Market Flashcards
Niche marketing
Where a business targets a smaller segment of a larger market, where customers have specific needs and wants
Mass marketing
Where a business sells into the largest part of the market, where there are many similar products offered by competitors
Key features of mass market
- customers form the majority in the market
- customer needs and wants are more general and less specific
- associated with higher production output and capacity + potential for economies of scale
- success usually associated with low cost (highly efficient) operation or market leading brands
Key features of niche marketing
- customers needs and wants are specific
- associated with lower production output
- lack of economies of scale
- associated with high cost operation
Advantages of targeting a niche
- less competition
- clear focus- target particular customers
- builds up specialist skill and knowledge
- can often charge a higher price
- profit margin often higher
- customers tend to be more loyal
Disadvantages of targeting a niche
- lack of economies of scale
- risk of over dependence on a single product or market
- likely to attract competition if successful
- vulnerable to market changes
What is market size?
A measure of total available demand for competitors in a market
Key points about market size
- it indicates the potential sales for a firm
- normally measured in terms of both volume (units) and value (sales)
- size of individual segments within the overall market can also be measured
- not normally a marketing objective- since a firm cannot influence it
- not always easy to measure, since how you define the market determines what you are trying to measure
What is market growth?
Measures the rate of change of market size, which might be rising, falling or remaining stable
Key points about market growth
- a key indicator for existing and potential market entrants- more businesses might be expected to try to enter fast growing markets
- growth rate can be calculated using either value or volume
- market growth is usually expressed as a percentage change on the previous period
What is market share?
the portion of a market controlled by a particular company or product
Key points about market share
- expressed as a percentage
- explains how the overall market is split between the existing competitors
- tends to be calculated based on market value, but volume can also be used
- good indicator of competitive advance: market leaders
What are market leaders?
Have the highest market share
Key sources of change (for dynamic markets)
- customer tastes and preferences
- impact of technology on what customers buy and how they buy
- impact on new market entrants
How competition affects the market
• battle for market share
- a constant battle to gain or protect share
- threat of new market entrants always there
• pricing
- price wars are a feature of intense competition
- stronger competitors often set the market price
• battle for competitive advantage
- product differentiation is a key part of competition
