Markets Flashcards
Different types of markets in business
- local markets
- national markets
- global markets
- consumer markets
- trade markets
- seasonal markets
Local markets and examples
where the buyers (customers) may be a short distance from the sellers (business). Examples are fresh/locally sourced products, hairdressers. local high street/retail park
National markets and examples
customers are spread throughout the country/over a large area but the same product is provided to customers. national chain businesses (supermarkets, fast food)
Global markets and examples
goods and services of one country are traded (purchased or sold) to people of other countries. (car manufacturers like ford and toyota)
Consumer markets and examples
products and services bought by individuals for personal or family use. categorised as fast-moving consumer goods, consumer durable goods and services
Trade markets and examples
sale of goods and services between businesses, (B2B). E.g raw materials or financial services
Seasonal markets and examples
businesses will experience seasonal variations in output and/or sales. Fireworks (November, January) and ice cream (summer)
Mass market definition
Largest part of the market, similar products sold by competitors, customers less specific about needs and wants
Niche market definition
Smaller segment of larger market, customer have more specific needs and wants
Key features of mass markets
Associated with higher production output and capacity + potential for economies of scale. Low-cost high efficient operation or market leading brands
Benefits of mass marketing
Widest potential customer base, lower risk, low unit costs for economies of scale, market research costs relatively low
Advantages of niche market
Less competiton, clear focus, specialist skills and knowledge built up, charge higher price, profit margins higher, more loyal customers
Drawbacks of niche market
Lack of economies of scale, risk of over dependence on single product/market, attract competition, vulnerable to market changes
What is market data
information about the characteristics of a particular market
Definition of market size
information about the total amount of goods sold in a particular market or the total amount of sales revenue that a particular market generates
Why is it good to know about market size
need to have knowledge of the size of the market to allow the management to fully assess opportunities and threats and to accurately plan its approach and/or its investments.
allows a business to determine a suitable level of sales revenue and marketing expenditure
What is market share
proportion of total sales in a market made by one business
Market share formula
Market share (%) = (number of products sold by business / total market sales) x 100
Why is market share important to a business
helps a business to meet business objectives, e.g. survival, growth, profit maximisation, increased market share
increases a business’ overall profitability
helps a business to benefit from economies of scale
can lead to competitive advantage
can help attract new shareholders
What are market trends
changes and developments in the buying and selling of products and services in a market
What is market segmentation
The process of splitting a large market into different sub-groups of customers on the basis of them having similar characteristics or traits. Easier to develop products and/or services aimed at certain customers and creat their target market
General demographics
geographical location, psychographic, lifestyle, and culture or ethnic origin/religion
What are the demographics generally split up into
Gender, age, socio-economic groups/social class
Geographical location
Reigns of the country (depends on where they live)
Psychographics
targeting customers based on personality and emotionally-based behaviour
Splitting up in lifestyle
targeting customers according to the way they lead their lives and the attitudes they share
Splitting market up by culture
targeting customers based on ethnic origin, religion and/or personal belief
Benefits of market segmentation to a business
Increased customer loyalty (meeting the needs of customers more effectively, to repeat custom to greater sales revenue)
Segmentation may allow a business to charge higher prices because of reduced price sensitivity, increases sales revenue and profits
Segmentation might allow a business to market a wider range of differentiated products, targeting more customers and increasing sales revenue.
Segmentation prevents products being promoted to the wrong group of customers – attract customers and dont waste resources
Benefits of market segmentation to a business
Increased costs due to potential research and/or development into new products and services leads to reduction in short-term profits.
lose focus on its core identity or products because of a wide product range on offer. leads to a fall in quality which can result in less custom or a failure to exploit economies of scale that could have otherwise arose had the company focused on one segment.
How customers will benefit from market segmentation
- receive a product closer to expectations due to specific targeting to a segment of customers and can adapt the product to meet their needs.
- allows customers to access high quality goods and ensure they feel they are getting value for money.
- fit better with a customer’s budget and lifestyle.
- help customers stick to their desired principles (ethics)
- marketing is targeted – the consumer is aware of new features of products.
drawbacks to customers as a result of market segmentation
- costs incurred by a business may increase when selling different ranges of products and trying to meet the needs of different market segments, leads to increased costs, forcing prices up even higher for customers. some customers may have a more limited choice due to income levels.
- Some customer segments are often excluded.
