The Market Flashcards
What is a market?
Groups of individuals and organisations that make up the pool of actual and potential customers
What does a dynamic market mean?
A market which is constantly changing, must be aware of market trends
What does market size mean?
The total value of a market in terms of money spent or number of products
What does market growth mean?
The % change in the size of a market compared to the previous year
What does market share mean?
The % of the market held by one company or product
What is a mass market?
A market that is aimed at the general population
What are the advantages of a mass market?
-Larger market means more customers and sales available
-Can target anyone
-A more recongnised brand
-Larger capital available for manufactuing
What are the disadvantages of a mass market?
-More competitive
-Not appealing to everyone
-High marketing costs
-Holding a high volume of products isn’t easy to change when demand changes
What is a niche market?
A subset of the main market and addresses a specialist need
What are the advantages of a niche market?
-People are willing to pay a higher price
-Less competition
-Easier to target customers
-Smaller scale of production means it is easier and more flexible to follow trends
What are the disadvantages of a niche market?
-Risky as there is not constant demand
-Higher unit costs because there are no economies of scale
Why do markets change?
-Supply
-Demand
-Economic growth
-Changes in fashion/taste
-Changes in technology
How do firms compete?
-Price
-Product range
-Customer service
What is offensive marketing?
When a business tries to increase sales or develop new markets
How:
-break into new markets
-invest in innovation
-acquire other businesses
-move into other related businesses
What is defensive marketing?
When a business reacts to competition and tries to maintain their market share
How:
-cost cutting
-rationalisation of products by cutting unsuccessful products
What is innovation?
The development of products, changing established products and using new materials
-includes changing/developing an existing product
What are the advantages of innovation?
-Possibility of new sales
-Access to new customers
-Possible growth in market share
-Brings attention to the brand
What are the disadvantages of innovation?
-Risky as its more likely to fail
-Expensive
-Disrupting the way the business operates
What is online retailing?
Involves selling products/services online
-it is removing the physical interaction and using technology based interactions
Examples of online retailing
-Amazon = 1994
-Ebay = 1995
-Etsy = 2005
What are the advantages of online retailing?
-Open 24/7
-Can easily reach international customers
-No premises (no rent)
-Can easily update/withdraw stock to keep up with market changes
What are the disadvantages of online retailing?
-Higher number of returns
-Issues with online security (fraud, scams)
-Very competitive market as competitors can be aware of other businesses prices and strategies
-Owners require IT skills
What are the risks of owning a business?
-Failure = expensive debts
-Bad reputation
-Not breaking even (no profit is ever made)
What are the rewards of owning a business?
-Lots of profit
-Using your own knowledge/skills
-Own boss/managing your own time
What are calculated risks?
One that has been carefully considered and for which the costs and benefits have been weighed up
What is a business plan?
A formal statement of what the business is planning to do which assess the risk of their new ideas
What is market orientation?
The decisions of a business are based around information about customer needs and wants
-the customers needs are their main focus
-success depends on customer satisfaction
-customers should be more accepting of the product as it meets their needs
What is product orientation?
When a business develops products based on what it is good at marking/doing rather than what the customer wants
-innovation is the main focus
-must educate customers on the benefits of the product
-creates unique products
What is market research?
Involves collecting, analysing and interpreting information about a target market, customers competitors and the industry as a whole
-used to gain a detailed understanding of consumer needs
-reduce the risk of product/business failure
What is quantitative data?
Based on data/statistics
-includes closed research questions such as ‘when’
-uses larger samples and is therefore more statistically valid
What is qualitative data?
Based on opinions, attitudes, beliefs and intentions
-includes open questions such as ‘why’
-aims to understand why customers behave in certain ways
What is big data?
It is data generated in large quantities and is fast information
-the process of collecting and analysing large data sets from sources to identify trends which can be used in decision making
Examples of big data
-Snapchat = 2.1
million generated her minute
-Email = 138 million generated per minute
What are the limitations of big data?
-Unstructured so it is hard to analyse therefore making it costly to analyse
-Most of the data is recent so it is hard to analyse past trends
-Consumers can be concerned about privacy which may restrict how much data can be collected
-Loss and theft of data can damage businesses
What is sampling?
Involves choosing the right number of people to get a representative group of customers
Types of sampling
-Quota sampling = more specific about who you sample
-Convenience sampling = sampling people convenient to you and the business
What are the problems with sampling?
-Must have a careful selection to ensure results are representative
-Sample size must be accurate/appropriate to get accurate results
-Can be biased resulting in inaccurate results
-Human error
What is friendly bias?
People tending to agree and be positive about the ideas presented in the research
What is social desirability bias?
People answering questions in a way that you think is socially acceptable
What is confirmation bias?
When the researcher interprets results to confirm the belief by filtering out negative information
What are leading questions?
When the researcher suggests the answer that the survey is looking for
What is market segmentation?
A group of customers that have similar characteristics (stereotyping)
How can markets be segmented?
-Age
-Gender
-Income/social class
-Location/geographical
Why do you need to market segment?
-Benefits customers want
-Amount customers are willing to pay
-Media they use (where will they see the adverts)
What is geographical segmentation?
-Customer location
-Region
-Urban /rural
What is demographic segmentation?
-Age
-Gender
-Socio-economic group
What is behavioural segmentation?
-Rate of usage
-Benefits (impulse buys, seasonal items)
-Readiness to purchase
What psychographic segmentation?
-Personality
-Lifestyles
-Class
What are the benefits of doing market segmentation?
-Customer loyalty
-Customer retention
-Positive word of mouth
What are the limitations of market segmentation?
-Increased costs due to shorter production runs
-Promotional and distribution expenditures increase due to different programmes used for different market segmentation
What is a market map/market positioning?
A grid that measures two different aspects of the brands or businesses within a market
-used to identify the marketing strategies of competitors in the market
What is the purpose of a market map?
-Identify a gap in the market
-Show how a market is segmented
-Show where a sector is overcrowded
What are the advantages of market mapping?
-Helps spot gaps in the market
-Allows firms to analyse new competitors
-Suggest ways to create brand images and marketing techniques
What are the disadvantages of market mapping?
-Time consuming
-Opinionated and judgemental (no right answer)
-Requires market research
What is added value?
An increase in value that a business creates by undertaking the production process
How can firms add value?
-Build a brand (reputation of high quality)
-Delivering excellent service
-Add features or benefits to a product
What are the benefits of added value?
-Charging a higher price
-Creating a difference from competitors
-Focusing more closely on target market segments
What is product differentiation?
Where a product is different from the competitors in some way
What is competitive advantage?
Ways that businesses makes its product/services appear superior to the competitor
How do you have cost advantage?
-Generate economies of scale by buying in bulk
-Operate efficiently to be cheaper than competitors
How do you have barriers to entry?
Making it difficult for other businesses to get into the market
What is primary research?
New research carried out to answer specific issues/questions
What are the pros and cons of primary research?
Pros:
-reliable source
-specifically designed to meet the objectives of a project
Cons:
-Time consuming
-Expensive
What are questionnaires?
A survey of customers using the business which measures customer satisfaction
What are interviews?
A more detailed survey to gauge reactions to new ideas the business is having
What are observations?
Observing buyer behaviour without buyers being aware
What are loyalty cards?
Keeping track of how much customers buy, what they buy and how much they’re spending for more cost effective marketing
What is a focus group?
A group of a target market takes part in a trial by using the product and discussing their thoughts
What is test marketing?
Putting samples of products in stores to get feedback before launching the product
What is secondary research?
Information that already exists, produced by someone else for something else and is made publicly available
What are the pros and cons of secondary research?
Pros:
-Less expensive
-Faster
Cons:
-Already exists (out of date)
-Not always related to the needs of a specific project
What are annual reports?
They are produced by a business with all of the businesses information
What is internal data?
Data from within the business using sales figures and a database of loyal customers
What are government sources?
A census every 10 years analysed by the office of national statistics
What are trade journals?
Magazines and websites focusing on one specialist market or industry
What are market research companies?
Mintel trends and reports which shows global trade analysis assessing change in culture, society and the economy
What is brand extension?
Using an established brand name to launch a new product variant, this enables the brand to reach a wider group of customers
What are the risks of developing a new product?
-Not meeting customer needs/wants
-Losing competitive advantage
-Not making the market share
