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Business Component 1 > Markets > Flashcards

Markets Flashcards

1
Q

markets

A

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

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2
Q

market share and formula

A

this measures the scale of a business relative to the market size, measured in value or volume

sales of a business ÷ total sales in a market x100

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3
Q

importance of having a high market share

A

•helps business to meet business objectives- survival, growth, profit maximisation, increased market share
•increases businesses overall profitability
•able to benefit from economies of scale
•can become the brand leader
•edge over competitors
•attract new shareholders
•investment into research

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4
Q

global markets

A

all about selling goods or services to overseas markets - different marketing strategies are implemented based on the region or country the company is marketing to

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5
Q

advantages of global markets

A

•higher earnings
•spread risks
•economies of scale
•survival
•saturation of the home markets- enter a new market

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6
Q

seasonal markets

A

have a critical sales period that means lines of stock are adapted and changed

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7
Q

trade (B2B) markets

A

the marketing role that focuses on selling and supplying to distributors, retailers, wholesalers and other supply chain businesses instead of the consumer; the objective is to increase demand

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8
Q

mass marketing

A

involves a business aiming products at a whole market rather than particular parts of them

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9
Q

advantages of mass marketing

A

•a company can produce large numbers of relatively standardised products- can benefit from EOS
•untargeted marketing can be used- national newspapers, national television
•low-cost operations and heavy promotion

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10
Q

disadvantages of mass marketing

A

•have to be able to produce goods on a large scale - expensive to set up
•if demand falls, unused resources will be left over
•products need to be heavily differentiated from fierce competition

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11
Q

niche marketing

A

a specialised market segment where you cater for the demand for products/ services that aren’t currently being supplied by the main suppliers

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12
Q

advantages of niche marketing

A

•can charge higher prices which makes profit margins lower
•able to sell to markets that have been overlooked or ignored by other businesses which avoids competition
•can focus on the needs of their customers in those segments which improves the product or customer service
•promotion costs can be kept lower

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13
Q

disadvantages of niche marketing

A

•businesses that exploit a niche market attract competition
•niche markets are small and often can’t sustain against competition
•can’t benefit from EOS
•doesn’t spread risks- over-reliant on one product and are vulnerable to changes in taste, fashion, economic downturn
•can be volatile- sales could change quickly
•hard to expand
•smaller market so limited profit
•harder to raise finance- high risk

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14
Q

market segmentation

A

breaking down a market into sub-groups that share similar characteristics, then identifying and targeting them to develop products or services for each of them

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15
Q

demographic segmentation

A

•gender
•age
•socio economic groups/ social class- linked to occupation and income groups

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16
Q

geographical segmentation

A

regions of the country- rural, urban, suburban
global marketing

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17
Q

psychographic segmentation

A

allows targeting of groups on personality and emotionally based behaviour- attitudes, opinions and lifestyles
•personality and lifestyle, culture, political voting preferences

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18
Q

rules of market segmentation

A

•segments must be recognisable
•must be different enough to other segments
•segments must have critical mass- have to be big enough or produce enough sales value
•segments have to be targetable

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19
Q

benefits to the customer of market segmentation

A

•receive a product that is closer to their expectations
•helps them stick to their desired principles
•can fit better with their budgets and lifestyle
•can be superior to the competition
•can make them feel that they’re getting value for money
•marketing is targeted so consumer is aware of new features of products

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20
Q

benefits to the firm of market segmentation

A

•gain greater knowledge about consumers so that it can vary its products to suit their needs
•identify requirements/ match the needs of different groups more precisely
•can target their advertising to specific groups which maximises its effect
•can increase brand loyalty
•higher profits - can develop premium segments where customers pay higher prices
•supports development of niche markets
•can adjust the product to consumer preferences which maximises potential of market share

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21
Q

monopoly characteristics

A

•a single producer within a market- pure monopoly
•likely to erect barriers to prevent others from entering their market
•price makers

22
Q

what could be the impact in the removal on a monopoly

A

•greater choice
•increased competition may force prices down
•greater efficiency due to competition

23
Q

monopoly competition and characteristics

A

the situation in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices
•large number of relatively small businesses in competition with each other
•few barriers to entry
•products are similar but differentiated
•relatively weak brand identity
•businesses aren’t price takers

24
Q

oligopoly characteristics

A

•only a few businesses dominate the market
•strong brand identity
•differentiated products
•brand loyalty through advertising and promotion
•short price wars do occur
•some barriers to entry (high start-up costs in manufacturing)

25
Q

cartels

A

when businesses in an oligopolistic market act together a cartel is formed- they try to keep prices high whilst they share the market between themselves

26
Q

advantages of an oligopoly to consumers

A

•large size leads to economies of scale
•high profits mean money for innovation and investment
•provide variety and choice

27
Q

perfect competition and characteristics

A

a market in which many small firms produce virtually identical products at similar prices, with the ability to enter and leave the market freely
•large number of businesses competing and no business is large enough to influence the activities of others
•no market leaders and no price leaders; they’re price takers
•homogenous goods- no differentiation
•equal access to tech- equal levels of productivity and benefit from EOS the same
•full market information- products, prices and suppliers
•no barriers to entry or exit

28
Q

why do consumers need protection

A

•businesses try to control price and competition in the market place and can produce goods and services that don’t fully meet consumer expectations
•legislators argue that without a string legal framework businesses will operate to maximise their profits with little consideration of customers

29
Q

Sale and Supply of Goods Act 1994

A

•goods must be of merchantable quality, fit for their intended purpose, lasting for a reasonable amount of time and be as described
•goods must be capable of doing what they were designed to do and what the purchaser would expect them to do

30
Q

Consumer Credit Act 1974

A

•controls the way that goods can be bought and sold on credit
•the use of APR was established- annual percentage rate of interest which allows consumers to easily compare competitive interest rates and to judge the true cost of borrowing
•’cooling-off’ periods- 14 days where they can change their mind about entering into a credit arrangement

31
Q

Trade Descriptions Acts 1968 and 1972

A

•designed to prevent and criminalise giving untrue or misleading descriptions of goods- size, weight and price

32
Q

Distance Selling Regulations

A

•protects consumers who buy over the phone or online
•provides the consumer with a cancellation period of 14 days where they can cancel the contract and get a full refund
•consumers aren’t bound by charges they haven’t agreed to

33
Q

Role of the Competition and Markets Authority

A

•examine situations where companies act together, forming an illegal cartel to limit the competition within an industry

34
Q

Role of the Ombudsman

A

•if a customer has a complaint that hasn’t been satisfactorily dealt with by a business
•can be useful to complain if consumers have an issue with pricing, quality of service, quality of goods or mistreatment

35
Q

demand

A

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

36
Q

the law of demand

A

the higher the price the lower the quantity demanded and vice versa

37
Q

Factors that cause the demand curve to shift

A

•population
•advertising
•substitutes
•income
•fashion and taste
•interest rates
•complements

38
Q

supply

A

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

39
Q

law of supply

A

an increase in price results in an increase in quantity supplied

40
Q

factors that cause the supply curve to shift

A

•productivity
•indirect taxes
•number of firms
•technology
•subsidies
•weather
•cost of production

41
Q

demand curve

A

from top left down to bottom right

42
Q

supply curve

A

from bottom left to top right

43
Q

equilibrium price

A

the price where quantity demanded is equal to quantity supplied

44
Q

Elasticity of demand

A

The relationship between changes in demand, changes in price and income

45
Q

Price elasticity and formula

A

Measures the sensitivity of demand to a change in price- always negative as the increase in price will lead to a fall in sales and vice versa

percentage change in quantity demanded ÷ percentage change in price

46
Q

price elastic

A

a product where a proportionate increase or decrease in price leads to a proportionately greater increase or decrease in the quantity sold

47
Q

price inelastic

A

where a proportionate change in a products price leads to a proportionately smaller change in the quantity sold
•tend to have high product differentiation and so have no substitutes

48
Q

income Elasticity and formula

A

measures how sensitive demand is to a change in income

Percentage change in quantity demanded ÷ percentage change in income

49
Q

income Elasticity and formula

A

measures how sensitive demand is to a change in income

Percentage change in quantity demanded ÷ percentage change in income

50
Q

normal goods

A

as real incomes increase, the demand for normal goods will also increase

51
Q

luxury goods

A

the demand for luxury goods will grow at a faster rate than the increase in real income that created the change in demand

52
Q

inferior goods

A

these are cheap substitutes of products people prefer to buy when their income is reduced

Business Component 1 (11 decks)

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