Market (KB)

Question 1

Define market

Answer 1

a place where buyers and sellers can communicate in a particular range of goods and services

Question 2

What is mass market?

Answer 2

when a business sells that same products to all consumers, and markets in the same way

Question 3

What are some characteristics of mass market?

Answer 3

• targeted advertising and promotions to the whole market
• gains from economies of scale
• widespread distribution
• very high set up costs
• fierce competition

Question 4

What is niche market?

Answer 4

when a business sells a product to a small consumer group

Question 5

What are some characteristics of niche market?

Answer 5

• targets specific segments
• can charge higher prices
• businesses need full understanding of consumer needs
• can concentrate on business strengths
• low start up costs
• difficult to survive changes in economic conditions e.g. fashion and taste

Question 6

What are 3 ways of measuring market?

Answer 6

• market size - total size of a market (volume/products sold, or value/amount spent by consumers)
• market share - proportion of the total market sales held by a company or brand
• market growth - percentage change in the total size of the market

Question 7

What benefits does online retailing give a business?

Answer 7

• can directly market to customers
• easier to get information on customers to use for marketing
• costs are lower e.g. fewer premises
• can reach more customers
• open 24/7

Question 8

What are some characteristics of perfect competition?

Answer 8

• lots of businesses competing
• no market or price leaders - price takes
• homogenous (identical) goods
• equal access to technology (equal productivity and economies of scale)
• consumers have full market information
• lots of suppliers
• no barriers to entry or exit
• mostly a model (unrealistic)

Question 9

What are some characteristics of a monopoly?

Answer 9

• pure monopoly (1 business has 100% of market)
• creates barriers to entry
• price makers (dictate price, but laws of supply and demand still operate)

Question 10

What are some characteristics of an oligopoly?

Answer 10

• lots of businesses but a few dominate
• differentiated products and strong brand identity
• brand loyalty encouraged by heavy advertising
• stable prices (but sometimes price wars can happen)
• some barriers to entry
• some businesses collude and form cartels to keep prices high
• benefit from economies of scale
• lots of variety and choice
• high profits (used for innovation and investment)

Question 11

What are some characteristics of monopolistic competition?

Answer 11

• lots of relatively small businesses
• very few barriers to entry
• products are similar but differentiated (USP e.g. quality, service, design etc)
• brand identity can be quite weak
• not price takers but have limited degree of control over what they can charge

Question 12

What is the job of the UK Competition Authorities?

Answer 12

• investigate business mergers to ensure that they don’t reduce competition
• respond to cartels and anti-competitive behaviour
• protect consumers from unfair trading practices
• won’t allow inorganic business growth over 25% of market