Markets Flashcards
1
Q
what is a market?
A
- a meeting place between buyers and sellers where goods and services are exchanged, usually for money
2
Q
what is market share?
A
- the sales of a business relative to the market size
3
Q
how do you calculate market share?
A
sales of business/total market sales * 100
4
Q
why is market share important?
A
- might indicate that the business is the market leader
- this may influence strategy or the business’s objectives
- can indicate the success or failure of a business and its strategy
5
Q
whats the importance of having a high market share?
A
- economies of scale
- increases overall profitability
- helps meet objectives
- investment into research
- attract new shareholders
6
Q
what are global markets?
A
- selling goods or services to overseas markets
7
Q
what are 3 advantages of global markets?
A
- economies of scale
- spread risks
- saturation of the home market
8
Q
what are seasonal markets?
A
- markets with seasonable variations
- have a critical sales period
9
Q
what are trade markets?
A
- focuses on selling and supplying to distributors, retailers, wholesalers and other supply chain businesses instead of the consumer
- aim to increase demand for products/services supplied within the supply chain
10
Q
what is mass marketing?
A
- business aiming products at a whole market rather than at particular segments
11
Q
what are 3 pros of mass marketing?
A
- economies of scale
- low cost operations
- untargeted marketing can be used
12
Q
what are 3 cons of mass marketing?
A
- expensive to set up
- heavy product differentiation due to fierce competition
- if demand falls, the business will be left with unused resources
13
Q
what is niche marketing?
A
- a specialised market segment where you cater for the demand for products/services that arent currently being supplied by the main suppliers
14
Q
what are 3 pros of niche marketing?
A
- charge higher prices
- focus on customer needs, customer loyalty
- promotion costs are low
15
Q
what are 3 cons of niche marketing?
A
- no economies of scale
- limited profit
- high prices in economic downturn can lead to low sales
16
Q
what is market segmentation?
A
- breaking down a market into sub-groups that share similar characteristics
- identifying and targeting groups of people with similar needs and developing products/services for each of them
17
Q
what are the 3 methods of segmentation?
A
- demographic (gender, age)
- geographic
- psychographic (lifestyle, culture, politics)
18
Q
what are 3 rules of market segmentation?
A
- segments must be recognisable
- segments must have critical mass
- segments have to be targetable
19
Q
what are 3 benefits of market segmentation to the customer?
A
- receive a product close to their expectations
- fit with their budget and lifestyle
- feels like theyre getting value for money
20
Q
what are 3 benefits of market segmentation to the business?
A
- target their advertising
- increase brand loyalty
- higher profits in premium segments
21
Q
what are 4 characteristics of a monopoly?
A
- single producer within 1 market is a pure monopoly
- price makers
- likely to erect barriers
- over 25% market share
22
Q
what could be the impact in the removal of a monopoly?
A
- greater choice
- increased competition may lower prices
- greater efficiency due to higher competition
23
Q
what are 4 characteristics of an oligopoly?
A
- many businesses but only a few dominate the market
- differentiated products with strong brand identity
- brand loyalty through advertising and promotion
- some barriers to entry
24
Q
what are cartels?
A
- when businesses in an oligopolistic market collude
- try to keep prices high whilst sharing the market between themselves
25
what are 3 advantages of oligopolies to consumers?
- economies of scale
- variety and choice
- high profits mean innovation and investment
26
what is monipolistic competition?
- the situation in a market in which elemnts of monopoly allow individual producers or consumers to exercise some control over market prices
27
what are 4 characteristics of monipolistic competition?
- large number of small businesses
- few barriers to entry
- weak brand identity
- products are similar but differentiated from each other
28
what is perfect competition?
- many small firms produce virtually identical products at similar prices
- will the ability to freely enter and leave the market
- dont earn excessive profits
29
what are 4 characteristics of perfect competition?
- no business is large enough to influence the activities of others
- goods sold are homogeneous
- equal access to technology
- no market leaders or price leaders
30
why do consumers need protection?
- poor quality goods
- substandard services
- misleading information
- pressurised selling tactics
31
what is consumer protection legislation?
- when consumers purchase goods/services, contracts are formed between the consumer and the retailer and the producer of those goods/services
- to clarify the nature of this contract, a series of laws have been passed
32
what is the Sales and Supply of Goods Act 1994?
- states goods must be of merchantable quality, fit for their intended purpose, lasting for a reasonable amount of time and be as describes
33
what is the Consumer Credit Act 1974?
- established the cooling off period where consumers have 14 days in which theyre able to change their mind about entering a credit agreement
34
what are 2 distance selling regulations?
- consumers arent bound by charges they havent expressly agreed to
- protects consumers who buy over the phone or online
35
what is a function of the CMA?
- examin situations where companies act together, forming an illegal cartel to limit competition within an industry
36
whats the role of the Ombudsman?
- used to complain if consumers have an issue with pricing, quality of service, quality of goods, or mistreatment
37
what is demand?
- the amount of a product that consumers are willing and able to purchase at any given price
38
what are the factors that cause the demand curve to shift? (PASIFIC)
- population
- advertising
- substitutes (price of)
- income - general level
- fashion and taste
- interest rates
- complements (price of)
39
what is supply?
- the amount of a product that suppliers will offer to the market at a given price
40
what are the factors that cause the supply curve to shift? (PINTSWC)
- productivity
- indirect taxes
- number of firms
- technology
- subsidies
- weather
- cost of production
41
what is elasticity of demand?
- the relationship between changes in demand, changes in price and income
42
what is price elasticity?
- the sensitivity of demand to a change in price
43
what does price elastic mean?
- where a proportionate change in price leads to a proportionately greater change in quantity sold
- greater than 1
44
what does price inelastic mean?
- a proportionate change in price leads to a proportionately smaller change in quantity sold
45
what is income elasticity?
- measures how sensitive demand is for change in income
46
what are the income elasticities of the 3 types of good?
- normal goods have positive income elasticity
- luxury goods have positive income elasticity
- inferior goods have negative income elasticity
47
what does equillibrium price mean?
- where quantity demanded is equal to quantity supplied
