Markets Flashcards
What is a market?
A meeting place between buyers and sellers where goods and services are exchanged, usually for money
Market Share
This measures the sales of a firm relative to the market size.
Sales of a business
————————— X 100
Total sales in a market
Types of Market
Global / local Markets
Mass Markets
Seasonal Markets
Trade Markets
Niche Markets
Global Markets
Global marketing is all about selling goods or services to overseas markets.
Advantages
- Higher Earnings
- Economies of Scale
- Prevent using saturated home market
Seasonal Markets
Many markets have seasonal variations. E.g. ice creams
Seasonal marketing will have a huge influence on the activities of a business involved in these industries as each will have a critical sales period which can make or break a business.
Trade Markets
Trade marketing is the marketing role that focuses on selling and supplying to distributors, retailers, wholesalers instead of the customer.
Mass Marketing
Mass marketing involves a business aiming products to a whole markets, rather than particular parts of them.
Advantages
Can produce large number of standardised products, and can benefit from economics of scale
Untargeted marketing can be used
Low cost operations
Disadvantages
Must be able to produce goods on a large scale, this is expensive
If demand does fall, firms will be left with unused resources
Products need to be heavily differentiated from competition
Niche Marketing
A niche market is a specialised market segment where you cater for the demand for products/services that are not currently being supplied.
Advantages
- businesses can charge higher prices that consumers are prepared to pay
- can avoid competition
- focus on needs of their customers
- promotion costs can be kept lower
Disadvantages
- firms that successfully exploit a niche market often attract competition
- rapid sales in growth can often be followed by rapid decline
- hard to expand
Market Segmentation
Market segmentation is breaking down a market into sub-groups that share similar characteristics.
Methods of segmentation
Demographic Personality and lifestyle
-Age
-Gender
-Social class
Geographical Culture - religion/ethnic
-regions of the country
Psychographic
- targeting of groups on personality
Types of competition
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition
Monopoly
A single producer within a market
Likely to erect barriers to prevent other from entering the market
Called price makers as they have influence on price
Any business with over 25% of the market has potential monopoly power
Oligopoly
There are many businesses but only a few dominate the market
Each business tend to have differentiated products with a strong brand identity
Prices can be stable for long periods, short price wars do occur
Some barriers to entry exits eg high start up costs
Many of our largest industries are oligopolistic
Eg in retailing the grocery market is dominated by Tesco, Sainsbury’s, Morrisons and Asda
Monopolistic competition
A large number of relatively small businesses in competiton with each other.
There are few barriers to entry
products are similier, but differentiated from each other.
Brand identity relatively weak
Businesses are not price takers, but only have a limited degree of control over the prices they charge.
Perfect Competition
A market is which many small firms produce virtually identical products at similar prices.
Characteristics
- no one business is large enough to influence the activity of others.
- no market leaders and no price leader
- equal access to technology
- no barriers to entry or exit
However, these unrealistic conditions means that perfect competition is merely a model
