markets Flashcards
revise
what is the definition of markets
A meeting place between buyers and sellers
where goods and services are exchanged, usually
for money
what is market share
The percentage of the total revenue or sales in a market that a company’s business makes up
how is market share calculated
(number of products sold (firm’s sales)/ number of products sold in market (total sales) x 100
what is the importance of having a high market share?
- increases barrier of entry for new firms
- high brand awareness/ loyalty –> inelastic demand
- price maker status
- increase growth
- Can become the brand leader.
- Attract new shareholders.
what are global markets
Global marketing is all about buyer and sellers meeting and selling goods or services to overseas markets.
what are the advantages of global markets
- new market –> increased market share –> increase profits
- early movement reduces competition from new firms and lead to price maker status in new marklet
- Economies of scale
- Spread risks
- Survival – some businesses need to be global
to survive.
what is mass marketing
Mass marketing involves a business
aiming products at a whole market, rather than
particular parts of them, for example, tomato
ketchup, tea bags
what are seasonal markets
Many markets have large seasonable variations.
e,g, christmas trees only popular in christmas
what are the disadvantages of mass marketing
- alot more costly
- lower conversion rate
- may not be firm specific
- ability to meet demand
what is a niche market
A niche market is a specialised market segment where you cater for customers who share similar characteristics which make them more likely to buy a particular product or service
what are the advantages of a niche market
- Businesses can charge higher prices/premium prices
- Have less competition
- Higher market share –> brand awareness/ loyalty
what are the disadvantages of a niche market
- Smaller market/limited profit.
- Harder to raise finance
- Cannot benefit from economies of scale.
- Hard to expand.
what is market segmentation
Market segmentation is breaking down a market into sub-groups of customers which share similar characteristics
what are the methods of segmentation
DEMOGRAPHIC
- age/ gender
GEOGRAPHICAL
- country of residence
PSYCHOGRAPHIC/ BEHAVIORAL
- hobbies
what are the benefits to the firm of market segmentation
- identify different target market
- advertise products more effectively/ efficiently
- increased sales and potentially higher profit margins due to premium pricing
what are the benefits to the customer of market segmentation
- more personalised products
- can fit better with their budgets and lifestyle
- because marketing is targeted – the consumer
is aware of new features of products.
what are the three different types of markets
- Monopoly
- Oligopoly
- Perfect competition
what are the characteristics of a perfect competition
- many buyers and sellers
- low barrier to entry and exit
- perfect information
- homogenous goods
what are the characteristics of a monopoly
- A single producer within a market – one
business has 100% of the marketplace. This is
known as a pure monopoly. - Likely to erect barriers to prevent others from
entering their market. - Monopolists are called price makers as they
have a significant influence on price. - UK and EU regard any business with over 25%
of the market as having potential monopoly
power
what are the characteristics of an oligopoly
- There are many businesses but only a few
dominate the market. - Each business tends to have differentiated
products with a strong brand identity. - Brand loyalty is encouraged by the use of advertising and promotion.
- Prices can be stable for long periods, short
price wars do occur. - Some barriers to entry do exist. For example,
high start-up costs with manufacturing
what is the definition of perfect competition
Definition: a market in which many small firms
produce virtually identical products at similar
prices.
- With the ability to enter and leave the market freely.
- They don’t earn excessive profits
what is demand?
the amount of a product that consumers are willing and able to purchase at
any given price
what is supply?
the amount of a product that suppliers will offer to the market at a given price
factors that cause the demand curve to shift
Population
Advertisement
Substitutes (price of)
Income (proportion)
Fashion
Income tax
Complementary
Factors that cause the Supply curve to Shift
Productivity
Indirect Taxes
Number of Firms
Technology
Weather
Cost of Production
what is the elasticity of demand
The relationship between changes in demand, changes in price and income is known
as the elasticity of demand
what is the equilibrium price
In a free market, demand and supply equal the equilibrium price. This is the price where the quantity demanded is equal to the quantity supplied.
what is income elasticity
measures how sensitive demand is to a change in income.
what are the three types of goods?
- Normal goods – as real incomes increase,
the demand for normal goods will also
increase: positive income elasticity less than
one. Examples are matches, lemonade,
newspapers. - Luxury goods – the demand for luxury goods
will grow at a faster rate than the increase
in real income that created the change in demand: positive income elasticity that is greater than one. Examples are holidays
abroad, health club membership, sports cars. - Inferior goods – these are cheap substitutes
of products people prefer to buy when their
income is reduced (such as value line baked
beans): negative income elasticity.
