Markets

Question 1

what are markets?

Answer 1

they are a meeting place between buyers and sellers, where goods and services are exchanged for money

Question 2

global markets? + benefits?

Answer 2

selling goods and services overseas
- more sales
- spreads risks
- economies of scale

Question 3

what is market share? and what is it important for?

Answer 3

the sales of a firm relative to market size
important for sales, growth, profits and economies of scale

Question 4

what are seasonal markets? + examples?

Answer 4

selling products related to season
e.g ice cream (summer), diet plans (january), fireworks (halloween)

Question 5

what is mass marketing? + examples?

Answer 5

aiming products at a whole market (rather than smaller parts)
e.g ketchup, teabags, washing powder

Question 6

what are the advantages of mass marketing?

Answer 6

• produce a large number of standardised products
• untargeted marketing makes it cheaper

Question 7

what are the drawbacks of mass marketing?

Answer 7

• left with lots of unused products if demand falls
• large scale production (expensive to set up)

Question 8

what is market segmentation?

Answer 8

this is breaking down the market into sub-groups that share similar needs

Question 9

what are 4 examples of market segmentation?

Answer 9

demographic - gender, age, social class
geographical - location, region
psychographic - personality, emotions
lifestyle - interests, attitudes

Question 10

what is niche marketing?

Answer 10

catering the demand for products that main suppliers aren’t selling

Question 11

what are the advantages of niche marketing?

Answer 11

• can charge higher prices
• lower promotion costs
• avoid competition (sell to overlooked markets)

Question 12

what are the drawbacks of niche marketing?

Answer 12

• attracts competition
• no economies of scale
• hard to expand
• harder to raise finance (classed as a high risk business)

Question 13

what is important to consider when using market segmentation?

Answer 13

• that it is recognisable
• that it is targetable
• must be different from other segments

Question 14

what are the benefits of segmentation to customers?

Answer 14

• 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

Question 15

what are the benefits of segmentation to the business?

Answer 15

• gain better knowledge of their customers (can suit their needs)
• target advertising specifically (lower costs)
• increase brand loyalty
• higher profits

Question 16

what is a monopoly? barriers of entry?

Answer 16

a single producer within a market, they are price makers
(they erect barriers to prevent others from entering the market)

Question 17

what is a oligopoly? barriers of entry?

Answer 17

few businesses dominate the market, with strong brand identity
(some barriers to entry)

Question 18

what is perfect competition?

Answer 18

many small firms produce virtually identical products at similar prices
- no market/price leaders
- no businesses can influence others
(they are unrealistic conditions)

Question 19

what is monopoly competition? barriers of entry?

Answer 19

a large number of small businesses in competition with each other
(few barriers to entry)

Question 20

what is consumer protection?

Answer 20

the safeguarding of customers when they buy goods and services, against unfair practices in the marketplace

Question 21

why do consumers need protection?

Answer 21

• 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

Question 22

what is consumer protection legislation?

Answer 22

when consumers buy goods, contracts are formed between customer, retailer and producer

Question 23

what does consumer protection legislation do?

Answer 23

clarify nature of new contracts
establishes requirements

Question 24

what is the consumer rights act 2015?

Answer 24

goods must be satisfactory, free from faults, as described, and durable

Question 25

what is the consumer protection act 1987?

Answer 25

it protects from unsafe goods, misleading price, and goods that can cause damage

Question 26

what is the CMA?

Answer 26

encourages businesses of voluntary codes of practice within industries

Question 27

what does the ombudsman service do?

Answer 27

it can be used to complain if consumers have an
issue with pricing, quality of service, quality of goods or mistreatment

Question 28

name an ethical issue related to marketing

Answer 28

consumers can be manipulated by businesses - they can hide their products so that people will naturally process them

Question 29

what is the definition of demand?

Answer 29

the amount of a product that
consumers are willing and able to purchase at
any given price

Question 30

what is the definition of supply?

Answer 30

the amount of a product that
suppliers will offer to the market at a given price

Question 31

what is the law of demand?

Answer 31

the higher the price, the lower the quantity demanded
the lower the price, the higher the quantity demanded

Question 32

what is the law of supply?

Answer 32

all else equal, an increase in price results in an increase in quantity supplied

Question 33

what factors cause the demand curve to shift?

Answer 33

population, successful advertising, income, fashion/taste, complementary goods, price of other products

Question 34

what factors cause the supply curve to shift?

Answer 34

legislation, cost of production, weather, new technology, improved infrastructure

Question 35

what is the equilibrium price?

Answer 35

the price where quantity demanded is equal to quantity
supplied

Question 36

what is price elasticity of demand?

Answer 36

measures responsiveness of demand to change in price

Question 37

what is price elasticity?

Answer 37

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

Question 38

what is income elasticity?

Answer 38

measures how sensitive demand is
to a change in income - can be elastic/inelastic/negative

Question 39

what is price inelasticity? + examples?

Answer 39

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

Question 40

how could businesses make demand for their goods more price inelastic?

Answer 40

• encourage customer loyalty
• reduce/restrict competition
• increase brand value
• offer extras e.g free wifi in cafes

Question 41

what are normal goods?

Answer 41

as real incomes increase, the demand for normal goods will also increase e.g shampoo, instant coffee

Question 42

what are luxury goods?

Answer 42

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

Question 43

what are inferior goods?

Answer 43

cheap substitutes of products people prefer to buy when their income is reduced e.g tesco value, frozen veg

Question 44

what is a cartel?

Answer 44

when businesses in a oligopolistic market act together, a cartel is formed - they try to keep prices high

Question 45

what is being ethical in a business?

Answer 45

being honest and fair with their customers

Question 46

what is an SME?

Answer 46

small + medium enterprises
- has less than 250 workers