Markets

Question 1

Different types of markets in business

Answer 1

• local markets
• national markets
• global markets
• consumer markets
• trade markets
• seasonal markets

Question 2

Local markets and examples

Answer 2

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

Question 3

National markets and examples

Answer 3

customers are spread throughout the country/over a large area but the same product is provided to customers. national chain businesses (supermarkets, fast food)

Question 4

Global markets and examples

Answer 4

goods and services of one country are traded (purchased or sold) to people of other countries. (car manufacturers like ford and toyota)

Question 5

Consumer markets and examples

Answer 5

products and services bought by individuals for personal or family use. categorised as fast-moving consumer goods, consumer durable goods and services

Question 6

Trade markets and examples

Answer 6

sale of goods and services between businesses, (B2B). E.g raw materials or financial services

Question 7

Seasonal markets and examples

Answer 7

businesses will experience seasonal variations in output and/or sales. Fireworks (November, January) and ice cream (summer)

Question 8

Mass market definition

Answer 8

Largest part of the market, similar products sold by competitors, customers less specific about needs and wants

Question 9

Niche market definition

Answer 9

Smaller segment of larger market, customer have more specific needs and wants

Question 10

Key features of mass markets

Answer 10

Associated with higher production output and capacity + potential for economies of scale. Low-cost high efficient operation or market leading brands

Question 11

Benefits of mass marketing

Answer 11

Widest potential customer base, lower risk, low unit costs for economies of scale, market research costs relatively low

Question 12

Advantages of niche market

Answer 12

Less competiton, clear focus, specialist skills and knowledge built up, charge higher price, profit margins higher, more loyal customers

Question 13

Drawbacks of niche market

Answer 13

Lack of economies of scale, risk of over dependence on single product/market, attract competition, vulnerable to market changes

Question 14

What is market data

Answer 14

information about the characteristics of a particular market

Question 15

Definition of market size

Answer 15

information about the total amount of goods sold in a particular market or the total amount of sales revenue that a particular market generates

Question 16

Why is it good to know about market size

Answer 16

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

Question 17

What is market share

Answer 17

proportion of total sales in a market made by one business

Question 18

Market share formula

Answer 18

Market share (%) = (number of products sold by business / total market sales) x 100

Question 19

Why is market share important to a business

Answer 19

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

Question 20

What are market trends

Answer 20

changes and developments in the buying and selling of products and services in a market

Question 21

What is market segmentation

Answer 21

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

Question 22

General demographics

Answer 22

geographical location, psychographic, lifestyle, and culture or ethnic origin/religion

Question 23

What are the demographics generally split up into

Answer 23

Gender, age, socio-economic groups/social class

Question 24

Geographical location

Answer 24

Reigns of the country (depends on where they live)

Question 25

Psychographics

Answer 25

targeting customers based on personality and emotionally-based behaviour

Question 26

Splitting up in lifestyle

Answer 26

targeting customers according to the way they lead their lives and the attitudes they share

Question 27

Splitting market up by culture

Answer 27

targeting customers based on ethnic origin, religion and/or personal belief

Question 28

Benefits of market segmentation to a business

Answer 28

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

Question 29

Benefits of market segmentation to a business

Answer 29

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.

Question 30

How customers will benefit from market segmentation

Answer 30

• 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.

Question 31

drawbacks to customers as a result of market segmentation

Answer 31

• 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.