Markets Flashcards
Define customer.
Someone who wants to buy a product from a business.
Define consumer.
Someone who uses goods and services produced by businesses.
Define market.
A place where buyers and sellers meet trade goods and services with each other.
Define competition.
Where two or more sellers of similar goods or services act independently to persuade buyers to choose their product.
What has revolutionised competition?
The rise of the internet and easy comparison of prices and services have revolutionised competition
What are the different types of markets?
1) Local market.
2) Global market.
3) Seasonal market.
4) Mass market.
5) Niche market.
6) Trade market.
7) Consumer markets.
What is a local market?
Where customers only travel a short distance to purchase goods or services from sellers. They are easy to access but are usually small.
What is a global market?
Where goods and services are offered for sale by businesses across different countries. With increasing use of the internet physical borders to buying and selling products are becoming less important.
What is a seasonal market?
A market where sales are concentrated in particular part of the year rather than being spread throughout the year.
What is a mass market?
Refers to a large market of customers which is undifferentiated and that sells products and services to suit a large number of people.
What is a niche market?
A niche market is the smaller section of a larger market on which a product or service is focused. It is aimed at satisfying specific market needs by creating a carefully tailored product.
What is a trade market?
Where a business is selling to another business rather than to an ordinary house holder. Branding tends to be unimportant as businesses want to buy high quality products for good prices. This type of market is known as business to business or B2B.
What is a consumer market?
Selling a product to the general public. Branding is heavily focused on and the buying process is very short and is more focused on emotional issues.
What are the advantages of operating is a mass market scale?
1) Being able to purchase goods and materials in bulk ( economies of scale). Dealing with high sales volumes makes it easier to afford large advertising and marketing campaigns.
2) Untargeted marketing can be used such as in national newspapers and on national television.
What are the disadvantages of operating in a mass market?
1) Competitions is likely to be fierce as businesses are attracted to potentially high sales levels. To stand out from the crowd a unique selling point is hugely helpful.
2) A large scale of goods need to be produced and this is expensive to set up.
3) If demand suddenly falls there will be a lot of product waste.
What is an advantage of operating in a niche market?
There is less competition from other businesses and products can be tailored to meet customers needs.
What are the disadvantages of operating in a niche market?
1) The smaller part of the larger market there are the fewer potential customers, therefore it may be difficult to persuade retailers to stock the products.
2) Cannot benefit from economies of scale.
3) Harder to raise finance as they are seen as high risk businesses.
4) Does not allow the spreading of risks.
What is the difference between niche markets and mass markets?
1) A niche market is small, but focused on one specific type of customer.
2) A mass market product may have a lower price than a niche market product.
3) Identifying a new niche market is a classic way in which new small firms can find a profitable niche for themselves.
What is market analysis?
The process of gathering information about anything that has or will affect conditions in the market in which a business operates.
What is market data?
Information collected by a business from different sources.
What can market data help businesses to understand?
1) Market size.
2) Market share.
3) Market trends.
What is market size?
The total value or quantity of demand in a specific market or period of time.
What is market share?
The proportion of sales a business or product has achieved expressed as a percentage in a period of time.
What is market trends?
Taking a series of market data over a period of time to try to predict what will happen in the future.
How can a business use market data to understand market size, share and trends?
Business can use market data to analyse and predict future trends to inform important decisions such as whether to make more products or introduce new ones.
Define market segmentation.
Dividing a market into a smaller set of customers who have similar needs and interests.
How do you calculate market share?
(Sales of business / total sales in a market) x 100
Why is it important to have a high market share?
1) Helps businesses to meet objectives e.g. survival, growth profit maximisation.
2) Increases businesses overall profitability.
3) Able to benefit from economies of scale.
4) Edge over competitors.
5) Attract new shareholders.
6) Investment into research.
7) Can become the new brand leader.
What are advantages of global markets?
1) Higher earnings: likely to be higher earnings, if margins in overseas markets exceed those at home.
2) Spread of risks: By moving into new markets risks are now spread.
3) Economies of scale: This move into global markets is likely to lead to increased economies of scale.
4) Survival: Some businesses need to be global to survive.
5) Saturation of the home market: The business may have the finance to expand, but be unable to do so because of competition so they take advantage of entering a new market.
What are methods of segmentation?
1) Demographic:
- Gender
-Age
- Socio economic groups/ social class
2) Geographical:
- Region of the country
3) Psychographic:
- Behavioural segmentation
- Personality and life style
- Cultural - religion/ ethnic grouping
- Political voting preferences
Why is segmentation important?
1) It allows a business to decide which segments it wants to focus on in terms of product or service.
2) Marketing can be more effectively focused on a specific set of customers.
3) The business can become more cost effective and efficient.
4) Customers are more likely to be able to buy products or services that meet their specific needs potentially at a lower cost.
What are the benefits of segmentation to the customer?
1) Can receive products closer to their expectations.
2) Can help them stick to their desired principles.
3) Can fit better with their budgets and lifestyle.
4) Because marketing is targeted the consumer is aware of new features of products.
What are the benefits of segmentation to the firms?
1) Greater knowledge about customers so that its products suit their needs.
2) Can target their advertising more precisely therefore maximising its effects- avoids wasteful marketing.
3) Can increase customer loyalty because customers appreciate that their needs are being met.
4) Higher profits - can develop premium segments in which customers accept higher prices.
What is a disadvantage of segmentation?
Producing a number of products to suit different tastes is expensive and can make it difficult for any of their products to make a profit.
What is psychographic segmentation?
The process of dividing a market into segments based on consumer personality traits, values, interests, lifestyles and opinions. It focuses on psychological aspects of consumer behaviour.
What are the key limitations of psychographic segmentation?
1) Its difficult in measurement: Psychographic traits like values, life style, attitudes and personalities are often abstract and harder to quantify compared to more concrete segmentation factors such as demographics. This makes it challenging to gather reliable and consistent data as people’s behaviours and attitudes can change over time or in different contexts. Psychographic segmentation often requires extensive research, surveys or qualitative analysis, which can be time-consuming and costly for companies.
2) Its subjectivity: can lead to imprecise targeting as the lines between psychographic groups maybe be blurred; marketing campaigns could be less effective if they don’t fully resonate with the intended audience.
What is behavioural segmentation?
Behavioural segmentation divides a market based on consumer behaviours such as their purchasing habits, brand loyalty, usage frequency, or interaction with products. It focuses on how customers act rather than who they are (demographics) or how they think ( psychographics).
What is the key limitation of behavioural segmentation?
It’s short term focused and lack of depth understanding motivations. Whilst it identifies consumer behaviours, it doesn’t always explain the underlying reason or psychological drivers behind those behaviours. This can lead to marketing strategies that address symptoms…
