Market Structure Types and Segmentation

Question 1

List the 4 types of marker structures

Answer 1

Monopoly
Oligopoly
Monopolistic competition
Perfect competition

Question 2

How are they segmented

Answer 2

1 by the levels of competition that exists within each market
2 market conditions in which businesses operate

Question 3

When does competition increase

Answer 3

As the number of businesses in the market increase

Question 4

State the characteristics of perfect competition

Answer 4

1 large number of businesses competing and no one business is large enough to influence the activity of others
2 there is no market or price leader so each business must accept the going price on the market - THEY ARE THE PRICE TAKERS
3 there is no difference between the goods sold by any business (they are homogenous) there is no branding difference so goods all look the same
4 businesses have equal access to technology so they have equal level of productivity and each business benefits in the same way from economies of scale
5 consumers are ion a perfectly competitive marker and have full market information (know what is being sold and for how much) they can access a wide number of suppliers
6 businesses can enter or leave the market at any time

Question 5

What is the impact of these 6 conditions for perfect market

Answer 5

they are unrealistic and just a model, in real Ali Ty there will always be branding and differentiation

Question 6

State the characteristics of monopoly

Answer 6

1 single producer in a market (1 business so 100% of the market place- known as Pure monopoly’)
2 Likely to put up barriers to prevent others entering the market
3 monopolists are called price makers as they greatly influence the price

Question 7

Why were pure monopolists common in 1990s as households only had the option of 1 gas, telephone and electric supplier

Question 8

What introduced competition into these markets ,

Answer 8

privatisation and degregulation

Question 9

Which company recently lost its monoploly

Answer 9

Royal Mail had the monopoly on delivering letter

Question 10

When do uk and eu competition authorities investigate situations where they feel power is being abused

Answer 10

when a business has over 25% of market and has potential monopoly power

Question 11

What advantages/benefits can monopolies offer us timers

Answer 11

1 bring benefits of economies of scale reducing prices
2 make goods more affordable
3 profits can be used by the business to reinvest and improve products

Question 12

What are the characteristics of oligopoly

Answer 12

1 There are many businesses but the market is dominated by a few
2 each business has differentiated products with strong brands
3 brand loyalty is encouraged by heavy advertising and promotion
4 prices can be stable for long periods but short price wars occur
5 some barriers to entry eg expensive start up costs

Question 13

Give an example of industries that are oligopolistic

Answer 13

Large industries. In retail the grocery market is dominated by Tesco, Asia and Morrisons

Question 14

Oligopolistic businesses sometimes act or collude together what is this known as
Why do they do it
Give examples
Is it legal

Answer 14

Cartels
They try to keep prices high and share the market between those involved
Airlines and sports clothing industries
Illegal

Question 15

What are the characteristics of monopolistic competition

Answer 15

1 relatively small business in competition
2 few barriers to entry
3 products are similiar but differentiated
4 brand identity is weak
Businesses are not price takers but have Ltd control over price

Question 16

Within a monopolistic market what does each business try to do

Answer 16

offer something different but they all compete for the same customers

Question 17

What forms does differentiation take provide examples

Answer 17

1 physical product differentiation -colour size shape stuffed crust, thin base pizza
2 differentiation through delivery and purchase methods eg on line free delivery of pizza

Question 18

What markets can businesses operate within

Answer 18

local and global consumer and business

Question 19

What is the difference between mass and niche markets

Answer 19

mass markets dominate market segment and there are also several smaller - niche markets

Question 20

What ar the features of mass marketing

Answer 20

1 the business targets advertising and promotional spending at whole market not just a segment
2ecconomies of scale can be take advantage of because of higher production output
3 low cost operations, and widespread distribution
4 development of market leading brands
5 cost of set up can be high

Question 21

What are the features of niche markets

Answer 21

1 a business targets smaller segments of a large market
2 customers have specific wants and needs
3 higher prices can often be charged as customers are prepared to pay for expertise
4 they can concentrate on their strengths developing products they are good at - often have expert knowledge
5 lower start up costs which help in the early stages

Question 22

What is the danger for a niche market

Answer 22

They can disappear quickly because of changes in ecconomic conditions fashion and taste
Mass market businesses can target the niche if they grow in size

Question 23

Market segmentation

Answer 23

Www.http://bit.ly/1WqJS42

Question 24

What is a market segment

Answer 24

the subgroup of a larger segment of the mass market

Question 25

State the types of segmentation

Answer 25

1 demographic - age, class, gender, income (banks have different accounts for different ages)
2psychographic - targets groups based on personality and emotional behaviour and attitudes, opinions, lifestyles (cars by emphasizing feature eg safety for a family)
3 geographic - regions. - urban, suburban, global markets (global brands require different ingredients in different countries)

Question 26

What are the rules of market segmentation

Answer 26

1 segments must be recognizable - different enough from other segments to make production for that segment worthwhile eg houses for different groups
2 segments must have critical mass- must be big enough or produce enough sales to make production targeted at a segment worthwhile
3 be targetable - have their own identity so marketing can be targeted to then eg daytime tv advertises funeral plans

Question 28

What is customer lifecycle

Answer 28

Over time customers will change their preferences and behaviour

Question 29

How can a business sustain relationships with customers in all phases of the customer life cycle

Answer 29

by segmenting markets
Serve different segments along the customer lifecycle and offering them a solution for their needs from stage to stage eg car manufacturers fun car for young professional, small car for student, SUV for family

Question 30

What marketing strategies are used for global marketing

Answer 30

different packaging, promotional and pricing strategies

Question 31

What are the advantages to moving to overseas markets

Answer 31

1 higher earnings - margins can be higher overseas
2 spread risks - decline in one market is off set by demand overseas)
3 saturation of home market - companies can’t expand at home because of competition
4 economies of scale
5 survival

Question 32

What are trade markets

Answer 32

Focus of selling and suppling to wholesalers, distributors and retailers - they increase product demand in the supply chain

Question 33

What ar seasonal markets

Answer 33

Have critical sales period . Stocking changes are planned well in advance some stores have titled seasonal sales aisles seasonal varieties eg ice cream in summer, fireworks in winter, diet plans in January

Question 34

Market types

Answer 34

Http;//bit.ly/1RR4Kyk