a brand for business
- mixture of ethnocentricity and polycentricity
what is the polycentricity approach to global marketing ?
promotion of the product is undertaken based on beliefs of the host country
what are some characteristics of the polycentricity approach to global marketing ?
- decision making is decentralised
- tailoring to host in main aim of the business
- fully take culture and religion of host Into account
- targets local needs and wants
what are factors that influence a businesses chose approach to global marketing?
-nature of the product
-aims/objectives
capital available
-local competition
-nature of the brand/ brand image
what is ansoffs matrix ?
- a marketing planning model that helps a business to determine its product and market growth strategies against risk
what are the 4 quadrants in ansoffs matrix?
- market penetration.
- product developmnmet
- market development
- diversification
what variables does ansoffs matrix consider?
- if a product is new/ existing
- if a market is new/ existing
what is an exchange rate?
the price of one currency expressed in terms of another currency
what does SPICED mean?
stronger pond imports cheaper exports dearer
how can exchange rates affect businesses?
- increase/ decrease competitiveness
- can impact pricing of product
- revenues/ profits generated from overseas
- price of imports/ exports
who benefits from weak exchange rates?
- businesses that are exporting into international markets
- businesses earning profit in overseas currency
who doesn’t benefit from weak exchange rates?
- businesses importing goods/services
- overseas business that’s trying to compete in domestic market
impacts of exchange rates on competitiveness
-choosing suppliers in countries where there is a weak exchange rate will increase value for money
what is glocalisation?
adaptation of product/ promotion to meet local requirements
