Markets Flashcards
what are markets?
they are a meeting place between buyers and sellers, where goods and services are exchanged for money
global markets? + benefits?
selling goods and services overseas
- more sales
- spreads risks
- economies of scale
what is market share? and what is it important for?
the sales of a firm relative to market size
important for sales, growth, profits and economies of scale
what are seasonal markets? + examples?
selling products related to season
e.g ice cream (summer), diet plans (january), fireworks (halloween)
what is mass marketing? + examples?
aiming products at a whole market (rather than smaller parts)
e.g ketchup, teabags, washing powder
what are the advantages of mass marketing?
- produce a large number of standardised products
- untargeted marketing makes it cheaper
what are the drawbacks of mass marketing?
- left with lots of unused products if demand falls
- large scale production (expensive to set up)
what is market segmentation?
this is breaking down the market into sub-groups that share similar needs
what are 4 examples of market segmentation?
demographic - gender, age, social class
geographical - location, region
psychographic - personality, emotions
lifestyle - interests, attitudes
what is niche marketing?
catering the demand for products that main suppliers aren’t selling
what are the advantages of niche marketing?
- can charge higher prices
- lower promotion costs
- avoid competition (sell to overlooked markets)
what are the drawbacks of niche marketing?
- attracts competition
- no economies of scale
- hard to expand
- harder to raise finance (classed as a high risk business)
what is important to consider when using market segmentation?
- that it is recognisable
- that it is targetable
- must be different from other segments
what are the benefits of segmentation to customers?
- fits with their budget and lifestyle
- they receive a product close to -their expectations
- they can be aware of of new features as marketing is targeted
what are the benefits of segmentation to the business?
- gain better knowledge of their customers (can suit their needs)
- target advertising specifically (lower costs)
- increase brand loyalty
- higher profits
what is a monopoly? barriers of entry?
a single producer within a market, they are price makers
(they erect barriers to prevent others from entering the market)
what is a oligopoly? barriers of entry?
few businesses dominate the market, with strong brand identity
(some barriers to entry)
what is perfect competition?
many small firms produce virtually identical products at similar prices
- no market/price leaders
- no businesses can influence others
(they are unrealistic conditions)
what is monopoly competition? barriers of entry?
a large number of small businesses in competition with each other
(few barriers to entry)
what is consumer protection?
the safeguarding of customers when they buy goods and services, against unfair practices in the marketplace
why do consumers need protection?
- businesses try to sell faulty products (e.g whirlpool)
- customers can be vulnerable
- businesses can hide the details with small print
- consumers are desperate
consumers are not experts
what is consumer protection legislation?
when consumers buy goods, contracts are formed between customer, retailer and producer
what does consumer protection legislation do?
clarify nature of new contracts
establishes requirements
what is the consumer rights act 2015?
goods must be satisfactory, free from faults, as described, and durable
what is the consumer protection act 1987?
it protects from unsafe goods, misleading price, and goods that can cause damage
what is the CMA?
encourages businesses of voluntary codes of practice within industries
what does the ombudsman service do?
it can be used to complain if consumers have an
issue with pricing, quality of service, quality of goods or mistreatment
name an ethical issue related to marketing
consumers can be manipulated by businesses - they can hide their products so that people will naturally process them
what is the definition of demand?
the amount of a product that
consumers are willing and able to purchase at
any given price
what is the definition of supply?
the amount of a product that
suppliers will offer to the market at a given price
what is the law of demand?
the higher the price, the lower the quantity demanded
the lower the price, the higher the quantity demanded
what is the law of supply?
all else equal, an increase in price results in an increase in quantity supplied
what factors cause the demand curve to shift?
population, successful advertising, income, fashion/taste, complementary goods, price of other products
what factors cause the supply curve to shift?
legislation, cost of production, weather, new technology, improved infrastructure
what is the equilibrium price?
the price where quantity demanded is equal to quantity
supplied
what is price elasticity of demand?
measures responsiveness of demand to change in price
what is price elasticity?
a change in price will cause a more than proportional change in demand
(price goes up, demand falls dramatically)
e.g plane fares, chocolate, branded goods
what is income elasticity?
measures how sensitive demand is
to a change in income - can be elastic/inelastic/negative
what is price inelasticity? + examples?
a change in price causes a less proportional change in demand
(price goes up, demand falls a little) e.g electricity, gas, water, milk, alcoholic drinks
how could businesses make demand for their goods more price inelastic?
- encourage customer loyalty
- reduce/restrict competition
- increase brand value
- offer extras e.g free wifi in cafes
what are normal goods?
as real incomes increase, the demand for normal goods will also increase e.g shampoo, instant coffee
what are luxury goods?
the demand will grow at a faster rate than the increase in real income that created the change in demand e.g holidays, sports cars, designer clothes
what are inferior goods?
cheap substitutes of products people prefer to buy when their income is reduced e.g tesco value, frozen veg
what is a cartel?
when businesses in a oligopolistic market act together, a cartel is formed - they try to keep prices high
what is being ethical in a business?
being honest and fair with their customers
what is an SME?
small + medium enterprises
- has less than 250 workers
