Market Structure Types and Segmentation Flashcards
List the 4 types of marker structures
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
How are they segmented
1 by the levels of competition that exists within each market
2 market conditions in which businesses operate
When does competition increase
As the number of businesses in the market increase
State the characteristics of perfect competition
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
What is the impact of these 6 conditions for perfect market
they are unrealistic and just a model, in real Ali Ty there will always be branding and differentiation
State the characteristics of monopoly
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
Why were pure monopolists common in 1990s as households only had the option of 1 gas, telephone and electric supplier
What introduced competition into these markets ,
privatisation and degregulation
Which company recently lost its monoploly
Royal Mail had the monopoly on delivering letter
When do uk and eu competition authorities investigate situations where they feel power is being abused
when a business has over 25% of market and has potential monopoly power
What advantages/benefits can monopolies offer us timers
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
What are the characteristics of oligopoly
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
Give an example of industries that are oligopolistic
Large industries. In retail the grocery market is dominated by Tesco, Asia and Morrisons
Oligopolistic businesses sometimes act or collude together what is this known as
Why do they do it
Give examples
Is it legal
Cartels
They try to keep prices high and share the market between those involved
Airlines and sports clothing industries
Illegal
What are the characteristics of monopolistic competition
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
Within a monopolistic market what does each business try to do
offer something different but they all compete for the same customers
What forms does differentiation take provide examples
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
What markets can businesses operate within
local and global consumer and business
What is the difference between mass and niche markets
mass markets dominate market segment and there are also several smaller - niche markets
What ar the features of mass marketing
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
What are the features of niche markets
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
What is the danger for a niche market
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
Market segmentation
Www.http://bit.ly/1WqJS42
What is a market segment
the subgroup of a larger segment of the mass market
State the types of segmentation
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)
What are the rules of market segmentation
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
What is customer lifecycle
Over time customers will change their preferences and behaviour
How can a business sustain relationships with customers in all phases of the customer life cycle
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
What marketing strategies are used for global marketing
different packaging, promotional and pricing strategies
What are the advantages to moving to overseas markets
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
What are trade markets
Focus of selling and suppling to wholesalers, distributors and retailers - they increase product demand in the supply chain
What ar seasonal markets
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
Market types
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